Over 55s are getting poorer: Aviva

The 20-page Real Retirement Report found the average income for the over-55s has risen in the last quarter from £1216 in September to £1285 in December 2011 but is down 4 per cent from £1335 this time last year.

Clive Bolton, at retirement director for Aviva, said with year-on-year inflation running at 5.4 per cent this actually means the over-55s are even worse off.

However, simultaneously, there has been a decrease in the number of over-55s claiming a state pension. The data found this figure fell from 57 per cent in December compared to 61 per cent in March, which Mr Bolton said indicates more people are now working longer, possibly a reaction to the fall in real incomes.

He added: “While the average amount the over-55s have in savings is down this is partly due to the fact that more people are now starting to save, which is good news.

“However, with income levels falling and inflation rising, it is going to make it difficult for some to maintain their standard of living and to secure a comfortable retirement income for themselves.

“The importance of planning for your income in retirement cannot be stressed enough, and the earlier people begin the more they will potentially boost their financial security in the long term.”

The data also showed the typical person over 55 now has £11,153 in savings and investments, which is 27 per cent lower than December 2010 when the average was £15,262.

The report also suggested this is partly because more people have found themselves dipping into funds to top up their income in order to meet daily costs.

The average unsecured debts of the over-55s have increased to £21,901 in December from £19,878 in March 2011, according to the data. However, the total debt of those with mortgages and other debts is £80,849 in December 2011, which is down from £84,985 in March 2011.

Mel Kenny, adviser for London-based Radcliffe & Newlands, said: “Both current monetary policy and inflation are major bugbears for the older clients. Low interest rates yet relatively high inflation is unusual, yet has problematically come at a time when more and more people are retiring.

“This more so affects the less well off who also cannot afford the capacity to take the risk required to maintain income in real terms. There’s no one answer that fits all and highlights the need to take advice.”