No savings bank accounts for pre-retirees

Two-fifths of people approaching state pension age are failing to put any money into a savings account each month, research has revealed.

According to Aviva's first Real Retirement Report, 40 per cent of individuals in the pre-retirement age bracket between 55 and 64 do not put a penny into a bank account on a monthly basis.

Overall, this age group has the lowest amount saved in a good savings account at £8,593, while one in five still have in excess of £75,000 to clear on their mortgages.

This is in stark contrast to those who have already surpassed retirement age, with individuals aged between 65 and 74 averaging £13,957 in savings.

Meanwhile, people who are older than 75 are seen to be the best at putting their money into a savings bank account as they have £18,748 stored away.

Clive Bolton, at-retirement director for Aviva Life, said: "This first report shows a worrying picture whereby those who are already retired are actually - to a large extent - financially better off than the pre-retirees.

"Their income might shrink as people retire but the current generation of retiring and long-term retired have a higher incidence of homeownership, lower debts and more savings than the pre-retirees."

There are also many worries for those approaching retirement age, which is hindering their desire to put money into a high interest savings account.

The continued increase in food and fuel bills, alongside other costs of living, is leaving almost three-quarters (74 per cent) of this age bracket concerned, while 38 per cent are anxious about the amount of interest they are receiving for tying money up in a savings account.

Although pre-retirees and young adults may have a wider number of everyday expenses than those to have already retired, Mr Bolton also highlighted the need to think about opening a savings account at the earliest possible stage and attempting to make regular payments into it.

However, he added that making sure individuals benefit from information on the topic is key to ensuring that they are not left in a poor financial position later in life.

He explained: "Although we would strongly advise people to start saving for their retirement as early as possible, we also need to ensure that those approaching retirement have access to the right information and support to maximise their income in their later years."

Meanwhile, there are many things that individuals can do in a bid to cut their monthly expenditure, which in turn will offer them more money that can be deposited into a banking account.

Alongside cancelling gym memberships, cutting back on drinking and shopping around for cheaper insurance premiums, people may also want to open an ISA savings account.

Cash ISAs are basically a normal savings account where a person is not taxed on any interest they accrue, with up to £3,600 allowed to be paid in for 12 months from each April.

According to money saving expert Martin Lewis, cash ISAs could be especially lucrative to individuals over the longer term if they are used correctly.

He said on his website: "Even though the rate benefit of a cash ISA is sometimes miniscule at present compared to a normal account, the long-term benefit is what counts. When you put money in a cash ISA it is tax-free year-after-year.

"So it's important if you have savings to fill up your allocation."