Retired household incomes rise above 2008 crash levels

Average income for retired households continued to rise following the economic downturn and has gone above the 2007/08 level – in contrast to non-retired households which have failed to get back to that same peak.

The Office for National Statistics said that median income provisional estimates for 2015/16 suggest for retired households the median is now £21,500. That was £1,700 higher in real terms than in 2007/08 (£19,800).

By contrast, the provisional 2015/16 results indicated that the value of median income for non-retired households is £29,200, which remains £400 below its level of £29,600 in 2007/08.

The figures were produced from the ONS Nowcasting study, which provided initial estimates of household income indicators. Unlike forecasting, which relies heavily on projections and assumptions about the future economic situation, Nowcasting makes use of data already available for the period of study.

This information includes data on earnings, employment and inflation, as well as details of how changes to the tax and benefits system affect different types of households and individuals.

Based on these provisional estimates, the median household disposable income was £26,400 in 2015/16. After taking account of inflation and changes in household composition over time, this figure was £400 higher than the pre-economic downturn level observed in 2007/08 (£26,000).

For both retired and non-retired households, the provisional estimates for 2015/16 showed that the value of median disposable income has increased since its recent low in 2012/13, after taking account of inflation and changes in household composition over time, officials said.

The ONS report stated: “However, the pattern of change since the start of the economic downturn has been very different for retired and non-retired households.

“While incomes of non-retired households remained higher than those of retired households, since 2007/08, median income for retired households has increased in most years, with the value rising to £20,200 in 2012/13, £400 higher than in 2007/08.

“By contrast, the median income for non-retired households decreased over the same period, and was £2,600 lower in 2012/13 than in 2007/08.

“However, since 2012/13, the value of the median for non-retired households has grown at a faster average rate (2.7% per year) than for retired households, for whom the median has grown at an average rate of only 2% per year.”

The report added: “Median household income declined after the start of the economic downturn, with most of that decrease occurring between 2009/10 and 2012/13, with median incomes in 2012/13 £1,300 lower in real terms than in 2009/10.

“However, since 2012/13 there has been a real terms increase, with the provisional 2015/16 figure indicating it is around 8% higher than in 2012/13.

“Taking a longer-term perspective, median disposable income is estimated to be over twice (2.2 times) as high in 2015/16 as in 1977, growing from £12,100 in 1977 at an average rate of 2.1 % per year.