Over-55s are seeing the benefit of falling inflation as non-essential spending rises and unsecured debt falls, the latest edition of Aviva’s Real Retirement Report shows.
However, the report – which has tracked personal finances among over-55s before, at and during retirement since 2010 – highlights a 31% rise in mortgage debt among over-55s over the last year.
It also reveals that death or serious illness is growing as a source of concern among over-55s’ about their living standards over the next five years.
Income and spending:
- Typical (median) monthly income for over-55s increased by 5% over the past year from £1,317 to £1,378 in Q3 2015, and by 26% compared to Q3 2011, when the typical income was £1,091.
- Compared with Q3 2011, over-55s are spending 47% more on entertainment and holidays per month, 42% more on eating out or takeaways and 26% more on clothing and footwear. However, spending fell on motoring by 1%, debt repayments by 3% and cigarettes and tobacco by 13% over this period.
- Over-55s are spending more on most types of expense compared to a year ago, with the only exception being fuel and light where over-55s spent £4 less in Q3 2015.
- Since Q1 2011, there has been significant increases in essential areas of monthly expenditure such as food (up 9% from £182 to £198) and travel (up 4% from £28 to £29), as well as a 50% rise in spending on entertainment, recreation and holidays (from £56 to £84).
- However, over-55s have also increased the typical amount saved per month to £206 in Q3 2015, up by 67% from £123 in Q3 2011. Compared with 12 months ago, over-55s saved £10 more per month in Q3 2015 (vs. £196 in Q3 2014).
Table 1: Over-55s are spending more on non-essentials
| Q3 2011 | Q3 2014 | Q3 2015 | |
| Food | £174 | £186 | £198 |
| Housing (mortgage or rent) | £94 | £96 | £110 |
| Fuel and light | £100 | £107 | £103 |
| Entertainment, recreation and holidays | £57 | £70 | £84 |
| Motoring | £61 | £60 | £60 |
| Postage, telephone calls and internet connections | £36 | £38 | £40 |
| Debt repayment | £42 | £31 | £40 |
| Eating out or takeaways | £25 | £32 | £35 |
| Alcohol | £28 | £27 | £33 |
| Clothing and footwear | £26 | £28 | £32 |
| Fares and other travel costs | £26 | £27 | £29 |
| Furniture, appliances and pet care | £18 | £18 | £20 |
| Personal goods and services such as make-up and medicine | £15 | £16 | £18 |
| Cigarettes and tobacco | £16 | £10 | £14 |
| Leisure goods such as sports equipment or CDs | £8 | £8 | £11 |
| Total amount spent | £725 | £754 | £826 |
Mortgages and unsecured debt:
- Mortgage debt has fallen in the long term by 47% from £70,395 in Q3 2011 to £37,036 in Q3 2015. However, it has increased over the last year by 31% from the £28,318 recorded in Q3 2014, which may be a sign of the interest-only mortgage repayment issue facing some over-55s.
- Credit card debt remains the most common form of unsecured debt among over-55s. However, the proportion with this kind of debt has fallen from 36% in Q3 2011 to 29% in Q3 2015. The average amount owed on a credit card has also fallen in the same period by 27% from £916 to £668.
- Average personal loans have also fallen by 33% in the past four years from £677 in Q3 2011 to £456. Borrowing from family and friends has fallen 15% from £128 to £109 and overdraft debt by 13% from £157 to £137 in the same period.
Table 2: Average unsecured debt among over-55s has fallen in the last four years
| Q3 2011 | Q3 2014 | Q3 2015 | |
| Credit cards | £916 | £687 | £668 |
| Personal Loans | £677 | £416 | £456 |
| Hire purchase | £156 | £177 | £172 |
| Overdraft | £157 | £105 | £137 |
| Loans from family members/ friends | £128 | £49 | £109 |
| Doorstep lenders | £10 | £20 | £25 |
| Store cards | £37 | £48 | £22 |
| Any other informal borrowing | £93 | £196 | £73 |
Threats to living standards:
- The cost of living remains the most commonly perceived threat by over-55s to their standard of living in the next five years, with almost half (47%) citing this as a concern in Q3 2015. However, this have fallen significantly from 73% in Q3 2011 and 52% in Q3 2014.
- The second most common concern is the threat of unexpected expenses (36%), up from 30% in Q3 2011.
- The death of a partner is a key growing concern among over-55s, with 19% citing this fear in Q3 2015 compared to only 6% in Q3 2011.
- In contrast, over-55s are more confident on the returns on their savings and investments than four years ago. Just 19% were concerned about falling returns on savings in Q3 2015, compared to 34% in Q3 2011, while 14% were worried about their investment returns, down from 24% in Q3 2011.
Table 3: Serious illness and death are increasingly considered the biggest threats to the standard of living for over-55s
| Q3 2011 | Q3 2014 | Q3 2015 | |
| Rising cost of living | 73% | 52% | 47% |
| Unexpected expenses (e.g. major repairs to home) | 30% | 36% | 36% |
| Serious illness (for me or my partner) | 11% | 30% | 34% |
| Rising inflation/ state of the economy | - | 25% | 26% |
| Falling return on savings | 34% | 19% | 19% |
| Death of my partner | 6% | 16% | 19% |
| Falling return on investments | 24% | 11% | 14% |
| Increase in taxes | 13% | 13% | 11% |
| Lose of current Government benefits | 7% | 10% | 8% |
Ends
If you are a journalist and would like further information, please contact:
Aviva Press Office: Fiona Whytock: 07800 692 299 or fiona.whytock@aviva.co.uk
Methodology
The Real Retirement Report is designed and produced by Aviva in consultation with ICM Research. The Real Retirement tracking series referenced within this report has been running since 2010 and totals 24,568 interviews among the population over the age of 55 years, including 1,232 for the latest wave of tracking data. Unless specified, the figures quoted are medians rather than means in order to provide a more accurate view of people’s personal finances. The median is the person who is the utter middle of a sample and is less likely to be skewed by particularly high or low values.
View the Real Retirement Report, Winter 2015 (PDF 0.9MB)
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