Millions of the elderly and people approaching retirement have no pension, no savings and large debts, shocking research reveals today.
The figures paint a worrying picture of a country with a ballooning population of elderly people who cannot afford to retire, with many surviving on an income of only £25 a day.
The major study, from insurance giant Aviva, found one in five people over the age of 55 still had a mortgage.
The average size of their home loan is £60,440, which will wipe out a large chunk of their monthly income.
The situation is even more bleak for people over the age of 75, with 4 per cent still having a mortgage, with an average of nearly £100,000 outstanding.
The study also found that the average older person has other debts, such as credit cards and loans, of £2,719.
The report warns: ’This age group is relying more heavily on credit than previously thought.’ The research, which the company conducts every three months, looked at three age groups – 55 to 64, 65 to 74 and those over 75.
One in five is forced to survive on an income of less than £750 a month, equal to around £25 a day.
Clive Bolton, a director of Aviva, said: ’The report highlights the simple fact that, as a nation, we need to save more for retirement.’
He urged people to put aside even a small amount of money every month, or risk a retirement marred by ’a struggle to survive on a tiny income’.
The report also shows the huge gulf between people with a gold-plated nest egg of savings, pensions and other investments for their retirement – and those with nothing. It found 15 per cent do not have a penny of savings or investments.
A further 29 per cent have less than £2,000, an amount which would be wiped out by the sudden expense of, for example, a new car.
Aviva researchers suspect a growing number of people are having to ’dip into their savings’ because the interest paid is so paltry.
There is a minority of well-off, well-prepared people who have significant savings and investments, with 21 per cent having more than £100,000.
Yesterday, debt charity Consumer Credit Counselling Service said soaring numbers of its clients were older people.
A spokesman said: ’We have seen a big increase in over-55s coming to us for help with their debts.
’They tend to be asset-rich but cash-poor which leaves them struggling to repay their debts.
’One of the big trends making it harder for people to save is having children later in life which means they often have dependent children who they are supporting through university as they are reaching their own retirement.’
Many plan to use the equity in their house, which averages nearly £150,000, to pay for their retirement.
But this plan often fails, as they cannot bear to sell the home where they have lived for decades, which has triggered a surge of interest in equity release schemes.
In a separate survey, nearly three-quarters of Britons think a traditional retirement will not be possible in the future.
Seven out of 10 of people said they did not think it would be possible for future generations to stop work and live off their pension for 30 years, according to research carried out for BBC Newsnight.
Pensions Minister Steve Webb said: ’The Coalition is committed to overhauling pensions to enable all pensioners to achieve a decent standard of living.’
Source: Daily Mail 8th September 2012. Full article can be seen here.