The average retiree has a nest egg of less than £1,500 to cover unforeseen expenses, a survey by insurance company MetLife has found.
The survey of the lifestyles and finances of 1,000 retired people, published in September 2015, found that the average retiree had just £1,343 for emergencies. A quarter of respondents said they had less than £1,000 available while one in five said they had less than £500.
When the unexpected turns into a nightmare
Over half of respondents said they didn’t know if they would able to cope with an unforeseen expense like healthcare costs or home repairs, and a quarter had experienced a ‘financial nightmare’ that threw their finances into disarray.
Dominic Grinstead from MetLife UK said: “It is very worrying that more than half of pensioners would be stumped if they had to find the money for a major bill. Financial emergencies in retirement are a major risk – around one in four say they have suffered financial nightmares which have forced them to cut back.
“Retirement ought to be a time to relax after a lifetime of working hard but sadly the survey shows the retirement glow does not last long before the money worries return.”
The survey also found that money worries are a real issue for many retirees. In terms of day-to-day finances, MetLife found the average retiree lives on £297 a week, although one in eight get by on less than £100 per week.
One in five retirees said life is much harder after finishing work than they imagined and they were not financially comfortable day to day, while just under half of respondents said they regularly worried about money.
Retired and still paying off the mortgage
The research is backed up by similar findings from research by Saga Equity Release Advice Service, which found that a third of over 50s still have an outstanding mortgage with an average balance of £50,000 before they own their houses outright .
The research by Saga, which was carried out in August 2015, found that one in seven people in their 70s are still paying off mortgages – with an average balance of around £40,000 – and are being forced to use their weekly pension to pay it off.
Of the more than 1,400 people polled by Saga, 7% said they had been prevented from seeking a better deal on their mortgage – and therefore potentially freeing up cash – because of their ages.
Alex Edmans, Head of Retirement at Saga Personal Finance, commented: “Millions of older homeowners have found themselves abandoned by mortgage lenders and stuck in uncompetitive deals because of the unfair age restrictions that many lenders have in place.
“If these people had access to a better deal they wouldn’t have to pay as much back each month which would leave them with more money to enjoy their retirement.”
Money saving tips
If you’re living on a reduced income or want to save some money for a rainy day, these tips could help you cut costs:
- Don’t be afraid of senior discounts: Cinemas, restaurants, tourist attractions and many shops offer discounts to over 60s – if you’re entitled to it, ask for it!
- Claim everything you are entitled to: Age UK provides an advice service for benefits and other entitlements.
- Make the most of vouchers and coupons: Search the internet for vouchers and bargains and make use of money off coupons from the supermarket.
- Travel for free where you can: Use your bus pass and get a senior railcard, if you intend to make any train journeys.
- Stay positive: Concentrate on all the things that you can do, rather than focusing on those you can’t
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.
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