9th December 2010

Aviva's quarterly Real Retirement Report published today shows there has been a significant increase in over-55s' fears about the rising cost of living.

Three quarters of those surveyed said this was their biggest fear over the next six months and 70% voiced concerns about the cost of living adversely affecting their standard of living over the next five years.

The financial concerns of this age group centre on the fear that their already squeezed incomes will fall further and they will be forced to pay for additional expenses.

Being forced to retire when you cannot afford not to work is something that has long been an issue for soon-to-be-pensioners, and one that should be addressed by the scrapping of the default retirement age.

This enabled companies to automatically terminate an employee's contract as soon as they reached the contractual retirement age; usually 65. This is to end next year, giving those of official retirement age the choice to continue working should they wish, or indeed need to.

Martin Bamford, a chartered financial planner and managing director of Informed Choice says the Aviva report is further evidence that careful financial planning is necessary to secure your financial security in retirement.

"The nature of retirement has been shifting gradually for many years.  More people now view retirement as a transitional period, rather than event that takes place on a single day.  Planning for income and capital needs during a phased retirement can be complex. 

"The use of more flexible retirement income options, such as unsecured pension, will become more popular as people need to vary their pension income levels to supplement earned income from employment in their ‘twilight' years.

"The removal of the default retirement age should not be taken as a sign that employment can replace pension savings. There is a good chance that work will not be available in your old age, or that you will be unable to work due to poor health. 

"Saving for retirement, using a pension and other financial vehicles, will remain as important now as it ever has been." 

 SEE ALSO: The end of retirement as you know it  

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