The report shows that the over-55s are beginning to save less, as their confidence grows around property prices and healthier income levels. Economic confidence is at an all time high in the report.
Rather than boosting their savings with their disposable income, the over-55s are using credit cards, personal loans and overdrafts to prop up a renewed interest in spending, particularly on luxury items. These are items that are most likely to come off the shopping list in hard times – including holidays, clothing and eating out. Coincidentally, these are also some of the items that the over-55s say they will cut back on if they need to do so in retirement.
Savings this quarter have fallen slightly with the over-55s typically putting away £46 a month, £2 less than they did in Q1 2014.
Property is by far the largest asset for this group with 61% owning their home outright and 20% owning it but with a mortgage. The average price of a house is £253,322 – a figure that has never been higher in this report.
While regional disparities exist between incomes and the amount people tend to save, none are quite as profound as the variance in property prices seen across the UK. At £458,944, London is more than double almost any other region.
Clive Bolton, Aviva’s managing director retirement solutions, said:
“We have been seeing a return to a more optimistic outlook in the over-55s over the past year and it is now clear that this group of people are moving beyond the days of the recession to more confident times.
“While it is good to see the over-55s feel they have money to spend on their lifestyle, it is a concern that this confidence may be fuelled in part by the boom in property prices. With so many over-55s owning their own homes, it is understandable they feel they have more flexibility around their finances.
“However, we know that many people underestimate how long they are likely to live in retirement and in doing so find themselves with dwindling savings in later life. And while it is great to see the economy improving, it is really important that the over-55s do not start spending or building up debt purely based on increasing property values, because that could all change.
“People nearing or at retirement need to really match their borrowing and spending habits with their income and retirement savings, so they have budgeted for their money to last the whole of their lives.”
