Aviva’s Real Retirement report reveals that the over-55s are cutting back on spending on entertainment and holidays in favour of debt repayment – and are dipping into their savings to do so.
Retirees’ savings plummet
The average savings pot for over-55s has fallen by almost £4,000 in the last quarter, according to today’s Real Retirement report from Aviva. Average savings have dropped from £18,364 to £14,544 – mostly because this age group has turned to savings to keep up with the cost of living.
The drop in savings pots has particularly affected those aged 65 to 74, whose total savings plummeted from £30,624 in the third quarter of 2012 to £18,748 in the fourth quarter. The over-75s have also seen a drop, from £13,332 to £8,748. To make sure you make the most of your savings, visit our guide to finding the best savings account.
Pensioners cut back on spending
The report reveals that this drop in savings is caused by a squeeze on retirees’ incomes, with many over-55s cutting back on non-essentials and topping up spending on essential items with their savings.
Monthly spending among over-55s has dropped by £69 in the last year, with retirees prioritising debt repayment, travel and fuel over entertainment, holidays and clothing.
Spending on debt repayment has increased by 8% and spending on clothing has dropped by 13% in the last quarter, suggesting that pensioners are feeling the pinch as much as younger consumers.
Working past retirement age
More retirees are choosing to work beyond the state retirement age in order to maintain their standards of living. Almost a quarter of 65 to 74-year olds are still earning a wage, and in the past three years, the number of retired people listing wages as part of their income has increased from 18% to 23%.
The fact that the average monthly income for the over-55s has increased by just £109 in the past two years could be another reason for more retirees working past the retirement age.
Clive Bolton, managing director of Aviva’s At Retirement business, says: ‘Whether it’s through choice or necessity, the fact that more people are working for longer shows how vital it is to work hard to achieve financial stability, so you can enjoy your retirement.’