The importance of saving to avoid debt in retirement
PR Log - Oct 25, 2011 - The Debt Advisory Centre has advised people to think about the positive effects starting a 'savings pot' now could have on their future finances - helping to improve financial security and reduce the likelihood of debt problems in later years.
The comments follow research from insurance group Aviva, which worryingly found that 23% of over-55-year-olds have to live on a post-tax income of £750 or less every month - working out at around £24 a day.
Furthermore, the report revealed that an estimated 7% of over-75s are still repaying a mortgage, with the average cost standing at £46,873. The findings paint a concerning picture of many people facing a bleak retirement due to a lack of available income - which could in turn push some into debt problems.
A spokesperson at the Debt Advisory Centre commented:
"This research is a definite cause for concern - indicating we have a generation of older people heading towards pension-age without adequate money to live on.
"Many people could be forced to stay in employment as late as possible because they simply can't afford to retire, and some may only have the option of living off a modest state pension when they do finally retire.
"However, putting money into savings sooner rather than later, particularly with an eye towards your future retirement, can be a successful way of planning for your later years - and give you a reliable fund to fall back on should you need to cover any unexpected costs in the nearer future.
"With that in mind, it's never too early to start saving. With winter fast approaching, it's advisable to ask yourself how you'd cover an unexpected cost, such as an increased heating bill, a burst pipe or any repairs you have to make to your car if it breaks down. Though we can't predict the future, an 'emergency savings' pot could give you the peace of mind of knowing that you could financially cope should you be hit with a bill 'out of the blue'.
"Furthermore, making a few small changes to your monthly budget could make a big difference to the amount of disposable income you have available - and therefore the amount you could potentially put into savings. See if you could switch to a cheaper utility supplier, or consider buying own-brand items at the supermarket, to reduce your monthly outgoings.
"Additionally, finding the best savings account with a competitive interest rate could also mean you will get a bit more out of your savings than you put in - so you can see your money stretch that bit further.
"Of course, putting money into savings is only appropriate if you're generally managing your money well already. If you're having difficulty repaying debts, you may need to think about entering a debt solution, such as a form of debt consolidation, or, if you're having more serious problems, an IVA (Individual Voluntary Arrangement) or bankruptcy. It's important to speak to a professional debt adviser first to discuss your options."
-ENDS- - - -
The Debt Advisory Centre offers expert debt advice, as well as a range of debt solutions for people facing financial difficulties.