This paper makes six key contributions. First, we implement an innovative technique to capture meaningful and distinct later-life income trajectories that exhibit marked differences in income volatility around retirement ages and, for all clusters except one, broadly stable income after retirement that corresponds to stark inequalities in standards of living. Second, the risks of membership of income trajectory groups (and clusters) follows a strong social gradient, that appears to accumulate over the life-course, as well as according to experiences of later-life precarity in terms of unplanned retirement, partnership dissolution, housing, care provision, pension access and benefits. Third, women are overrepresented in the Always Poor income trajectory group and it appears that this is as a consequence of inequalities in access to pensions and in the financial consequences of partnership dissolution due to divorce/separation or the death of spouse. Fourth, there are sharp declines in two income trajectories in the Luxury and Comfortable groups in the years prior to Statutory retirement age that appears to be associated with a range of factors including type of pension (private or occupational) unplanned retirement and experience of partnership dissolution. Fifth, two income trajectory clusters in the Comfortable group exhibit a spike in income at age 60 and this seems to be associated with high social position in terms of occupational prestige and education. Finally, a small proportion of the population (4%) in the Boom-to-Bust group experience a sharp increase to very high income at age 70 with a similarly sharp decline to a very low income at the very oldest ages that is sufficient only to cover essential costs of living. We discuss each of these findings in turn before considering the policy implications and limitations of the research.

Identifying Income Trajectories

Identification of different shapes of income trajectory brings a valuable insight for research on inequalities in later life with the potential to better understand inequalities in the experience of ageing and adverse outcomes such as frailty, falls, depression and mortality. Most research on inequalities in ageing tends to use wealth, a more stable indicator than income, or a snapshot of income. Our research suggests that there are meaningful patterns in later life income trajectory that can be captured and that might be accommodated within models of later life outcomes for greater insights on inequalities. The greatest volatility in income trajectories, as might be expected, is around retirement ages reflecting the diverse routes and often phased nature of retirement that usually occurs ahead of the Statutory retirement age (Banks, 2006). We consider the drivers of different forms of income volatility at retirement later in the discussion. After retirement, the broad stability in incomes is perhaps a reflection of measures taken to protect older people’s financial position such as the triple lock maintaining the value of the State Pension and other benefits that top up low incomes in retirement (Davis et al., 2021). Significantly, over half of older people in England (54%) are assigned to an Always Poor income trajectory with persistently low-income during retirement that is only sufficient to cover only essential costs of living. This finding tallies with critiques of Laslett’s Third Age (Laslett, 1989) that points to inequality and low income as a barrier for many older people to take up the various opportunities for personal fulfilment that Laslett envisaged in retirement (Rowland, 2012). The low income of a significant proportion of the ELSA sample is confirmed in the wave 9 report which gives the 25th percentile of weekly equivalised income to be equal to £265 and £235 for men and women respectively (Banks et al., 2020).

Income Trajectory Membership and Relation to Social Position and Later-Life Precarity

A central finding of this paper is that both social class and experience of precarity are associated with membership of income trajectories. Those who are in the lower social classes or who experience precarity in later life in terms of housing, pensions, relationships, care (giving/receiving) and unplanned retirement are at greater risks of being Always Poor and less likely to be in the Luxury compared to the Comfortable group. Since, each of father’s education, respondent’s own education and final occupational status are independently associated with income trajectory group membership, the result is consistent with the notion that the impact of social position on later life income trajectories accumulates across the life course and across generations. Those who have attained a high occupational status despite the challenges of coming from a background where their father had little schooling or having not securing high qualifications themselves, are, nonetheless more likely to be Always Poor than an individual with the same occupational status but who holds high educational qualifications and/or has a highly educated father. That social position across the life course, and across generations, is associated with income trajectories in later life is in line with theories of accumulation of dis(advantage) which observe a “systemic tendency for interindividual divergence in a given characteristic (e.g., money, health, or status) with the passage of time” (Dannefer, 2003). For example, adverse experiences in childhood, such as poverty, poor housing and nutrition, stress or low access to education, are socially patterned and influence subsequent outcomes such as occupation and career trajectories, wellbeing and health, capacity to manage stress and form stable relationships and the ability to own a house (Bartley, 2012). All these factors interconnect and combine across the life-course to drive stark inequalities in income trajectories in later-life in various ways. This finding is in line with previous research that has demonstrated empirically the accumulation of (dis)advantage over the life-course and across generations for outcomes such as wellbeing and allostatic load in later life in the UK (van Deurzen & Vanhoutte, 2019; Vanhoutte & Nazroo, 2016).

Causal pathways linking income trajectories and specific forms of precarity in other areas are likely complex, often bi-directional, and differ according to the indicator of precarity. For example, income is a key factor in determining capacity to purchase a property, or a private pension, with those on low income more likely to be restricted to rental accommodation and the State Pension in later life as a result. But a similar argument is less obviously true when it comes to divorce/separation, for example, where low income does not appear clearly associated with greater risks of divorce/separation (Brown & Lin, 2012). More generally, low income among younger adults is known to be associated with poor health and wellbeing, although causal directions and pathways are also contested (Mackenbach, 2020), which then plausibly elevates factors such as the risk of involuntary retirement due to poor health/disability (Banks, 2006) and greater need for care in later life (Humphries et al., 2016). On the other hand, experience of partnership dissolution, involuntary retirement, providing or requiring high-levels of care all might also plausibly drive lower income in retirement through mechanisms such as a loss of shared income from a partner (especially for women) (Buckley & Price, 2021; Lin & Brown, 2021; Purdam & Prattley, 2020) and loss of income in the final years of work with implications for subsequent pension wealth (Banks, 2006; Vlachantoni, 2010). Experience of precarity and income are likely often self-reinforcing; for example, those who always rent likely lack sufficient income to buy a house but continue to incur housing costs through later-life whilst those in more affluent groups have no such housing costs having paid off mortgages (Colic-Peisker et al., 2014).

Sex Inequalities in Income Trajectory Membership

Our findings on sex and income trajectory membership are directly in line with a body of research that shows older women have long been at risk of low income and economic hardship in later life due to structural inequalities in employment and pension access, particularly following partnership dissolution through bereavement and divorce/separation (Buckley & Price, 2021; Ginn, 1991; Lin & Brown, 2021; Purdam & Prattley, 2020; Vlachantoni, 2012). The inequalities in pension access in the UK are stark with the median pension wealth six-times higher for men compared to women (£212,000 versus £35,000) (Buckley & Price, 2021). Research shows that after divorce, separation or widowhood, women tend to experience a sharper decline in income linked in large part to inequalities in the way pension wealth is divided, and they consequently suffer a rise in risk of financial hardship (Buckley & Price, 2021; Gillen, 2009; Purdam & Prattley, 2020).

Income Volatility Around Retirement

Two income trajectories show a marked decline in income from the age of 50 to 60 before levelling off through the retirement years. Since the trajectories lie in the Luxury and Comfortable groups, neither approach the levels of income in the Always Poor group, but nevertheless, these declines represent a potentially important change in circumstances during a key phase of later life. The pre-retirement decline in income for the cluster within the Luxury group appears to be associated with partnership dissolution including divorce/separation and the death of a spouse. As noted above, research suggests that divorce/separation and death of spouse impact negatively on income particularly for women (Buckley & Price, 2021; Gillen, 2009; Lin & Brown, 2021; Purdam & Prattley, 2020). Similarly, there is evidence to suggest that the stresses of partnership dissolution in later life may well impact on aspects such as wellbeing (Tosi & van den Broek, 2020) with potential implications for work and income prior to retirement. The pre-retirement decline in income for the cluster within the Comfortable group is associated with holding a private pension and not an occupational pension. One explanation for this result may be linked to the distinction that private pensions are less likely than occupational pensions to be ‘Defined Benefit’ and more likely to be a ‘Defined Contribution’ pension (Banks et al., 2020). In a Defined Benefit pension, the employer guarantees a given level of pension benefits to an employee in retirement based usually on final salary and length of service meaning that there are strong incentives not to retire early or to switch roles with less responsibility or part-time work with lower salaries. In a Defined Contribution pension there fewer incentives for continuing to work up to Retirement age or moving to part-time work in the final years of work (Banks, 2006). Thus, it may be that holding a private pension is associated with declines in income in the final years of work because early-retirement, moving to a role with less responsibility or to part-time work all reduce income and are more common among those with private pensions compared to occupational pensions. Similarly, the spike in income trajectory observed at the age 60 in two clusters may also be linked to the incentives for Defined Benefit pension holders to strive end their careers on the highest salaries. Our analysis suggests that this income spike is associated with being in a managerial/professional occupation or holding degree-level qualifications and such groups are the most likely to have access to a gold-standard Defined Benefit pension (Banks, 2006).

Boom-to-Bust in Later-Life Income Trajectory

The Boom-to-Bust group, who experience very high levels of income around age 70 that drop to the lowest incomes at the oldest ages (80+) are a group of particular policy concern given their financial situation at end-of-life. Those in the Boom-to-Bust group are characterised by having an increased likelihood of holding a private pension and higher qualifications and a lower likelihood of holding an occupational pension compared to the Comfortable group. Again, the greater tendency for private pensions to be defined contribution rather than defined benefit may underpin the results here. Those who hold a defined contribution pension have greater flexibility to ‘cash-in’ their pension leading to a spike in income during retirement and subsequent decline without regular pension payments to rely on.

Policy Implications

There are a number of policy implications that flow from this research. First, we identify that a significant portion of the older population have persistent low income in later life and experience precarity across many other domains. A consequence is that policy responses to significant events such as the financial crisis, the Coronavirus pandemic and its aftermath should consider that for older people in such circumstances, small changes to costs of living or personal income streams and public services might easily tip individuals in a situation where they cannot cover the basic costs of life. Similarly, cuts in UK public spending in areas such as public transport, social care, neighbourhood upkeep and public leisure facilities have most impact on the poorest and elderly, removing opportunities for social participation (Hastings et al., 2017, 2021) which has been connected to adverse health outcomes in later life (Sacker et al., 2017). Cuts in public spending without sufficient attention to the circumstances of a sizeable vulnerable older population may well bring unintended consequences such as rising use of food banks and the levelling off in life expectancy improvement that followed the austerity policies implemented in the UK (Jenkins et al., 2021; Macdonald & Morgan, 2020; McCartney et al., 2022). In the aftermath of the Coronavirus pandemic and an unfolding cost of living crisis in the UK, it is important that policy responses do not neglect vulnerable older populations, particularly around social care provision which is considered at breaking point (Humphries et al., 2016).

A concerning trend for the future is that many of the indicators of precarity that are considered in this paper are increasing in prevalence and evidence-based policies are required to mitigate the impact on a growing later-life precariat. For example, trends point to a growth in older people who live in rented accommodation and who experience later-life divorce/separation (Brown & Lin, 2012; Storey & Coombes, 2020). Older renters are among the poorest and least able to cover rent in later life, they are more likely to experience stress associated with the potential to lose their home or to live in sub-standard or inappropriate housing often lacking the capacity to secure housing adaptions to meet their needs (Colic-Peisker et al., 2014; Storey & Coombes, 2020). As norms around marriage and divorce shift, the population who experience divorce in later life is increasing as is living alone. The impact of divorce on women’s income in later life remains, on balance, unfair (Buckley & Price, 2021) and divorce in later life has been linked with poorer wellbeing among those affected (Tosi & van den Broek, 2020). A growing older population living alone may bring implications for informal care provision in the absence of care that might previously have been covered by a spouse, particularly in the context of sharp reductions in social care budgets (Humphries et al., 2016). There is a need then for policies to ensure pension wealth is fairly split after later life divorce and that social care responds to the needs of a growing population of older people who live alone. Similarly, development of policies to protect the housing security of older renters and to ensure they can secure necessary housing adaptions would seem particularly important in the future particularly in the private rental market.

The Boom-to Bust group are of particular interest in a policy sense given the evidence of spending their final years with very low levels of income. The analysis suggests that membership of this group is particularly associated with holding a private pension and may be linked to older people withdrawing their pension during retirement. Further detailed quantitative and qualitative research would seem valuable to understand the experiences of this group in order to inform appropriate policy responses.

A final policy contribution of this paper is to respond to arguments around intergenerational fairness, that pit the perceived advantageous position of older as responsible for the challenging circumstances faced by younger people (Willett, 2011) and in some cases make a case for removing some the benefit and other protections received by older people. Such arguments sit uneasily with the extent of low income experienced by many older people in England during their retirement. The inequalities within the ‘young’ and ‘old’, and their structural determinants, some shared, would seem more pressing than pitting generations against each other (Bristow, 2019; True, 2019).

Limitations

This paper is subject to some limitations that ought to be taken into account. First, as with all survey data, ELSA is subject to missing data and those who drop out of the survey are more likely to be in poor health or experiencing precarity. It is likely that we underestimate the extent of low income and its intersection with later life precarity as a result. One of the ways we counter issues of non-response is through the inclusion of refreshment samples in our analysis. Other statistical approaches for handling non-response have limitations that led us not to pursue them here given our use of refreshment samples. Multiple imputation is not robust to situations where data is Missing Not At Random (MNAR) which would seem plausible for this research where indicators of precarity themselves (or other unobserved variables) might reasonably be expected to be associated with attrition in the same precarity indicators. While longitudinal weights are available in ELSA, these are not equipped to deal with missingness that is MNAR and weights are only provided for the sample who are present all waves, severely reducing the sample size for our research which draws on data across all of the ELSA waves. Full details of missingness are provided in the English Longitudinal Study of Ageing technical report and we produce our own figure in Supplementary material (Fig. S3) which illustrates the scale of non-response and refreshment samples across the survey.

Second, as noted above, many of the associations likely run in two directions and the nature of the study does not allow us to explore in more details the extent to which associations run in one direction or the other. We do not make specific claims around the direction and relative strengths of any causal connections between indicators of precarity. Rather we would suggest that it is most likely that different forms of precarity intersect with each other in later life in complex ways. Finally, we do not include time in our analysis of income trajectories so major events, such as austerity, are not factored into our latent class analysis of income trajectories. Similarly, we do not distinguish when events such as divorce occur and must acknowledge the potential for the impact of divorce on income trajectory membership to vary according to the stage of life at which it occurs or to be changing over time.

In conclusion, the central contribution of the paper is to empirically capture characteristic groups of income trajectories in retirement and to show that membership of these groups are stratified by gender and social class, but are also associated with and intertwined with precarity in other areas of later life. The Always Poor comprise over half the older population, and are vulnerable not just in terms of low income but also in experiences of other precarity in later life. Those older people who find themselves Always Poor are more likely to be women and in lower social classes, and are particularly vulnerable to adverse outcomes, such as mortality and poor health, in the face of cuts in public spending.