Pre-retirement group worse off

Nia Williams

February 10, 2010

In addition, 86% of people in this crucial pre-retirement age group do not have an active relationship with an intermediary.

Pre-retirees (55 – 64) have the lowest savings (£8,593), lowest incidences of home ownership (76%) and largest average mortgages (£16,694). Two fifths (40%) of pre-retirees save nothing per month and one fifth (20%) still owes more than £75,000 on their mortgage.

All these findings were revealed in a new quarterly report from Aviva 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.

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% 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.

The majority (80%) of consumers in these age groups own their own homes – outright (62%) or with a mortgage (18%). A shift in attitudes to homeownership is starting to show and the younger age group (76%; 55 -64) is the least likely to own their own home (compared to 65 – 74; 84% and over 75; 81%).

The pre-retirees have the lowest value properties (£225,988) and are the most heavily mortgaged with over 26% still having a mortgage.

Clive Bolton, at-retirement director for Aviva Life, commented: “By 2011, there will be almost 18 million people in the UK who are over 55. At Aviva, we recognise that people who are part of these three ages of retirement have different worries and priorities than many other consumers. Therefore, we have decided to launch the Real Retirement Report to promote a better overall understanding of this age group.

“With thorough financial planning such an important part of preparing for retirement, we were shocked to see that only 14% of pre-retirees had an active relationship with an adviser. Indeed, this is all very worrying and we would strongly advise people to start saving for their retirement as early as possible. In addition – as an industry – we also need to ensure that those approaching retirement have access to the right information and support to maximise their income in their later years.”

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