Aviva’s Real Retirement Report UK pinpoints genuine concerns about retirement

It seems equity release could become an increasingly popular option in the near future if new figures from Aviva are accurate.

Aviva’s quarterly Real Retirement Report shows that unexpected expenses are forcing over 55s to dip into savings that would otherwise have been used for retirement income.

The study found that, over the next five years, people aged over 55 fear the rising cost of living more than anything else (64%). This is a significant increase from the last report (18% in May) and underlines how the fallout from the recent economic turmoil and the current environment of government cuts have impacted on people’s outlooks.

Just under two thirds (61%) of over 55s are worried about how they will pay for unexpected expenses of £500 or more. The report shows that despite the large number of over 55s having had to pay out for unexpected expenses, only 6% have made any provision for long-term care, 9% for private medical care and 23% for the upkeep of their homes.

Over 55s funded their unexpected expenses by dipping into emergency savings funds (45%) and by using income-generating savings (25%). In addition, 17% cut back in other areas, 11% took out a credit card or loan and 6% sold assets.

Clive Bolton, ‘at-retirement’ director for Aviva, says: “Over the last 30 years, people have generally seen retirement as an opportunity to relax after a long working life and enjoy the fruits of their labour.

“However, when you consider that for a savings pot of £16,296 you would get an annual gross income of just £117 from the standard branch-based notice account, you can understand why many over 55s are very worried about their finances. In fact, these figures reveal that one in five over 55 households is struggling to get by on almost a third of the national average income.

“Retirement income is also relatively fixed which is why any rise in the cost of living is particularly concerning for this age group. This coupled with the fact that people often have to pay for unexpected expenses for which they have made no provision highlights how vitally important it is to build up retirement savings over your entire life.”