Aviva report: over 55’s reducing debt and increasing savings
The latest quarterly real retirement report from Aviva has indicated that more people over the age of 55 are making debt repayment and savings a priority in the current economic climate.
The report, which monitors the finances of people over the age of 55 in the UK, has indicated that 73% of people are concerned about the impact that inflation will have on the costs of living over the next six months.
However, this number has fallen from the last quarterly report in February 2011, which had indicated that 83% of people had these fears. This has suggested that many people are now beginning to adapt to the difficult financial environment that many people in the UK currently face.
The report has shown that the average income of people over the age of 55 has grown by 0.65%. However the rise in inflation over the last year was 4.7%, which has has left many pensioners facing a cut in income in real terms.
Between May 2010 and may 2011, the average rise in income for people in the over 55 age group amounted to just £8 per month, to a total pay of £1,249 per month.
However, when the figures were broken down into the three stages of retirement, the preretirees (age 55 – 64) saw their monthly income fall by £28 to £1,324 per month. The retired age group (age 65 – 74) saw their monthly income rise by £62 per month to an average of £1,426 per month, whilst the long term retired (age 75+) were hit the hardest and saw their income fall by £238 to £1,178 per month.
The report has revealed that over the last quarter, the average debt of people over the age of 55 fell by nearly 14% to £17,112. On average, people in this age group have paid back £2,766, with people looking to reduce overdraft debt the most.
Between February 2011 and May 2011, the average debt held on overdrafts fell by £1,214 to £988, and this was followed by the average amount of hire purchase debt which fell by £829 to £1,169. The average personal loan debt fell by £414 to £5,569, store card debt by £389 to £831 and the average debt held on credit cards fell by £338 to £2,973.
Approximately 59% of people over the age of 55 are now making monthly savings. This has risen from 57% in February 2011.
Commenting on the study, Clive Bolton from Aviva, suggested that many people have adapted their spending habits and are taking control of their finances, which is helping to ease their fears over the impact a slow economic recovery will have in their retirement income.
Mr Bolton said: “The sixth Real Retirement Report has found the over-55s under pressure from the rising cost of living… it is encouraging to see a picture emerging of a group showing determination to to tackle this by paying down outstanding debts and boosting regular savings.”