Debt-hit middle aged workers are increasingly forced to dip into pension pots
OLDER workers are increasingly dipping into their pension pots or taking on extra debt to pay their bills before they hit retirement.
The rising cost of everyday life along with stagnant salaries has led to one in five people aged 55 to 65 – about 1.9 million of them – raiding the money invested for when they reach old age, it is claimed New pension freedoms allow savers aged 55-plus to access their whole pension pots.
Not only that but in the last three months about 2.2 million people in this age bracket took on new debt to cover their living expenses.
It means one in four is nearing retirement with an average of £428 in new debt, reveals data from True Potential Investor.
The financial services group surveyed more than 32,000 workers about their saving and spending habits to date.
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Almost a quarter of those asked said the biggest worry in their life was “having enough money to get by”.
If given an extra day a month to do as they please, 14 per cent said they would use it to earn more money.
Nearly a fifth of monthly income is spent on rent or mortgage repayments.
David Harrison, of True Potential, said: “The struggles many people may be having in the latter years of their working life serve as a warning to younger generations about the value of saving early for your future.”
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Pensioners had some valuable protections, such as the triple lock inflation guarantee on state payments.
He said: “But those on the cusp of retirement are clearly being squeezed.
"Inflation is higher than both wage growth and bank interest rates. “
Many over-55s are stuck with savings that are not growing.
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No wonder dipping into savings to get by feels fairly pain-free.
No one can forecast exactly how their finances will look in years to come, or the unexpected financial challenges that may emerge.
“The earlier people start saving, the greater their ability to deal with whatever lies ahead and to fund a comfortable retirement.”
Alistair McQueen, of insurance and pensions provider Aviva, said: “Credit card debt held by the over-55s is at a six-year high and the recent rise in the Bank of England interest rate will put even greater pressure on those reliant on credit.”
