UK Cost of Living Eases for Over-55s as Economy Picks Up

Britain's over-55s are cashing in on the improving economy with rising incomes leading to more than £150 extra in their pockets a month compared to last year.

According to Aviva's latest Real Retirement Report, the over-55s typically receive £1,373 ($2,331, €1,673) a month in income – an extra £151 a month compared to the same time last year (Q1 2013).

They are pocketing £216 more compared to two years ago (Q1 2012) when their overall income was £1,157, and £258 more compared to Q1 2011.

Those approaching retirement – aged between 55-64 years – have seen the biggest increase with a typical £1,402 per month compared with £1,368 for those aged 65-74 years and £1,290 for those aged over-75 years.

"The report is a timely reminder that as more of us will rely on defined contribution pension schemes in the future, there will be a greater responsibility on individuals to make good retirement choices," said Helen Ball, head of defined contribution at Sackers.

"With government policy focusing on freedom of choice, in large scale workplace schemes which provide value for money, we can expect to see a much greater emphasis on effective communication at all stages of membership (even before age 55)."

The research also revealed that savings and investments are partly behind the boost, now providing income for a larger number of over-55s.

Nearly a third (29%) named this as a source of income compared with 24% the same time last year (Q1 2013) and 25% for the previous years (Q1 2012 and 2011).

The research also revealed that savings levels vastly improved as over-55s seek financial stability.

The over-55s have stashed away more money to protect themselves against the rising cost of living and the fear of having enough money in retirement.

The amount of money put away in savings and investments reached a high of £18,632 in Q1 2014 – last reaching these levels in Q3 2012 when they stood at £17,750.

The 65-74s have the largest savings pots at £25,938 compared with £13,158 for the 5564s and £13,750 for the over 75s.

On average, households are putting away £198 a month in savings.