Expenditure is exceeding income for 35% of over-55s, and a further 68% of these individuals have dipped into their savings to help plug the gap, according to new research by more2life.

A survey commissioned by more2life – which was carried out by Opinion Matters in April 2019 and received 1,766 responses from individuals above the age of 55 – found a further 25% of over-55s said the increasing cost of living will mean it is likely that their households will be living beyond their means this year.

For the total surveyed adults whose spending exceeded their income, 17% said they would use their bank overdraft to bridge the income gap, whilst 16% would choose to borrow using a credit card.

The survey also found that 48% of over-55s said they don’t have enough cash savings to cover an unexpected bill of £5,000. Furthermore, the research from the equity release lender revealed that one in five said they would not be able to cover the cost of an unexpected £5,000 bill by any means, whilst 14% said they would have to consider taking out a loan.

“Fewer over-55s are enjoying a financially carefree retirement, a fact that we can in part attribute to smaller pension pots, greater financial responsibilities and longer retirements,” commented more2life CEO, Dave Harris.

“While it is natural to want to use your savings to improve your standard of living in later life, being forced to dip into them or borrow to meet day-to-day living costs is another matter entirely.

“This research highlights that for some people, retirement is far from relaxing and they are one large bill away from real financial hardship.”

more2life suggested one in 10 respondents said not being able to cover day-to-day expenses would encourage them to borrow, while 8% would borrow to help a family member or partner.

The research also revealed that when considering the impact of a 10% cut to their monthly income, almost half of over-55s indicated they would have to cut back their spending, whilst a further 12% would need to regularly dip into their savings.

Thirty-two per cent of respondents, however, did say that their income would still be enough, even with a 10% reduction of their income.

Harris added: “With an increased number of over-55s dipping into their savings or using unsecured borrowing just to make ends meet, an unexpected bill can play havoc with their finances. However, we need to encourage people not only to consider all their assets at retirement but also how they might help if they do find themselves struggling.

“Solutions like equity release are set to help an increasing number of older homeowners boost their income. In Q3 alone, older homeowners unlocked nearly £11m of property wealth per day to help give them a financial uplift in their retirement.

“With specialist advice and a host of innovative lending options, equity release can help many retirees to bridge their income gap and give them the financial freedom in retirement that they deserve.”

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