What kind of financial future is in store for us when we’re older? With house prices higher than ever and the cost of living making putting away savings a real challenge for many, there is plenty that may make some feel the glass is half-empty rather than half-full.
Almost half (44%) the people asked in a new Experian survey of over-55s say they are concerned about their financial future, with over half (56%) worrying about not having enough savings and (55%) not having disposable income. In fact, 40% have concerns over high monthly bills.
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What does disposable income go on?
Yet a majority (68%) of over-55s we asked said they feel financially comfortable. But what does financially comfortable mean? Our survey suggested it was having money to spend on holidays, clothes and other non-necessities. In terms of disposable income, for most people the majority of it goes on eating out, family (children and grandchildren) and other forms of socialising. Even so, one in five people (30%) said they thought they were not financially comfortable.
Concern over savings and debts
Our survey found that while the over-55s have an average of £40,700.64 in savings, that includes pensions, which arguably doesn’t leave a lot once you take into account that 20% have £100,000 and above in savings. In fact, 7% surveyed said they have no savings at all. Although around 3 in 5 (61%) have no outstanding debt, the effects of a higher cost of living has caused an average outstanding debt of £3,423 for the over-55s.
And we’re paying mortgages off later in life
There has been a lot spoken lately about how the increasing average age of first time buyers is likely to mean an increase in the age that many of us will still be paying off a mortgage.
More and more First Time Buyer mortgages are taking customers past the age of 65. Of those we surveyed who have a mortgage, 1 in 10 have 90% or more of the initial amount they borrowed on their current mortgage outstanding – meaning they’re likely to still be paying it off well into their dotage. Just 16% have less than 10% of their mortgage outstanding, while 55% surveyed paid off their mortgage between the ages of 51 and 65, while 12% have never had a mortgage.
Three tips for managing money in or near retirement:
1. Know what you can afford: Make use of online budgeting tools or visit your local Citizens Advice Bureau or Money Advice Service branch if you need help in planning your finances. If you take out credit, make sure you’ll be able to afford to repay what you owe on time and in full each month bearing in mind that your disposable income may reduce when you decide to retire.
2. Bank of Mum and Dad: More than a quarter of over-55s have supported someone else to buy a property. If you are considering supporting a family member financially, ensure you realistically have the flexibility in your finances to do so and that your financial wellbeing won’t suffer in the future as a result.
3. Just because you retire doesn’t mean your credit score does: Although you might have paid off your mortgage and be virtually debt-free, you may wish to access small amounts of credit in the future. Keep your credit score in shape by regularly checking your credit report and ensuring you maintain the credit you may still have.