New research from insurer Aviva has shown that two fifths of ‘pre-retirement’ people aged 55 and over, are failing to accrue any savings and entering retirement with substantial debt problems.
Non- mortgage debts do not tend to be a problem for the pre-retirement group and the average household does not tend to enter retirement with debts from credit cards, overdrafts or loans.
However, 20% of people still owe at least £75,000 on their mortgage when they approach retirement.
The research also showed that one in five of those aged 55-64 are living on less than £750 a month.
The first ‘Real Retirement’ report from Aviva reviewed the financial situations of three age groups; pre-retirees (55-64), retiring (65-74), and long-term retired (over 75) and found that pre-retirees were far worse off than those who had already retired.
One in five people in the pre-retirement group were struggling to survive on less than £750 a month and an increasing number of those entering retirement were doing so riddled with debts.
The average savings amount for those aged 55-64 is £57,002 but the median, or most typical, amount is £8,593. The report says the high figure has been skewed by a few very rich people which disguises the problematic situation of the majority.
The average monthly income across the three age groups is £1,284, which is 31% less than the average monthly income of the UK.
Pre-retiree’s could in fact benefit says the report, as once they hit retirement age their state pensions will push their monthly incomes over the £750 threshold.
Clive Bolton, of Aviva, said: "Baby boomers are far more comfortable with debt than previous generations. Therefore we are seeing an increasing number of people entering retirement with unsecured and secured borrowing. Aviva research shows approximately 10% of the proceeds of equity release is used to repay debt."
Post new comment