Nearly a million older people just one big bill away from financial disaster as new report shows reality of trying to meet the extra costs of ageing on a low income

Pensioner poverty numbers have once again increased, with two million pensioners now living in poverty and nearly a million (930,000) saying they would be unable to pay an unexpected bill of £200, according to recently released government figures.

In a new policy report, 'Struggling On' – published today – Age UK sets out the realities of living on a low fixed income in retirement; the coping strategies that older people have developed in order to manage; and the intense difficulties they face in trying to meet the additional, unavoidable costs of ageing which present big, daily challenges for them yet are often overlooked by policymakers.

Based on in-depth interviews with older people 'Struggling On' shows how the need for extra spending due to ill health, disability, living in insecure or poor housing, or away from family and friends, makes life incredibly difficult as you get older if there's not much money coming in.

The Charity is warning that those with health and care needs are particularly likely to struggle as a result of having to spend more on heating, laundry, transport and care and healthcare items. National figures show that people aged 65+ in England with a care need, for example, are twice as likely to say they don't manage well with their finances as those without, and 61 per cent more likely to find they have insufficient money to spend on meeting their needs.

Poverty rates are much higher among older tenants than home owners, with 29 per cent of social tenants and 35 per cent of private tenants living in poverty compared to 16 per cent of all pensioners.

The older people interviewed by Age UK's researchers described the strategies they use in the face of financial hardship; for example, spending less on food and heating, doing without new clothes or outings, taking out repayment plans to afford new electrical items or furniture, seeking to keep working and claiming any available benefits. Many appeared resigned to the increasing costs they encountered in later life and their need to watch every penny – which was nonetheless a constant source of worry to them.

In its report, the Charity makes a series of recommendations and calls on the Government and others to take action to make life better for the older people in our society who are barely getting by.

Key recommendations from Age UK's report:

 The Government must work with the advice sector to look at how free, independent and accessible information and advice is provided and funded so that older people in difficult financial circumstances can get the help they need to claim their entitlements.

 Universal benefits such as bus passes and free TV licences provide essential additional support to all those who need help, including the very poorest who may otherwise miss out on their benefits, and need to be preserved.

 Regulators must ensure that the price of essential services such as insurance, energy and water – very significant costs for older people on low incomes – are affordable for them.

 Policymakers must recognise the importance of everyone being able to build and maintain at least a modest savings buffer, essential for financial resilience and peace of mind in later life.

 The Government must urgently work with local authorities to improve the situation of older renters – levels of poverty are much higher among pensioners who rent than who own their homes.

The Charity is also warning that many pensioners who are financially stretched have been caught out by the steep rise in State Pension age since 2010 , with upcoming policy changes to Pension Credit and Housing Benefit for mixed-age couples set to make the position worse still for those affected. The potential loss of the free TV licence for over-75s poses another major threat to some of our oldest citizens who are struggling to get by, and at an annual cost of more than £150 a year could well be beyond their means, placing those who rely on their television for news, entertainment, and companionship in a horrible situation.

Millions of pensioners on a low income are also missing out on their share of £3.8bn, because they are not claiming vital benefits such as Pension Credit which could make a huge difference to their weekly incomes.

Caroline Abrahams, Charity Director at Age UK, said: "Our new report lifts the lid on what it is like to struggle financially in later life at a time when pensioner poverty is on the rise.

"Part of the problem is the low incomes on which some older people have to survive, but another largely overlooked element is the extra costs that come along with getting older: like having to buy pads and running the washing machine more if you are incontinent or having the heating up higher if you are chronically unwell. It's no surprise that older people with care needs and those who pay rent are much more likely to have financial problems than the population of older people overall.

"The older people who took part in our research were mostly just about getting by, but only by budgeting very carefully and organising their lives to get the most from every penny, which is challenging for anyone at any age, let alone if you are in your seventies or beyond.

"At Age UK we are becoming worried about the emergence of an 'ageing precariat' – a subset of pensioners who are so stretched financially that an unexpected big bill could mean total disaster. Unfortunately, two potential Government policy changes will further undermine the financial security of older people in this position: the ending of Government funding for free TV licences for the over-75s, and a provision which would throw poor pensioners with a younger partner onto the Universal Credit regime and subject to the so-called 'bedroom tax'. For the sake of the poorest pensioners in our society we urge the Government to think again about these measures which will hit them very hard indeed."

Any older person who is worried about money can call Age UK Advice free of charge on 0800 169 6565, visit www.ageuk.org.uk/money or contact their local Age UK for further information and advice.

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Notes to editors

Age UK's Struggling on report can be viewed here www.ageuk.org.uk/strugglingon

A selection of case study quotes from Age UK's report:

"A friend and I used to go out once a week for a bite to eat and to look at the market. But since my operation my walking is worse and I don't do this anymore. I couldn't afford the taxi to get there." Maureen, 76, London

"I have no disposable income, so I'm using my agreed overdraft by the time the end of the month comes. I've been in the overdraft for three years." Alice, 76, Bristol

The bills were always a worry. Heating was the main issue because my mother required it to be on all the time, so bills were very high.' Jill, 70, Yorkshire

"I'll stay in work as long as I can... I need the money really." Peter, 72, Staffordshire

"Spending on clothes would be pure excess! I've reached the age I think it's not worth spending it." Jane, 86, Herefordshire

"I'm alright, I'm living. It's not a high standard of living but... I do as I can. I do feel sorry for myself at times, but no – I'm alright." Arthur, 87, Lancashire

"That was the awful thing about private renting, only one year leases and they put the rent up every year." Kath, 67, Cambridgeshire

"The bus pass – my godsend. Without that I don't think I would go out of my house." Maureen, 79, London

"You really have to just sort of, struggle on really. I can probably carry on for another 3 years – luckily I don't buy myself anything and I don't go anywhere now, just shopping and to the church on Sunday. But it depends what goes up, the rent, council tax, if the physio puts up her price." Dorothy, 81, High Wycombe.