Article date: 15 October 2007
- Two thirds of over 60s get by on less than £10,000 a year
- One in 10 retirees scrimp on holidays, clothes, socialising and even heating bills
- One in five is troubled by the increasing costs of running a home
The true extent of the pensions crisis was revealed today as new figures from Norwich Union show that the majority of over 60s are getting by on less than £10,000 a year. Even more worrying is the raft of cost cutting measures they are taking to reduce their outgoings in retirement, which includes scrimping on food, clothes and heating bills.
When asked of any action they had taken to afford retirement, almost a third (32%) of those questioned said they had taken cost cutting measures. 11% of over 60s admitted they have stopped taking holidays, the same number have reduced their spending on clothes, toiletries and footwear and a further 11% have cut down on socialising. In addition, 9% have cut back on the amount of time they keep their heating on, 6% have reduced their spending on food and a further 5% have stopped using a car.
The study was compiled as part of ongoing research to support Norwich Union's equity release offering. The company recently revealed that Britain's over 60s are sitting on a property equity goldmine of £841 billion, equivalent to £82,446 per person.
In the regions, those most likely to make changes to their lifestyles in order to finance their retirement are, in order:
- North East (41%)
- London (40%)
- South West (34%)
- West Midlands (34%)
- East of England (32%)
- Wales (30%)
- East Midlands (30%)
- North West (30%)
- South East (29%)
- Yorkshire & Humberside (27%)
- Scotland (26%)
Despite having to make these cutbacks, only 29% of the over 60s questioned are claiming benefits to help them through retirement, with 70% believing that they are not eligible.
Money worries weigh heavily on the minds of Briton's over 60s, with the increasing costs of household bills of major concern to almost one in five (19%). The future is also a worry, 16% fret about how they would afford long-term care should the need arise. 11% are anxious that they may not have enough money to live comfortably in their retirement and a further 11% are concerned they will not be able to cope with the rising cost of living. Being unable to leave an inheritance is a worry for 6%, while 5% are apprehensive about having to rely on their family for support.
Dominic Fraser-Smith, group product manager at Norwich Union Post Retirement Products, commented: "This research paints a concerning picture of the struggles faced by the UK's over 60 population. Their golden years should be spent enjoying the fruits of their labour rather than worrying about their finances. There should be no need for pensioners to be taking measures such as reducing the amount of heating they use in their homes when they are sitting on a potential goldmine of £841 billion* - the amount of housing equity owned by the UK's over 60 population.
"While equity release is not necessarily the right course of action for everyone, it does have place in the world of retirement funding and it is an option those approaching retirement should consider as part of their retirement planning."
An equity release policy will affect the amount of capital planholders are able to leave to their dependents and could affect any state benefits they receive. There are costs involved when taking out an equity release plan.
TNS carried out face-to-face interviews between 28 August 2007 and 11 September 2007 with 1903 consumers over 60 who owned their own properties.
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Notes to editors:
About Norwich Union
Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest financial adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.