Soon-to-retire Brits “pessimistic” about finances

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29 May, 2017

Soon-to-retire Brits “pessimistic” about finances

Baby boomers approaching retirement are more anxious about their personal finances than any other age group in Britain, as pension increases come under pressure and rising inflation threatens to diminish the value of savings.

A third of 55 to 64 year olds told accounting giant PwC that they expect their disposable incomes to drop in the next year, compared to 29% of those over 65. This represents a change from the usual picture in which pensioner expectations are mostly dismal.

Kien Tan at PwC said: “In a trend that started last summer, pre-retirement baby boomers are now the most pessimistic age group.”

“This may reflect their concerns over forthcoming retirement, while over-65s will have benefited most from the ability to withdraw from their pension pot, as well as the triple lock policy of the past few years.”

In comparison, 44% of 18 to 24 year olds expect to be better off, with many younger Brits moving into the workforce, only 19% of that group expects to have less disposable income.

Those aged 25 to 34 are also relatively optimistic with 31% expecting to have more disposable income and 22% anticipating a fall. Just 16% of the 55 to 64 age group expect their disposable income to increase next year, while only 11% of pensioners think the same – as private incomes are typically fixed after retirement.

Rising inflation is a major worry. The fall in the pound since the Brexit referendum has increased the cost of imports, helping push up inflation to 2.7% on the year in April, its highest level since 2013. Grocery is the only category where more 55 to 64 year olds expect to spend more, rather than less, in the coming year, and this is largely due to expected price hikes coming this year.

“In other spending categories, such as going out, big ticket purchases and clothing, at least a quarter of 55 to 64 year olds expect to spend less in the coming year, compared with less than 10% saying they will spend more,” said Mr Tan. “This contrasts with under 25s, more of whom plan to spend more rather than less in categories such as beauty and personal care, clothing and accessories, and health and wellbeing, none of which are priorities for over 55s.”

The sterling’s slide has split decisions down the middle over holidays – with 20% expecting to spend more on holidays, and 23% to cut back due to tight expenses.

The findings came as part of PwC’s latest consumer confidence survey, which found that 22% of soon-to-be retirees expect to be better off next year - a decline from 24% at the start of this year.

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