Almost one in four people over the age of 55 is afraid of being hit by a slump in returns on savings over the next five years, a new survey by Aviva has revealed.
The figure, 22 per cent, was up from 17 per cent in the second quarter of 2016, putting it at the highest point in almost three years.
Forty-five per cent of respondents, meanwhile, regarded the rising cost of living as a threat, making this the biggest concern for over-55s.
This comes as the Office for Budget Responsibility predicts inflation, currently at 1.2 per cent, is set to peak at 2.6 percent, the highest level since September 2013.
Aviva pointed out that variable Isa rates had fallen below inflation over the last three months, with interest earned down from £444 to £140 since 2012, a 68 per cent drop.
The survey also found unsecured debt levels of over-55s was up 15 per cent since Q3 2015 to £1,904.
Borrowing via credit cards and personal loans was growing even faster
The survey also measured awareness of pension freedoms, a 2015 reform which radically overhauled rules over how retirees can access their pension pots, most notably doing away with compulsory annuitisation.
It found that overall awareness had remained unchanged, with 86 per cent of respondents stating they were aware of the changes.
Just 21 per cent of respondents felt that the changes would help them supplement their income in retirement and 10 per cent said they would use it to pay off their mortgage or other debts such as credit cards.
Almost half of those who had not yet retired said there were no advantages from the reforms, down marginally from 51 per cent in Q3 2015.
Rodney Prezeau, managing director, consumer platform, at Aviva UK Life, said 2016 had been a “year of seismic change”, adding that the effects of Brexit were still unclear.
“What is clear is that those approaching retirement have heightened concerns for the future following the decision to cut interest rates in the summer and through a growing consensus that inflationary pressures may start to kick-in next year,” Mr Prezeau said.
“Rising inflation and rising interest rates would be uncharted territory for many. The Bank of England base rate was last increased in July 2007 – more than 100 months ago. This brings new challenges for savers at a time when there are worrying signs of an increasing reliance on debt in later life.”
He urged people to take time to assess what “wider macroeconomic changes could mean for them individually” as they plan for their retirement.
james.fernyhough@ft.com
