Over the last two years Aviva has tracked the income and spending of 11,600 people in, or near, retirement. The average monthly income of the over-55s now stands at £1,285, a small rise on the quarter before, but 4% down from last year.
“With year-on-year inflation running at 5.4%, this actually means the over-55s are even worse off,” said Aviva Director, Clive Bolton. He also warned that although autumn and winter have been relatively mild so far, another cold snap – after 20% rises in heating bills – would hit the worst-off hard. Many pensioners are taking on part-time work in order to meet rising electricity and petrol bills. The number of 65-74 year olds who earn an income from wages, as well as a pension, rose from 18% to 22% over the year.
Others are digging deep into their savings to meet day-to-day costs. Aviva found that the typical person over 55 now has £11,153 in savings and investments, 27% lower than December 2010, when the average was £15,262. One in seven people over 55 have no savings at all, while even those who are saving are putting less aside every month. The typical monthly amount saved fell from £31.17 to £26.90.
Many are still paying off a mortgage well into retirement. Aviva found that one in 10 over-75s have a mortgage, typically around £60,000, “which is worrying as they are less likely to be working and more likely to have a fixed income”. One of the more remarkable findings of the report is that, on average, 65-74 year-olds have higher incomes than 55-64 year olds. Aviva said its quarterly tracking of income levels has found a consistent “retirement bounce” at age 65, when payouts from state and company pensions lift incomes.
The report also highlights deep income inequalities among older people. One in five 55-64 year-olds enjoy incomes over £2,500 a month, or five times the earnings of the bottom tenth. Many are also sitting on properties worth many times their pension. The average person aged over 75 owns a home worth £268,833 – significantly more than the value of the average home in the UK, said by the Halifax to be £161,731.
