More than a third (35%) of over-55s say their expenditure exceeds their income according to more2life.
A majority of these individuals (68%) said they use their savings, with a further 25% claiming that the increasing cost of living will mean it is likely that their households will be living beyond their means this year.
For those whose spending exceeds income, 17% said they would use their bank overdraft to bridge the income gap whilst 16% would choose to borrow using a credit card.
Almost half of over-55s reported that they do not have enough cash savings to cover an unexpected bill of £5,000.
Dave Harris, chief executive at more2life, said: “Fewer over-55s are enjoying a financially carefree retirement, a fact that we can in part attribute to smaller pension pots, greater financial responsibilities and longer retirements.
“While it is natural to want to use your savings to improve your standard of living in later life, being forced to dip into them or borrow to meet day to day living costs is another matter entirely.
“This research highlights that for some people retirement is far from relaxing and they are one large bill away from real financial hardship.”
The research reveals that when considering the impact of a 10% cut to their monthly income, 44% of over-55s said they would have to cut back their spending whilst 12% would need to regularly dip into their savings.
Almost a third (32%) of respondents said that their income would still be enough despite a 10% reduction.
Harris adds:“With an increased number of over-55s dipping into their savings or using unsecured borrowing just to make ends meet, an unexpected bill can play havoc with their finances.
“However, we need to encourage people not only to consider all their assets at retirement but also how they might help if they do find themselves struggling.
“Solutions like equity release are set to help an increasing number of older homeowners boost their income.
“In Q3 alone, older homeowners unlocked nearly £11m of property wealth per day to help give them a financial uplift in their retirement.
“With specialist advice and a host of innovative lending options, equity release can help many retirees to bridge their income gap and give them the financial freedom in retirement that they deserve.”