First Aviva Real Retirement Report outlines financial challenges for today's over 55s

Article date: 10 February 2010

  • Two fifths (40%) of 55-64s are saving nothing per month
  • One fifth of 55-64s still owe more than £75,000 on their mortgage
  • Growing disparity between the haves and the have-nots

Aviva’s first Real Retirement Report published today reveals that while many over 55s have significant financial concerns, those approaching retirement have finances in far worse shape than those either aged 65-74 or over 75.  

Pre-retirees (55-64) have the lowest savings (£8,593), lowest incidences of home ownership (76%) and largest average mortgages (£16,694). Two fifths (40%) of pre-retirees save nothing per month and one fifth (20%) still owes more than £75,000 on their mortgage.

All these findings were revealed in this new quarterly report from the UK’s largest insurer which reviews the finances of the three ages of retirement – pre-retirees (55-64); retiring (65-74) and long-term retired (Over 75). The first issue also takes a detailed look at annuities and this is detailed in a separate news release.

Disparity between haves and have nots:
The report also reveals that there is a wide divergence between the richest and poorest in all age groups. This gap is at its largest in the younger age group (55-64) so while the average amount of savings for this group is £57,002 the median - which represents a more typical saver - is a mere £8,593*. 

This is because a small number of very rich people disguise the relative poverty of a large minority. This difference in savings is less severe for the retiring (average: £58,155 vs. median: £13,957) and the long-term retired (average: £63,576 vs. median: £18,748).

Table One: Distribution of richest and poorest over 55s by savings:

 

Pre-retirees

Retiring

Long-term retired

% with savings of less than £500

29%

20%

16%

% with savings of more than £100,000

18%

16%

15%

% who fall between the extremes

53%

64%

69%

Income:
The average income for these age groups falls with age - pre-retirees (£1,433), recently retired (£1,385) and long-term retired (£1,136). However, the number of people who have an income of less than £750 per month actually falls between the ages of 55-64 (23%) and 65-74 (19%) as receiving their state pension means that some people’s income actually increases.    

There is only a 21% difference between the monthly income of the pre-retirees and the long-term retired. This is in itself concerning as they have significantly more financial commitments such as outstanding mortgage debt; 55-64 (average: £16,694), 65-74 (£8,011) and over 75 (£3,277).

Savings/debt:
Pre-retirees (£8,593) also have fewer savings than the retiring (£13,957) and the long-term retired (£18,748). Indeed - with retirement on the horizon – 40% of pre-retirees are saving nothing each month.  While non-mortgage debt is not a significant issue for most people over 55, some people are still working to pay off debt and pre-retirees have the highest level of debt (£2,851) – potentially reflecting the ‘baby boomer’ relaxed attitude to debt.  

The majority (80%) of consumers in these age groups own their own homes – outright (62%) or with a mortgage (18%).  A shift in attitudes to homeownership is starting to show and the younger age group (76%; 55-64) is the least likely to own their own home (compared to 65-74; 84% and over 75; 81%).

The pre-retirees have the lowest value properties (£225,988) and are the most heavily mortgaged with over 26% still having a mortgage.

Retirement worries:
Across the board, the biggest worry for the over 55s is the rising cost of living (74%) followed by unexpected expenses (45%) and the falling return on savings (38%).   This focus on increasing costs, falling income and unexpected expenses really highlights the precarious state of many retirees’ finances.

Pre-retirees are concerned about retiring (19%) and redundancy (12%) which really highlights the fact that many people do not see retirement as ‘golden years’ but rather as a worrying time of financial and social change.   

Clive Bolton, at-retirement director for Aviva Life, comments: “By 2011, there will be almost 18 million people in the UK who are over 55. At Aviva, we recognise that people who are part of these three ages of retirement have different worries and priorities than many other consumers. Therefore, we have decided to launch the Real Retirement Report to promote a better overall understanding of this age group. 

“This first report shows a worrying picture whereby those who are already retired are actually – to a large extent - financially better off than the pre-retirees. Their income might shrink as people retire but the current generation of retiring and long-term retired have a higher incidence of homeownership, lower debts and more savings than the pre-retirees. There is also a growing disparity between the haves and the have-nots when you look at the three ages of retirement.

“Although we would strongly advise people to start saving for their retirement as early as possible, we also need to ensure that those approaching retirement have access to the right information and support to maximise their income in their later years.”

-ends-

Download The Aviva Real Retirement Report - February 2010 (PDF 1.26MB)

Press office contacts:
Sarah Poulter           
Telephone: 01904 452828                   
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Louise Soulsby                
Telephone: 01904 452617                   
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The Wriglesworth Consultancy:
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Notes to editors:

Methodology
All remaining data was sourced from the Aviva Real Retirement Index. This report is a definitive look at the personal finances of the UK’s over 55 population. Not only does it look at personal wealth, income sources and expenditure patterns but also track how these change in the "three ages" of retirement. In addition to the regularly data, each quarter a spotlight will be shone onto a different relevant topic with Annuities being the choice for Q1 2010. 

* Technical Notes:

  • A median is described as the numeric value separating the higher half of a sample, a population, or a probability distribution, from the lower half. Thus for this report, the median is the person who is the utter middle of a sample.
  • An average is a single value that is meant to typify a list of values. This is derived by adding all the values on a list together and then dividing by the number of items on said list.  This can be skewed by particularly high or low values.

About Aviva
Aviva, the international savings, investments and insurance group, is the world’s fifth largest insurance group, serving 50 million customers across Europe, North America and Asia Pacific. 

In the UK, Aviva is a leading provider of life, pensions, investment, general insurance and health products to more than 20 million customers. Aviva also provides roadside assistance through RAC. Products are distributed through a number of channels including IFAs, brokers, corporate partners and direct to customers via the internet.

Aviva's UK Insurance business has a market share of around 15%, making it the largest general insurer in the UK. The business is focused on insurance for individuals and small businesses.

Aviva's life and pensions business in the UK has a total market share of 12% and a top three position in its key markets of savings, protection, and annuities. Aviva’s news releases and a selection of images are available from the internet press centre at www.aviva.com/media.

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