Over 55s Turn to Saving and Debt Cutting in Bid to Increase Retirement Finances
22 July 2011
As the rising cost of living outstrips any income increase, many over 55s are turning to saving and cutting debts as ways of stabilising their retirement finances, says a new report from Aviva. The "Real Retirement" report found that while the income for over 55s has risen by 0.65%, in the past year, adjusted inflation for this age group rose by 4.7%.
The most severely affected by this are the over 75s who have seen their average monthly income fall from £1,416 (May 2010) to £1,178 (May 2011).
The same report also highlights that nearly 40% of over 55s have seen "significant, and often unwanted and unplanned, changes to their careers" between ages 55 and 65. Understandably 68% of those suffering career changes said it had a detrimental effect on their retirement finances, with 11% considering using assets such as their house to pay for retirement.
Despite these bleak financial figures it seems that financial uncertainty has spurred the over 55s into saving more and cutting debts. The number of over 55s who are saving each month has risen from 57% to 59%. The monthly amount being saved has also risen by almost £6 a month to £32.94, showing that the over 55s have begun saving in earnest for their retirement years.
The over 55s are also working to reduce their debts, with the amounts owed on credit cards, personal loans, overdrafts, store cards and hire purchase all falling from February 2011 to May 2011.
Clive Bolton, 'at retirement' director at Aviva, said "With changes to pensions and the threat of unemployment causing concern among the over 55s, it is encouraging to see a picture emerging of a group showing determination to tackle this by paying down outstanding debts and boosting regular savings".
Despite the positive action being taken, 73% of over 55s are still concerned about rising living costs. For those who do still have worries equity release could be an option. An equity release plan allows a tax free cash lump sum to be released from the home which can be used to ease financial pressures. In fact, the lump sum can be spent in any way the customer wishes and a drawdown equity release plan allows the lump sum to be released in stages. There's also the option of a home reversion plan, which allows you to sell all or part of your home in exchange for a cash lump sum.
We can offer independent advice on equity release to homeowners aged between 55 and 95. To arrange your free, no obligation, initial consultation call our UK based contact centre on 0800 531 6027. Lines are open Monday - Friday 9am-5.30pm. Our expert advisers will talk you through the pros and cons explaining how all plans reduce the value of your estate and may affect entitlement to state benefits.
This is an equity release plan. To understand the features and risks ask for a personalised illustration.
Key's typical fee is 1.65% of the amount released, payable only on completion of a plan. Think carefully before securing other debts against your home.