On November 15th The Resolution Foundation published a briefing note on the results of its survey about the effect of lockdowns and other restrictions on working-age families.
Many families are going through a bad time. The briefing note is probably the most up to date survey as to how families are being impacted by the economic effect of the Covid pandemic.
The survey looks at the first Lockdown (April to June) and also how things changed when lockdown restrictions were eased (July to September). The research does not cover what has happened since the gradual tightening of the restrictions, (Leicester went back into lockdown at the end of June, for example) leading to Lockdown 2 coming into force on 5th November. It looks like individual contact hence economic activity is going to be constrained until at least the Spring.
The findings of the survey on individual households are therefore likely to be amplified before we see any reverse to the trends.
The survey found, that during the easing period, 23% of working-age adults were coping on incomes lower than they were receiving in February. This is down from 26% during lockdown. Despite unprecedented government support, a large number of families are suffering a significant reduction in income.
Spending opportunities reduced during these periods. The worrying situation for a family is where the reduction in spending is less than their reduction in income. Nearly one-third of the lowest income quintile find themselves in the situation, compared to 24% of the highest quintile. Although those on lower incomes ae probably the hardest hit, they are not the only ones.
It is not all gloom due to the lack of spending opportunities, just over 35% have seen their financial position improve compared with their pre-pandemic position.
The survey does not cover pensioners. We know from DWP pensioner income surveys that a large number of pensioner households (up to 20%) are dependent upon employment income. Also, we know from the unemployment statistics that the under 24’s and over 50’s are the two groups that have seen the largest numbers of job losses.
Unless affected by the employment market generally, pensioner households will have seen their retirement income remain constant. An exception could be those who panicked during the stock market downturn. Spending opportunities will have decreased leading to an improvement in their household finances.
The bad news is that we face three to four months where the suffering continues for those households where the family’s finances are worsening.
The impact of vaccines should begin to bring back a degree of social normality but social normality does not mean an economic boom. There will be many businesses that will not re-open, will be carrying large amounts of debt, and as can be seen, many households will be heavily indebted. As always, the above is a generalisation, there are businesses that have been booming, as I have illustrated households where the finances have improved.
In this environment and situation you can begin to see why more people might be pulled towards the later life market.
Retired households who have seen their finances improve, feel confident about their future, and want to make up for a year taken from their lives. ‘Now what about that once in a lifetime holiday, or the home improvement we are always talking about?’
Retired households who have lost their employment income sooner than expected might now wonder whether they need to replace it and if they do, how?
Looking beyond the immediate retired household. Once a mum and dad always a mum and dad. We bring up our children to become independent individuals, but when life plays them a bad hand of cards most of us want to make it better for them. Younger families will be the hardest hit by this pandemic. Many will need to press the restart button on their lives. How often will the Bank of Mum and Dad come to the rescue for these and many other individuals?
The Resolution Foundation briefing note provides a good insight into who and how households have been affected so far by the pandemic. The later life market can offer solutions to those who need to either restart their lives or help their children to do so.
There will therefore be plenty of opportunities for later life advisers in 2021; now is the time to start thinking about your marketing strategy to ensure you can pick up your share of that demand.
Bob Champion is chairman of the Air Later Life Academy
