A generation in debt - Britain's pensioners owe more than any other age group
Retirement is seen as a time to put your feet up and enjoy life's little luxuries.
The reality, according to a report, is more likely to involve working to pay off record debts and struggling to make ends meet.
For the first time, Britain's 11million pensioners owe more than any other age group.
Many are forced to rely on overdrafts, credit cards and handouts from family members to survive.
In extreme cases, they are having to use credit to pay for basic living expenses such as the weekly food shop.
The study by the Consumer Credit Counselling Service covered only "unsecured" loans, which means total debts could be larger because many pensioners still owe tens of thousands of pounds on their mortgage.
Those over 60 who had contacted the charity for help with their money problems owed an average of almost £30,000.
By comparison, the 18 to 24 age group owe £9,656; the 25 to 39s £21,876 and those aged 40 to 59 £28,903.
In the past, it was always the 40 to 59 age group who had bigger debts than any other age group.
The Consumer Credit Counselling Service said there were many reasons for the cultural change. One is that pensioners are more used to using credit cards than their parents were.
Rather than save up to buy something, many are happy to use credit to get something they cannot actually afford.
Sarah Nancollas, a director of the insolvency expert Nancollas Greer, said: "Judging from the
people we are finding approach us for help, it is the fact that pensioners are living on such low incomes that is driving them into debt. Many of them struggle and turn to borrowing and credit just to get by.
"Historically older people have been reluctant to get into debt but it seems many now feel they don't have a choice."
Another common reason is that older couples are squeezed by financial commitments to other members of their family. For many, their grown-up children are still a burden.
To get them on to the housing ladder at today's high prices, many are forced to give their children a deposit of at least £10,000.
With people living longer than ever before, many pensioners also have their own parents to look after. Soaring prices are likely to make the pensioner debt problem worse, according to experts.
The costs of essential items, such as bread, milk and fuel are rising at the fastest pace since records began.
The biggest losers during this climate of rising prices are the elderly, according to an analysis of official inflation figures by the investment group Alliance Trust.
For those over 75, the inflation rate is 3.4 per cent, which is 36 per cent higher than the official inflation figure of 2.5 per cent, it claims.
Rising costs such as food and energy hit the elderly the "hardest" because they spend a higher percentage of their income on these costs.
David Sinclair, head of policy for Help the Aged, said: "Pensioners are constantly facing above inflation price rises. Coupled with a fixed low income, many older people struggle financially more and more, year after year.
"With one in five pensioners living in poverty and an increasing number of older people in debt, the future looks anything but rosy for older people."
The charity will publish a report next week which is expected to reveal further evidence of debt problems among the elderly.
With huge debts, record numbers of pensioners are working beyond retirement age, according to the Office for National Statistics.
Nearly 1.3million women over 60 and men over 65 are working. Some want to work but many have no choice.
• Widow Rita Young, 71, says the cost of living has forced her into debt.
The former market researcher has reached the overdraft limit on her current account and has been struggling to pay off two credit cards.
She said: "I know the dangers of getting into the red but I've got no choice."
Mrs Young, of Peterborough, had barely finished paying off a £3,000 loan when she was forced to put money on credit cards.
She receives £140.51 state pension a week and a £200 winter fuel allowance. But she says this is not enough to keep up with the rising cost of energy and household bills.
She added: "I'm very grateful I don't like to smoke or drink or I would have been sunk by now. The only thing I allow myself is for a girl to come round and set my hair once a week.
"But I will have to stop this, too, if things continue to get worse."
By BECKY BARROW Daily Mail
Sunday, 23 March 2008
Annuity delay can cost pensioners a packet
Retired people who delay buying an annuity because of current stock market volatility have been warned they risk missing out on thousands of extra pounds in income.
In uncertain economic conditions, consumers may feel it is wise to defer buying their annuity, especially if their pension funds have fallen in value over the past few months – the average UK portfolio has plummeted by some 20% since June.
But consumers may believe that by leaving the funds invested and hoping they will recover, that they will then benefit from a higher annuity at a later stage.
In the final three months of last year the annuity market dropped by 15% because of the stock market turmoil.
Annuity provider Just Retirement, points out that a 65-year-old retiree, with a fund of £50,000, who deferred buying an annuity by one year, could have to wait 13 years to recoup the lost income.
'Even worse, if interest rates fall by 1% over the period, the income from the annuity purchased after deferment of one year could fall to £3,703, meaning it would take 184 years for the client to get their money back,' says Nigel Barlow, at Just Retirement.
If you delay by one year, though you receive a bigger annual income you will still be £700 out of pocket after 10 years. However, after 13 years you will start making money, and after 15 years your total income will be £793 ahead.
But as it is not compulsory to use pension savings to buy an annuity until age 75 the question of how long will might live also has to be considered.
'Holding back may be the right decision for some, it is also a risk and depends on how certain you are that the markets will recover during this period, and also how certain that annuity rates will improve,' adds Barlow.
For example, in December 1999, the FTSE peaked at 6930. It has not reached this level since - the latest peak was 6752 in June last year – on Wednesday it closed at 5545.6. Over that same period between 1999 and June 2007, annuity rates for single males declined by almost 20%, with factors such as increasing life expectancy and falling interest rates being key influencers.'
Annuity rates generally been on a downward spiral for some time, for example, 10 years ago a single life annuity rates was about 10%, meaning with a £100,000 pension, you would receive £10,000 a year. Today they are about 7.5%, so individuals with the same size pot would get just £7,500 per annum.
Tom McPhail, a pensions expert at IFA Hargreaves Lansdown, says: 'Generally I agree that people should not delay in purchasing an annuity – it is dangerous to try to second-guess the market. So buy it when you need it.
'However, annuity rates have been pretty flat over the past 12 months. The recent credit crunch has wiped some 20% of the capital value of UK funds since last June, so if you buy now, you will crystalise those losses - it is all dependant on whether individuals are willing to take a gamble by staying invested and seeing how much the market, and hence their pension pot, rises.'
According to Hargreaves Lansdown, for a 65-year-old male, with a £100,000 pension pot, the best annuity deal on the market is from Aegon Scottish Equitable which offers £7,450 a year. For a female, aged 65, the group offers £6,967.
Philip Scott, This is Money
In uncertain economic conditions, consumers may feel it is wise to defer buying their annuity, especially if their pension funds have fallen in value over the past few months – the average UK portfolio has plummeted by some 20% since June.
But consumers may believe that by leaving the funds invested and hoping they will recover, that they will then benefit from a higher annuity at a later stage.
In the final three months of last year the annuity market dropped by 15% because of the stock market turmoil.
Annuity provider Just Retirement, points out that a 65-year-old retiree, with a fund of £50,000, who deferred buying an annuity by one year, could have to wait 13 years to recoup the lost income.
'Even worse, if interest rates fall by 1% over the period, the income from the annuity purchased after deferment of one year could fall to £3,703, meaning it would take 184 years for the client to get their money back,' says Nigel Barlow, at Just Retirement.
If you delay by one year, though you receive a bigger annual income you will still be £700 out of pocket after 10 years. However, after 13 years you will start making money, and after 15 years your total income will be £793 ahead.
But as it is not compulsory to use pension savings to buy an annuity until age 75 the question of how long will might live also has to be considered.
'Holding back may be the right decision for some, it is also a risk and depends on how certain you are that the markets will recover during this period, and also how certain that annuity rates will improve,' adds Barlow.
For example, in December 1999, the FTSE peaked at 6930. It has not reached this level since - the latest peak was 6752 in June last year – on Wednesday it closed at 5545.6. Over that same period between 1999 and June 2007, annuity rates for single males declined by almost 20%, with factors such as increasing life expectancy and falling interest rates being key influencers.'
Annuity rates generally been on a downward spiral for some time, for example, 10 years ago a single life annuity rates was about 10%, meaning with a £100,000 pension, you would receive £10,000 a year. Today they are about 7.5%, so individuals with the same size pot would get just £7,500 per annum.
Tom McPhail, a pensions expert at IFA Hargreaves Lansdown, says: 'Generally I agree that people should not delay in purchasing an annuity – it is dangerous to try to second-guess the market. So buy it when you need it.
'However, annuity rates have been pretty flat over the past 12 months. The recent credit crunch has wiped some 20% of the capital value of UK funds since last June, so if you buy now, you will crystalise those losses - it is all dependant on whether individuals are willing to take a gamble by staying invested and seeing how much the market, and hence their pension pot, rises.'
According to Hargreaves Lansdown, for a 65-year-old male, with a £100,000 pension pot, the best annuity deal on the market is from Aegon Scottish Equitable which offers £7,450 a year. For a female, aged 65, the group offers £6,967.
Philip Scott, This is Money
Tuesday, 11 March 2008
Its on the Tip of your Tongue
Why can't your brain find it now?
Charles Zanor
If only there were simple means to solve every tip of the tongue experience. You know the kind. Like the one I had a couple of months ago when I could visualize the Vermont clothing store where my friend Dan and I regularly stock up on white wool socks, but I just could not recall its name. Not until several weeks later, when I retrieved the plastic bag containing my last two pairs of slightly imperfect Wigwams, did I find the answer staring me in the face: Sam's.
Two questions flow from this experience: What made such a simple memory task so out of reach? Is this a bad sign?
We'll start with the less encouraging news.
First off, my brain is shrinking. (In case you are starting to feel smug, don't. Yours is, too.) Second, my subjective sense that it is not as easy as it once was to recall words is no illusion. Tip of the tongue experiences (TOTs) increase as we get older, and this is true in spades for the recall of proper names.
Here's some good news. While TOTs are a sign of aging (and have been shown to correlate with specific brain changes), they are not a sign of impending dementia.
Meredith Shafto, a research associate at Britain's University of Cambridge, has been studying normal cognitive aging for five years. TOTs, she says, are "part of what we call normal or healthy aging. . . . With normal aging there are changes that are noticeable and distressing and irritating, but they are not pathological."
What makes TOTs interesting is not that they are that dreaded knock on the door, but that they tell us something about how our brain functions normally to produce the vocabulary we use on a daily basis.
Deborah Burke, a psychology professor at Pomona College in Claremont, Calif., who has written widely about language, aging and TOTs, explains the current thinking:
"We like to think of words as being stored in a unit in our head, and that we have a little place in our minds where we have [for example] Brad Pitt, and we know what he looks like and what movies he's been in and his name and all that."
Instead of storing information that way, she explains, there is "a network of information across different parts of the brain, and you can lose access to one part and not the other. So you can see Brad Pitt's face and say, 'Yes, that's his face,' but you're not able to recall his name because it's not stored as a unit with his face or with [other] information about him."
As we age, the connections in our information network deteriorate, causing so-called transmission deficits. This is especially true when we haven't activated a particular connection for some time. What used to be a two-way street between Brad Pitt's face and his name is now, say, a bike path that has some overgrowth. The connection is still there, but it is weak and needs attention.
A recent study in the Journal of Cognitive Neuroscience reports a correlation between face-naming difficulties and shrinkage of a particular area of the brain. Shafto and colleagues showed a series of famous faces to adults between ages 19 and 88. Using MRI imaging, they found that increased TOTs were strongly associated with age-related atrophy in the left insular cortex, a cortical structure deep on the brain's left side.
This finding helps explain why we have more TOTs as we get older, but not why forgetting proper names is the most common problem. To understand this, we have to turn to transmission deficit theory, which provides a straightforward rationale.
Unlike most other words, proper names are arbitrary and usually tell us nothing about the person named. Larry King the name tells us nothing about Larry King the face or Larry King the man. If we lose the connection between the face and the name, we have no alternative route to get there. We may remember that his name starts with an L or has three syllables, but we still cannot quite make it all the way down the overgrown bike path to retrieve all the key word sounds (or phonology), which is what makes TOTs so frustrating. On the other hand, if we recall King's face and want to connect it to what he does (rather than what he calls himself), we have a lot of connections to choose from: talk show host, interviewer, emcee and so on.
One instructive exception to the proper name rule provides additional support for transmission deficit theory. Some cartoon characters have names that do in fact carry meaning (Spider-Man, Goofy), while some don't (Homer Simpson, Garfield).
In a recent article, "Charlie Brown Versus Snow White," in the Journal of Gerontology: Psychological Sciences, University of Colorado researchers tested young and old adults on how well they could name both kinds of characters. Young adults outperformed older adults on the naming test even though, as is routinely found in almost all studies on aging, the older adults did better on a standard vocabulary test. They just had trouble naming faces.
More pointedly, young adults differed little in their ability to name the two kinds of characters. Older adults, by contrast, had much more difficulty naming characters such as Charlie Brown and Garfield than they did Snow White and the Pink Panther -- names with an added semantic boost.
When I asked Burke what we can do to limit our TOTs, she enthusiastically endorsed the idea of using our language skills as much as possible in lively conversations where we are fully engaged and firing on all eight cylinders. Beyond that, she said, there are no all-purpose exercises to ramp up our ability to recall names from the past. Tried-and-true techniques do exist, however, to learn specific names at a specific time and place. We just have to apply these techniques every time we want to learn new names.
Still, I could not resist asking Burke if she thought doing crossword puzzles might have TOT-reducing benefits. She demurred, thinking I meant those rarefied crosswords with esoteric clues and solutions. I did not. I was referring to my mother-in-law.
Antoinette Berardi owned a truckload of moderately challenging crossword magazines with clues such as: Moby Dick author; Mo of Arizona; Mikhail's wife. I have clear recollections of her hunkering down at her kitchen table, turning to a fresh puzzle and blasting through that baby with the intensity of a NASA engineer working to rescue a crew from space. My wife claims that her mother did this to relax. I don't know about that, but I do know this: I have never met anyone with a more impressive memory. And, unlike her son-in-law, she never had to rehearse the name of the place she bought her socks.
Charles Zanor is a practicing psychologist in Massachusetts. Comments:health@washpost.com.
Charles Zanor
If only there were simple means to solve every tip of the tongue experience. You know the kind. Like the one I had a couple of months ago when I could visualize the Vermont clothing store where my friend Dan and I regularly stock up on white wool socks, but I just could not recall its name. Not until several weeks later, when I retrieved the plastic bag containing my last two pairs of slightly imperfect Wigwams, did I find the answer staring me in the face: Sam's.
Two questions flow from this experience: What made such a simple memory task so out of reach? Is this a bad sign?
We'll start with the less encouraging news.
First off, my brain is shrinking. (In case you are starting to feel smug, don't. Yours is, too.) Second, my subjective sense that it is not as easy as it once was to recall words is no illusion. Tip of the tongue experiences (TOTs) increase as we get older, and this is true in spades for the recall of proper names.
Here's some good news. While TOTs are a sign of aging (and have been shown to correlate with specific brain changes), they are not a sign of impending dementia.
Meredith Shafto, a research associate at Britain's University of Cambridge, has been studying normal cognitive aging for five years. TOTs, she says, are "part of what we call normal or healthy aging. . . . With normal aging there are changes that are noticeable and distressing and irritating, but they are not pathological."
What makes TOTs interesting is not that they are that dreaded knock on the door, but that they tell us something about how our brain functions normally to produce the vocabulary we use on a daily basis.
Deborah Burke, a psychology professor at Pomona College in Claremont, Calif., who has written widely about language, aging and TOTs, explains the current thinking:
"We like to think of words as being stored in a unit in our head, and that we have a little place in our minds where we have [for example] Brad Pitt, and we know what he looks like and what movies he's been in and his name and all that."
Instead of storing information that way, she explains, there is "a network of information across different parts of the brain, and you can lose access to one part and not the other. So you can see Brad Pitt's face and say, 'Yes, that's his face,' but you're not able to recall his name because it's not stored as a unit with his face or with [other] information about him."
As we age, the connections in our information network deteriorate, causing so-called transmission deficits. This is especially true when we haven't activated a particular connection for some time. What used to be a two-way street between Brad Pitt's face and his name is now, say, a bike path that has some overgrowth. The connection is still there, but it is weak and needs attention.
A recent study in the Journal of Cognitive Neuroscience reports a correlation between face-naming difficulties and shrinkage of a particular area of the brain. Shafto and colleagues showed a series of famous faces to adults between ages 19 and 88. Using MRI imaging, they found that increased TOTs were strongly associated with age-related atrophy in the left insular cortex, a cortical structure deep on the brain's left side.
This finding helps explain why we have more TOTs as we get older, but not why forgetting proper names is the most common problem. To understand this, we have to turn to transmission deficit theory, which provides a straightforward rationale.
Unlike most other words, proper names are arbitrary and usually tell us nothing about the person named. Larry King the name tells us nothing about Larry King the face or Larry King the man. If we lose the connection between the face and the name, we have no alternative route to get there. We may remember that his name starts with an L or has three syllables, but we still cannot quite make it all the way down the overgrown bike path to retrieve all the key word sounds (or phonology), which is what makes TOTs so frustrating. On the other hand, if we recall King's face and want to connect it to what he does (rather than what he calls himself), we have a lot of connections to choose from: talk show host, interviewer, emcee and so on.
One instructive exception to the proper name rule provides additional support for transmission deficit theory. Some cartoon characters have names that do in fact carry meaning (Spider-Man, Goofy), while some don't (Homer Simpson, Garfield).
In a recent article, "Charlie Brown Versus Snow White," in the Journal of Gerontology: Psychological Sciences, University of Colorado researchers tested young and old adults on how well they could name both kinds of characters. Young adults outperformed older adults on the naming test even though, as is routinely found in almost all studies on aging, the older adults did better on a standard vocabulary test. They just had trouble naming faces.
More pointedly, young adults differed little in their ability to name the two kinds of characters. Older adults, by contrast, had much more difficulty naming characters such as Charlie Brown and Garfield than they did Snow White and the Pink Panther -- names with an added semantic boost.
When I asked Burke what we can do to limit our TOTs, she enthusiastically endorsed the idea of using our language skills as much as possible in lively conversations where we are fully engaged and firing on all eight cylinders. Beyond that, she said, there are no all-purpose exercises to ramp up our ability to recall names from the past. Tried-and-true techniques do exist, however, to learn specific names at a specific time and place. We just have to apply these techniques every time we want to learn new names.
Still, I could not resist asking Burke if she thought doing crossword puzzles might have TOT-reducing benefits. She demurred, thinking I meant those rarefied crosswords with esoteric clues and solutions. I did not. I was referring to my mother-in-law.
Antoinette Berardi owned a truckload of moderately challenging crossword magazines with clues such as: Moby Dick author; Mo of Arizona; Mikhail's wife. I have clear recollections of her hunkering down at her kitchen table, turning to a fresh puzzle and blasting through that baby with the intensity of a NASA engineer working to rescue a crew from space. My wife claims that her mother did this to relax. I don't know about that, but I do know this: I have never met anyone with a more impressive memory. And, unlike her son-in-law, she never had to rehearse the name of the place she bought her socks.
Charles Zanor is a practicing psychologist in Massachusetts. Comments:health@washpost.com.
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