The falling cost of living is allowing over-55s to increase their savings and pay off debts, a survey by Aviva has found.
The price increases of essential items such as food and fuel have slowed considerably over the past 6 months, leading to a 7% reduction in essential spending in Q4 2014.
As a result, over-55s have seen significant improvements to their disposable income in the past year, rising £1,032 (6%) in the year to Q4 2014 alone. In comparison, disposable income rose by £1,440 (95) between Q4 2011 and Q4 2014.
The consumer prices index has fallen continuously since October 2014 and reached a historic low of 0% in February 2015.
This has enabled over-55s to increase their monthly savings and reduce their debt loads:
- average monthly savings among over-55s was £214 in Q4 2014 – a 60% increase from the £80 average in Q4 2011
- average debt among over-55s was £1,527 -a 46% reduction from the average £2,812 in Q4 2011
- credit card debt has halved from £1,033 in Q4 2011 to £551 in Q4 2014
- over-55s spent an average £72 a month on entertainment, holidays and recreation in Q4 2014 – up from £59 in Q4 2011.
Clive Bolton, managing director of retirement solutions at Aviva, said:
“The rise in disposable income is a welcome sign that over-55s’ standard of living is on the up. It is a testament to their resilience and adaptability that they have come through the recession in such a strong position.
“Planning ahead is the best way for over-55s to arm themselves against any unexpected costs in retirement. If and when inflation rises, careful planning will help to ensure more people can take this in their stride.”