Article date: 7 May 2014
- Higher incomes with £150 extra a month
- Saving improving with an average £198 a month – best in three years
- Spending at a high, standing at £816 a month
- Unsecured debt has fallen
- 66% own their home outright – a steady rise in mortgage-free over-55s
Britain’s over-55s are cashing in on the improving economy with rising incomes leading to more than £150 extra in their pockets a month compared to the same time last year, Aviva’s latest Real Retirement Report shows.
Findings show savings pots have increased too, but the level of monthly expenditure has risen with the cost of living putting increased pressure on household budgets.
Aviva’s Spring 2014 Real Retirement Report assesses consumer finances across the UK’s three ages of retirement: pre-retirees (55-64 year olds) retiring (65-74 year olds) and the long-term retired (over-75 year olds).
Growing income among over-55s:
The over-55s typically receive £1,373 a month in income – an extra £151 a month compared to the same time last year (Q1 2013). They are pocketing £216 more compared to two years ago (Q1 2012) when their overall income was £1,157, and £258 more compared to Q1 2011.
Those approaching retirement - aged between 55-64 years - have seen the biggest increase with a typical £1,402 per month compared with £1,368 for those aged 65-74 years and £1,290 for those aged over-75 years.
Savings and investments are partly behind the boost, now providing income for a larger number of over-55s.
Nearly a third (29%) named this as a source of income compared with 24% the same time last year (Q1 2013) and 25% for the previous years (Q1 2012 and 2011).
Savings levels vastly improved as over-55s seek financial stability:
The over-55s have stashed away more money to protect themselves against the rising cost of living and the fear of having enough money in retirement. The amount of money put away in savings and investments reached a high of £18,632 in Q1 2014 - last reaching these levels in Q3 2012 when they stood at £17,750.
The 65-74s have the largest savings pots at £25,938 compared with £13,158 for the 55-64s and £13,750 for the over 75s. On average, households are putting away £198 a month in savings.
A smaller proportion of over-55s, than in previous years, do not have any savings but it is still significant at 28%. Monthly saving habits are also improving with those not saving anything down to 9% from a high of 15% in 2011.
Rising cost of living bites:
Spending among the over-55s has hit an average of £816 a month – a high point for the Real Retirement Report.
Food, fuel and lighting, housing, motoring and entertaining, recreation and holidays are proving the most expensive of monthly purchases. Of these, all except housing (mortgages and rent) have increased on the same time last year (Q1 2013).
Over-55s are less reliant on borrowing:
The level of unsecured debt owed by the over-55s has fallen across credit cards, loans and overdrafts in 2014. Credit card balances have been fluctuating over the years, yet have now fallen to an average of £777 – which has been reducing over time.
In total the over-55s owe an average of £2,022 which is slightly higher than this time last year (Q1 2013) at £1,910 but lower than £2,166 in Q1 2012 and £2,370 in Q1 2011.
Property remains the largest asset for the majority of over-55s with 66% owning their own home outright and 17% owning their home but with an outstanding mortgage. This marks a steady rise in those that are mortgage free. The value of property is the highest since Q1 2011, reflecting the improved housing market, and stands at an average £240,641.
Clive Bolton, managing director, retirement solutions, Aviva, said:
“Improved levels of income will make it easier for the over-55s to maintain the standard of living they desire. The fact that people are saving hard is hugely encouraging given the strong campaigning by the industry for people to create a better level of financial stability for them and their families in retirement. Unexpected expenses will impact less on their finances if they have a decent nest-egg.
“The cost of living is a continual worry for the over-55s who typically suffer more from increases to household bills since it makes up a bigger proportion of their outgoings. Having better incomes and more robust savings will help counteract the increases in expenditure for many and is a sign of an improving economy.”
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