Incomes rise, but debts increase and savings fall for over-55s
The typical monthly income has increased by 4% at the start of this year, but certain age groups are still financially struggling due to significant pressure from unsecured and secured debt, according to Aviva’s latest Real Retirement Report.
The UK’s over-55s saw their total savings increase over the last quarter, with the typical pot rising from £14,198 in Q1 2012, to £15,756 in Q2 2012. The main driver behind this is increases in the saving pots of the retiring (65-74) rather than the pre-retirees (55-64) or long-term retired (over-75s).
Those aged 65-74 have benefitted from the removal of the default retirement age (DRA), allowing retirees to work longer, while still claiming their State Pensions. In addition, this age group has typically boosted their savings with a lump sum from their annuities, choosing to put this money into savings for later life rather than spend it now.
Clive Bolton, at retirement director of Aviva comments: “The overall fortunes of the UK’s over-55s are on an upward curve with both incomes and savings increasing. However, when you look at the individual age groups, you find that much of this improvement is driven by the retiring (65 – 74) rather than the long-term retired (over-75s) and the pre-retirees (65-74).
“With the average amount saved each month falling over the course of the year and the average debt held almost a third (31%) higher than at this point last year, it is clear that there are some who are still struggling with financial pressures.
The rising costs of day to day expenses has seen all three age groups dip into savings, suggesting that despite some starting to put away money each month, they have to dip into their savings by the end of the month.
Bolton added: “As incomes increase and with over-55s’ inflation easing back to 3.21% in May, this is a good opportunity for people to boost their savings and try to pay down their debts.”
“The more people can do to secure their retirement income before they stop working, the more prepared they will be to meet the expenses they encounter during their later years.”