While many over 55s have significant financial concerns, those approaching retirement have finances in far worse shape than those either aged 65-74 or over 75, according to Aviva's first Real Retirement Report.
Pre-retirees (55-64) have the lowest savings (£8,593), lowest incidences of home ownership (76 per cent) and largest average mortgages (£16,694).
Two fifths (40 per cent) of pre-retirees save nothing per month and one fifth (20 per cent) still owes more than £75,000 on their mortgage.
All these findings were revealed in this new quarterly report from the UK's largest insurer which reviews the finances of the three ages of retirement-pre-retirees (55-64); retiring (65-74) and long-term retired (Over 75).
The report also reveals that there is a wide divergence between the richest and poorest in all age groups. This gap is at its largest in the younger age group (55-64) so while the average amount of savings for this group is £57,002, the median-which represents a more typical saver-is a mere £8,593.
This is because a small number of very rich people disguise the relative poverty of a large minority. This difference in savings is less severe for the retiring (average: £58,155 vs. median: £13,957) and the long-term retired (average: £63,576 vs. median: £18,748).
The average income for these age groups falls with age-pre-retirees (£1,433), recently retired (£1,385) and long-term retired (£1,136).
However, the number of people who have an income of less than £750 per month actually falls between the ages of 55-64 (23 per cent) and 65-74 (19 per cent) as receiving their state pension means that some people's income actually increases.
Pre-retirees (£8,593) also have fewer savings than the retiring (£13,957) and the long-term retired (£18,748). Indeed-with retirement on the horizon-40 per cent of pre-retirees are saving nothing each month.
While non-mortgage debt is not a significant issue for most people over 55, some people are still working to pay off debt and pre-retirees have the highest level of debt (£2,851)-potentially reflecting the ‘baby boomer' relaxed attitude to debt.
Eighty per cent of consumers in these age groups own their own homes-outright (62 per cent) or with a mortgage (18 per cent). A shift in attitudes to homeownership is starting to show and the younger age group (76 per cent; 55-64) is the least likely to own their own home (compared to 65-74; 84 per cent and over 75; 81 per cent).
The pre-retirees have the lowest value properties (£225,988) and are the most heavily mortgaged with over 26 per cent still having a
mortgage.
Across the board, the biggest worry for the over 55s is the rising cost of living (74 per cent) followed by unexpected expenses (45 per cent) and the falling return on savings (38 per cent).
This focus on increasing costs, falling income and unexpected expenses highlights the precarious state of many retirees' finances.
Pre-retirees are concerned about retiring (19 per cent) and redundancy (12 per cent) which really highlights the fact that many people do not see retirement as ‘golden years' but rather as a worrying time of financial and social change.
"By 2011, there will be almost 18 million people in the UK who are over 55,” said Clive Bolton, at-retirement director for Aviva Life.
"This first report shows a worrying picture whereby those who are already retired are actually-to a large extent-financially better off than the pre-retirees.
“Their income might shrink as people retire but the current generation of retiring and long-term retired have a higher incidence of homeownership, lower debts and more savings than the pre-retirees.”
Keep up to date with the latest news by receiving our
MoneyMaker newsletter.
