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Hard-up retirees left to plunder their savings

Hard-up retirees left to plunder their savings

Category: Annuities

Updated: 13/05/2011
First Published: 23/08/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Retirees and those soon to give up work are increasingly having to dip into their savings and investments to help them pay day-to-day expenses.

With the fallout from the recession continuing to bite, almost a third (31%) of UK adults have used their savings and investments to supplement their income over the last 12 months, according to Schroders.

Collectively an estimated £60 billion of savings and investments have been withdrawn over the last year to cover living expenses.

On average, those who have tapped into their savings have spent around £4,600 in the last 12 months.

More women than men were forced to draw upon their savings, with 34% of women tapping into their capital reserves compared to 28% of men.

However, it is those who are retired or approaching retirement who are most likely to have dipped into their reserves to make up a shortfall in income.

Over a third (36%) of those aged 55-64 years and 33% of those aged over 65 years said they had relied on investments to boost their income in the last 12 months.

"The challenging economic environment has seen millions of Britons dipping into their savings to fill their income gap," said Robin Stoakley, managing director of Schroders UK Intermediary Business.

"The amount of capital being drawn down suggests that it is not just rainy day funds that are being drained, but a significant proportion of individuals' long-term savings.

"This is particularly an issue for those nearing or in retirement as they have less opportunity to rebuild their savings and declining annuity income proves insufficient to cover their day to day expenditure."

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