Aviva's quarterly Real Retirement Report published today shows there has been a significant increase in over-55s' fears about the rising cost of living.
Three quarters (74%) said that this was their biggest fear over the next six months and 70% over the next five years. The research shows that this age group is concerned about the austerity measures outlined in the Autumn Comprehensive Spending Review and the imminent increases in VAT.
Whilst the over-55s' biggest fear is the rising cost of living (74%), over the next six months, they are also concerned about the falling return on savings (35%), unexpected expenses (36%) and an increase in taxes (26%).
The financial concerns of this age group centre on the fear that their already squeezed incomes will fall further and they will be forced to pay for additional expenses out of this money.
Housing (mortgage or rent) now makes up the largest share of the over-55s' monthly outgoings, accounting for 18% of total expenditure (compared to 14% in September 2010). This is likely to be due to a variety of reasons, from landlords increasing rents, to people choosing to pay down their mortgage in the current low interest environment.
Commenting, Clive Bolton, ‘at retirement' director at Aviva, said: "Over the last six months, we have seen a significant increase in the number of over-55s who are worried about the rising cost of living.
“Inflationary pressures have become stronger over this period, whilst interest rates have remained at historically low levels. The Government's Emergency Budget and Autumn Comprehensive Spending Review have also left this age group feeling nervous that they will receive less support from the State. However, we have seen the over-55s make steps to adjust their spending accordingly, which is encouraging.”