The over 55s have seen unexpected expenses eat away at their savings, reducing the amount they have to generate income with, Aviva has said.
According to Aviva's latest Real Retirement Report, a number of unexpected costs are eroding the value of over 92 per cent of over 55s' savings, which would otherwise be used to generate income.
The findings show that while people are saving in order to maintain their lifestyle in retirement, they also need cash readily available to cover costs that they had not accounted for.
The over 55s have a greater fear of the rising cost of living than of anything else, with 64 per cent of respondents saying this was their greatest fear, a significant increase compared to the 18 per cent who gave this reply in May this year, highlighting how the ongoing economic turmoil is impacting on this group's outlook.
Aviva's research has found that a savings pot of £16,296 would provide an annual gross income of just £117 from a standard branch based notice savings account.
But, despite the vast majority of over 55s saying that rising costs are their greatest fear, more than half have not made any provisions for unplanned expenses, which is why they have to eat into their savings.
"Retirement income is also relatively fixed which is why any rise in the cost of living is particularly concerning for this age group," explained Clive Bolton, ‘at retirement' director for Aviva.
Almost half of respondents have had to use their emergency savings, while 25 per cent have had to use savings intended to generate income in retirement, and 17 per cent have cut costs in other areas in order to make ends meet; 11 per cent have taken out a loan or credit card, and six per cent have sold assets to boost their cash flow, the report reveals.
The Bank of England's decision to keep the base rate at its record low 0.5 per cent again this week will do nothing to help retired people or those saving for retirement to increase their savings or replace funds that they have used.
Commenting on the findings of the report, Mr Bolton said: "Over the last thirty years, people have generally seen retirement as an opportunity to relax after a long working life and enjoy the fruits of their labour."
"The Aviva research shows that as longevity increases individuals will spend longer in retirement. As such we want to help them plan their retirement finances so that they can enjoy the best possible lifestyle in their later years."
© Fair Investment Company Ltd