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15 Oct 2014

Post-Budget: Over 55s Aren´t Changing Their Retirement Plans

The last budget saw the biggest ever shake-up of the UK pension system; but despite this, Money Facts reports that the majority of over-55s are still planning to stick with their pre-budget retirement plans.

According to Aviva´s latest Quarterly Tracker, the new pension freedoms and possibilities have failed to have much of an effect on those approaching retirement. Although 78% of survey respondents said that they were aware of the new allowances, just 10% stated that they were planning to change their retirement plans as a result.

Clive Bolton from Aviva worries that this could largely be due to a lack of information, as many are unaware of the tax benefits that the new freedoms can bring:

“There is a huge amount of education work needed to ensure the over-55s are equipped to make the right decisions. There are implications that could leave retirees better or worse off at a time when they need to maximise their savings… it´s really important that our industry and Government work together to ensure there is clarity,” he stated.

Furthermore, with 43% of over-55s reporting that they felt confident about the economy in 2014´s second quarter, there is a concern that this optimism could cause retirees to increase their spending. In fact, the report found that the typical monthly spend for the over-55s increased from £792 to £846 during this time.

Meanwhile, savings dropped during this period - with savers putting away just £46 a month (£2 less than in the first quarter) - whilst debt from loans, overdrafts and credit cards reached an almost record high of £2,269.

Growth in the property sector could be one cause of this trend, as much of the demographic own their own homes. But Bolton warns that “the over-55s [should] not start spending or building up debt purely based on increasing property values, because that could all change.”

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