Yahoo Finance Cost of living: Older people face biggest income squeeze from surging energy bills
Older people are set to spend a higher share of their incomes on energy bills this winter, compared to other age groups, as the cost of living bites.
According to the Resolution Foundation’s intergenerational audit report, over-75s are expected to spend 8% of their total household income on bills, even with significant government support.
This is partly driven by the fact that people in this age group are more likely to live in energy-inefficient homes.
Just a third of households headed by someone aged 65 and above live in homes with an energy-efficient A-C EPC rating, compared to half of households headed by someone aged 16-29. Older people also tend to live in larger, harder to heat homes, it said.
The data, which is funded by the ESRC connecting generations research programme, looked at the cost of living crisis facing Brits today — from rising energy bills this winter, to mortgage costs, falling house prices, and higher unemployment next year.
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Resolution Foundation added that all generations will be forced to spend more on their energy bills this year, but younger households are the most at risk of being unable to pay them, or falling into arrears.
Younger households are up to four times more likely to be on prepayment meters, preventing them from spreading energy costs out evenly throughout the year.
The audit found that 19% of households headed by a person aged 16 to 29 are on a prepayment meter for their electricity and 18% are on a prepayment meter for their gas, compared to 5% and 4% of households headed by someone aged 65 and above.
Younger people are also less likely to have assets and savings to draw on as coping mechanisms for responding to rising energy costs.
While over four fifths of people aged 65 to 74 and 75 and above say that they would be able to use money from their current account or draw on existing savings to cover an unexpected expense. Just under half of 20- to 29-year-olds are in the same position.
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Even with government support, from lump-sum payments for vulnerable households to the £400 Energy Bills Rebate and the Energy Price Guarantee, the typical household energy bill will be 83% higher in 2022-23 compared to pre-energy crisis levels.
Middle-aged households — those headed by 40- to 49-year-olds and 50- to 64-year-olds — will see the largest increases in cash terms, with typical annual energy bills for these groups rising by over £1,000 on pre-crisis levels, to around £2,260 and £2,320 respectively, in 2022-23.
However, this in large part reflects that such households tend to be larger than older or younger households.
Resolution Foundation found that while non-pensioners are £816 a year worse off on average as a result of changes to working-age benefits since 2010, pensioners are £666 a year better off due to the triple lock.
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Molly Broome, economist at the Resolution Foundation, said: “All generations are facing difficulties from the growing cost of living crisis — but different generations are experiencing it in very different ways.
“The middle-aged will face the largest bill rises and older generations will see the greatest squeeze on their incomes due to their larger and less energy-efficient homes.
“But it’s younger people who are most likely to struggle to pay rising bills, because they are less likely to have savings to fall back on — and will therefore be forced to either rely on older friends or family members, or potentially go without heating during the coming cold weather.”
