Why we are almost better off retired than working

PENSIONERS are better off than ever as they have been cushioned through the recession, according to a report published yesterday.

The average disposable income of retired households has increased by £1,800 since the financial crisis struck in 2008, while working-age families are £800 worse off.

Experts said the figures show how the economic downturn has been felt very differently across the generations, with retired baby boomers largely shielded from austerity.

The Office for National Statistics report echoed research published by the Institute for Fiscal Studies last week that found pensioners are wealthier than ever. The IFS said their interests have been protected by politicians unwilling to upset older generations more likely to vote.

Promises made at the last election included maintaining a ‘triple-lock’ that guarantees the state pension rises by either the rate of inflation, growth in average earnings or 2.5 per cent – whichever is highest.

At the same time, millions of working households suffered years of slow or non- existent wage growth while facing steadily rising prices.

It is only recently that wages have started to recover strongly and inflation has tumbled to around zero – making families feel richer.

But many low earners now face cuts to tax credits, while pensioner benefits remain protected.

The ONS said British households are richer than ever before – but that the recovery in living standards has been driven by pensioners.

The typical household disposable income in the UK – total earnings and benefits after tax, adjusted for inflation – rose to £25,600 in 2014-15.

That was slightly above the prerecession peak of £25,400 and some £1,500 higher than the post-crisis low reached in 2012-13. But the report revealed that pensioners have fared far better than working families, whose incomes remain below prerecession levels.

Average income for retired households reached £21,100 in 2014-15 – up more than 9 per cent or £1,800 since 2007-08. By contrast, a typical working household’s income was £28,100, still £800 or nearly 3 per cent below the pre-crisis peak of £28,900.