'Credit crunch to hit over-50s hard'

The Sunday Express, 6th July 2008, by Holly Thomas.

'The over-50s look set to be hit hard by the credit crunch, according to new research, which warns thousands face an increased risk of an impoverished retirement.

Funding the rising cost of living is one of the biggest issues affecting this age group, with almost half using credit cards for everyday purchases such as groceries, said a report by the Post Office.

With new warnings that inflation will rise to 4 per cent, retirement experts say the future looks bleak for many.

Danny Cox at independent financial adviser Hargreaves Lansdown said: 'The over-50s are going to suffer from the effects of the credit crunch because they are being hit hard by increased living costs at a time when they need to be more careful with their money if their pension savings are small.

"Earning potential for this age group tends to be less, which adds to the pressure to make ends meet - especially if they are accruing substantial debts to keep up with the rising costs of fuel, food and household bills."

Putting money aside for the distant future has also become an aspiration rather than a reality, with a third of people admitting they are unable to save on a regular basis.

Of those who do not save, more than half say they simply cannot afford to while 48 per cent say they have no surplus cash because day-to-day living costs are so expensive.

The effects of today's credit crunch are even more apparent among the over-70s, as 64 per cent regularly resort to using credit cards to buy groceries.

Longevity is also a problem. According to Life Trust, the latter stages of retirement are the most expensive, with the annual cost for an individual peaking at 92.

At this age, a retiree would spend 50 per cent more across the year than they would have spent at 65.

There is a concern older people will increasingly be leaving debts behind rather than an inheritance.

Earlier this year, Help the Aged reported a quarter of all people approaching state pension age had outstanding debts, including credit cards and loans.

Worryingly, people facing retirement are more confused than ever about the complexity of current tax legislation and rules on pensions.

In a study by insurer LV=, seven out of 10 over-50s admitted being uncertain about pension rules.

Yet the majority have not sought the help of an adviser at all. Rodney Cook at LV= said: "Around 3.5 million pre-retired households are yet to take any professional financial advice, which is worrying."