Over 55s: savings and incomes rise but debts are growing even faster

The Momentum UK Team 12 July 2012

Increases in income and savings of the over 55s have been outstripped by debt, according to Aviva’s latest Real Retirement Report.

Since the start of 2012, average income levels for the over 55s have increased by 4pc from £1,303 to £1,361. Savings have also risen with the average worth of the over 55s’ saving pots reaching £15,756 - an increase from £14,189 at the beginning of this year.

Savings growth was attributed to the savings provisions of those in the over 65 age bracket as a major catalyst in this rise as opposed to those of ‘pre-retirees’ in the 55-64 category.

However, in many cases, the debt which faces the over 55s outweighs the rise in incomes and savings. According to Aviva, the average amount owed by someone over the age of 55 is £22,401 compared to £17,112 at the same time last year.

The removal of the Default Retirement Age (DRA) has meant that people can work longer and save more. Those over the age of 65 may also have enhanced their savings with a lump sum from their annuity.

The report suggested that there is a growing number of retirees claiming their State Pension whilst still continuing to work (often on a part-time basis) could be a reason for the rise in incomes.

Savings have fallen for those in the 55-64 and over 75 category. The oldest category (75 and over) have seen their savings plummet by nearly half in the last two years from £22,500 in 2010 to £12,998 today. The savings provisions of respondents aged between 55 and 64 have dropped from £11,176 to £9,373. The report suggested that this could be because they are still trying assist other family members whilst saving for their futures.

Clive Bolton, Retirement Director at Aviva said:

“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.”

“As incomes increase and with over-55s' inflation easing back to 3.21% (May - Q2 2012), 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.”

Call for support

The report also highlighted the fact the older generation are keen for more support leading up to their retirement in order to help them make the right decisions about saving for their retirement. 68pc claimed that they would appreciate some support from their employers such as financial workshops or literature and a recommendation of financial advisors that could offer guidance.

Clive Bolton said:

“Planning is vital if you want a comfortable and stable retirement. This is not only planning throughout your retirement to ensure that you put enough aside but also planning your ultimate exit from your career and making use of all the options available to help improve your finances.”