Older people are starting to feel the benefits of the improving economy with around £150 a month more in their pockets than they had a year ago, a report has found.
People aged over 55 are becoming more likely to cite savings and investments as a source of their income, in signs of confidence returning to the economy as people seem more willing to start spending their savings again, Aviva's spring "real retirement" report found.
The over 55s typically receive £1,373 a month in income, which is an extra £151 a month compared with spring 2013. Those approaching retirement and aged between 55 and 64 years old have seen the biggest jump in their average incomes since 2012, with a £233 increase over the two-year period taking average incomes for this age group to £1,402. People aged between 65-74 have a typical monthly income of £1,368 and those aged over 75 have around £1,290, the report found.
Almost one third (29%) of older people identified savings and investments as a source of their income, up from 24% a year ago. The average amount that people have in savings and investments is £18,632 and people aged 65-74 have the most put away typically, at £25,938.
Three-fifths (60%) of older people said the state pension makes up part of their income, while 58% of 55-64-year-olds said they still earn money from employment, dropping to 7% of over 75-year-olds who still earn a wage.
Clive Bolton, managing director, retirement solutions at Aviva, said: "This latest report reflects a shift in the views and experiences of the over-55s as they begin to feel the benefits of the improving economy."
The report also found that living costs are continuing to eat big chunks out of older people's incomes, with spending hitting an average of £816 a month, marking a new peak for the quarterly report, which is now in its fifth year. Spending on gas and electricity has helped to push this figure up, with this cost now standing at a new peak of £122 a month on average.
But in another sign that consumer confidence is improving, the research also found that older people are spending more on enjoying themselves, with spending on recreation, entertainment and holidays rising to £78 a month, expenditure on dining out and takeaways growing to £30 a month and shopping for clothes and shoes also increasing, with an average of £29 a month spent.
Meanwhile, debt repayments from non-mortgage borrowing have fallen to their lowest levels since the report series began, at £37 a month on average.
Rising house prices could also be helping to make the over 55s feel better off. Two-thirds (66%) of people in this age group own their home outright, with no mortgage outstanding, up from 60% a year ago. Continued low interest rates have kept the cost of borrowing relatively cheap, encouraging people to pay down or pay off their mortgages.
The average value of a property owned by someone aged over 55 has reached £240,641, compared with the national UK average of £179,872, the report said.
The research, which was carried out among around 1,000 people who are approaching or in retirement, was carried out in February, before a radical shake-up of the way people can take their retirement pots was announced in the recent Budget.
The Budget reforms aim to give people more freedom about how they use their pension savings, making it easier for them to cash their pots in rather than feeling forced to use them to buy a fixed lifetime income called an annuity.
Controversy has been growing over annuities amid fears that people are failing to get the best and most suitable deals for them. There are several different types of annuity, including ones which tend to pay better rates for people in ill health.