Pensioners in the UK face a growing retirement poverty postcode lottery, according to new research, with older people in some regions under far greater financial strain than others.
In a survey of 2,000 people aged 50 and over, insurance and equity release firm SunLife found stark regional differences in how financially secure people feel as they approach or enter retirement.
A key measure is whether over 50s have private pensions, so they are not reliant solely on the state pension to see them through retirement. On average across the UK, seven in 10 (73%) have their own pension.
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This drops to 70% in the North West, where average incomes in the region are also lower at less than £25,000.
The situation is better in the South West where three quarters (75%) of over 50s have a private pension, rising to 76% in the South East and 83% in Northern Ireland.
However while more retirees in the South East may have private pensions to fund their lifestyle in retirement, they also face much higher living costs that can leave them struggling to make ends meet and looking for ways to boost their retirement income.
London stands out for its financial vulnerability; just 55% of over 50s in the capital own their homes – the lowest rate in the UK – leaving many more exposed to housing costs later in life.
Average income for over 50s in London (£31,164) is also lower than many other regions, including Scotland (£31,399) and the South East (£31,169) despite those in the capital facing a significantly higher cost of living.
We look at how much you need for a comfortable retirement in a separate article.
How much debt do over 50s have?
Over 50s have more debt than many people believe – the assumption is most older people have cleared their mortgages, but SunLife’s data suggests that’s not the case.
One in seven (14%) over 50s are still paying off their home loans. This rises to 20% in Northern Ireland, 19% in the North West, and 16% in both Yorkshire and East Anglia.
Higher mortgage rates mean these homeowners face mounting monthly repayments – £887 a month on average – that can eat into already tight retirement budgets.
This is especially a problem in areas where income levels remain low or debt levels are high. For example, the average mortgage payment for over 50s in London is £1,230.
Across the UK, 48% of over 50s have some form of debt – from credit cards and overdrafts to personal loans and mortgages. That figure rises to 52% in the South East and 51% in London.
Are over 50s worried about the cost of living?
Over 50s approaching retirement on what is likely to be a fixed income are acutely worried about the rising cost of living – it is their number one concern.
In Northern Ireland (74%), Scotland (71%), and the East Midlands (68%), that anxiety is particularly severe.
While fewer Londoners (56%) cite the cost of living as their top worry, a significantly higher proportion are concerned about long-term financial security.
Almost four in 10 (38%) over 50s living in the capital say running out of money in retirement is one of their top financial concerns – above the UK average of 34% – while one in five (21%) are most concerned about outstanding debts.
In contrast, 24% of over 50s in the North East, 21% in East Anglia, and 15% in the South East say they have no financial concerns at all.
Mark Screeton, SunLife's CEO, said: “Our research shows a clear ‘postcode lottery’ when it comes to retirement, where people’s ability to enjoy later life appears to be impacted by where they live.
“Whether it is mortgage repayments dragging into retirement or higher levels of consumer debt, older people in some areas are facing greater financial concerns than others.
“In London particularly there seems to be a ‘perfect storm’ of low homeownership, high debt, below-average income, and financial anxiety, all at a time in life when many would hope to feel more secure.”
Screeton added for homeowners over 55 – even those with an outstanding mortgage – equity release could offer a way to clear debts, stop monthly repayments, and unlock the value in their home without having to move.
We look at whether you should unlock cash from your home in a separate article.
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