Millions Approach Retirement In Poverty And Denial

Millions of people approaching retirement are being hit by a crippling combination of large mortgages and no savings.

A recent report by insurance giant Aviva found that one in four pre-retirees (55 to 64 yr olds)  has a mortgage. In a fifth of those cases, it is more than £75,000.

Those aged between 55 and 64, known as 'pre-retirees', have been unrealistic about their pensions and are living in a state of denial about their finances.

Research also reveals that even pensioners who have saved have been hit by a 70% collapse in their retirement income in the past ten years as annuity rates have plummeted, according to financial information company, MoneyFacts.

Parents are remortgaging their home to give money to their children to help them on to the property ladder. Others use their house as a 'cash machine', taking out money to put into a business, fund a better lifestyle or pay off debt.

The study found that 40% of pre-retirees are not saving any money into the likes of a bank account or a tax-free ISA. They have average savings, excluding pensions, of only £8,600 - a sum which would almost disappear in the event of a common emergency, such as needing a new boiler or a car.

In the past, a typical pre-retiree would have had no mortgage, more savings and would have retired by the age of 65.

Separate research yesterday highlighted the nightmare facing pensioners who have been saving all their lives - with little to show for it.

The two research reports make a mockery of the myth that older people are debt-free and enjoying themselves with extra cash to spend on holidays, eating out and other treats.

Clive Bolton, a director at Aviva Life, said the research painted a 'worrying' picture of people approaching retirement who cannot afford to stop working.

Record numbers of elderly people are working, with this number set to climb. At present, 1.4m people over state pension age - 60 for women and 65 for men - have jobs.

Axis Delivers A Solution!

With interest rates at a record low, producing income through savings is not going to plug the gap. In fact far from being the solution it's a large piece of the problem.

In my view, the best solution is to invest in property. The investment has to be a careful strategy that will meet a number of important considerations...

• Working with the assets you currently have, either as liquid cash or that can be realised from existing property or other tangible assets.
• Take into account the years to retirement - the more the better.
• Ensure a relatively low risk approach, given that pre-retirees are unlikely to have the opportunity to rebuild lost capital if something goes wrong.
• Consider the balance between capital growth now and income flow later.

The good news is that Axis has investment strategies that have the potential to deliver exceptional returns in a period from less than one year, up to 10 years. We can help pre-retirees generate far greater income and capital growth than is their current experience. In many cases our strategies deliver up to 20% pa net income on capital, or capital growth of 300%+ in five years!. We can also help build capital quickly so that future income flows can be based on a larger capital base.

To discuss your specific circumstances and how Axis can help, contact us now.

Call us on 01273 447 300 or email questions@axiscontact.com and have a no-obligation, no cost discussion about how we can assist.

Live with Abundance!

Rod Thomas

Posted in Finance & Money

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