Retirement poverty fear for millions of Britons

By Elliot Wright, 10th February 2010

Millions of people are approaching retirement with severe financial concerns, a report has showed.

Nearly half of 'pre-retirees' - those aged between 55 and 64 - are saving nothing per month towards their retirement while one fifth still owe more than £75,000 on their mortgage.

Compared to the recent and long-term retired, pre-retirees possess the lowest amount of savings at £8,593, while those aged between 65 and 74 and the over 75s have £13,957 and £18,748 saved respectively.

With 40% of pre-retirees saving nothing each month and some still paying off an average debt of £2,851, retirement looks like a bleak prospect for many Britons, according to a report by insurance giant Aviva.

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 55-64 age group 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. 

The report comes after independent personal finance advisory firm Moneyfacts revealed yesterday that even for those that have saved pension payouts have dropped by a staggering 60% in the last decade.

Pension payouts have dropped by a staggering 60% in the last decade.

Someone who has been paying £100 per month into a balanced managed pension pot for the last 20 years would have built up a pension of £40,749 if they retired now, compared with £103,914 if they had retired a decade ago.

A fifth of 55 to 64-year olds are concerned about retiring, with the cost of living, unexpected expenses and the falling return on savings representing the major worries. Many do not see retirement as 'golden years' but as a worrying time of financial and social change.

Clive Bolton, at-retirement director for Aviva Life, said: "This 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.  

"There is also a growing disparity between the haves and the have-nots when you look at the three ages of retirement.

"Although we would strongly advise people to start saving for their retirement as early as possible, 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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