The UK’s over-55s have seen incomes fall, savings drop and debts rise as they struggle to meet the rising cost of living, reveals Aviva’s latest Real Retirement Report. This report - which is the seventh in the series – highlights the financial challenges that the three ages of retirement (55-54; 65-74 and over-75) face.

Typical monthly income for UK over-55s has fallen to £1,216 (September 2011) from £1,294 (June 2011). This is not only lower than the last quarter but also the lowest monthly income recorded since the first Real Retirement Report in February 2010 (£1,250). 

The over-75s (£999) have the lowest monthly income followed by those aged 65-74 (£1,314) and those aged 55 – 64 (£1,230). In addition, almost a quarter (23%) of over-55s now survive on less than £750 per month.

Over-55s typically have £10,468 in savings which is 12% lower than last quarter (£11,907 – June 2011) - a clear indication that not only are some people not saving but they are in fact dipping into their savings.

With 73% of over-55s worried about the rising cost of living, it is interesting to note that a quarter now have less than £500 in savings. Pre-retirees (55-64 years old) who are more likely to be economically active are most likely (29%) to be in this situation followed by the retiring (65 – 74 years old - 21%) and long-term retired (over 75 years old -19%).

The fact that pre-retirees have very low savings is unsurprising as 46% are saving nothing each month (retiring – 36% and long-term retired – 26%).