Pensioners have been affected heavily by falling interest rates. Even dividend incomes are dwindling as hard-pressed companies seek to cut yields in preparation for the difficult times ahead. Other than pension income, these form the two main sources of income for the silver saver.
Neil Duncan-Jordan, national officer of The National Pensioners Convention, estimates that 80% of pensioners rely on savings or share-based investment income to help fund day-to-day living.
Falling Savings Income and Dividends income For Pensioners
Figures produced by Birmingham Midshires show that those aged between 60 and 70 have an average of £35,900 in savings. With base rates at 2%, the silver saver has seen their income drop to a third of what it was 6 months ago.
Job Curtis, the fund manager of Henderson City of London Investment Trust, found that more than 100 companies have cut dividends this year. He also believes that dividend yields will fall by a further 15% during 2009.
What Can Be Done to Improve Returns For the Silver Saver?
- Utilise ISA allowances: Individual Savings Accounts allow savers to invest £3600 per annum and benefit from tax free gains. ISA's usually offer preferential rates of interest to attract savers;
- Fixed-rate Bonds. Tying up capital in fixed-rate bonds allows savers to get returns of about 5% against a backdrop of falling interest rates;
- Claim pension credits: This guarantees that single pensioners get an income of at least £124.05 per week. This figure increases to £189.35 for couples;
- Benefit entitlements: Age Concern recently revealed that 60% of pensioners are failing to claim benefits they are entitled to. A number of seniors could be paying reduced or no council tax at all. Others with disabilities could be claiming Carers Allowance;
- Use online price comparison services to secure the best deals: It is possible to identify substantial savings on utility bills, insurance, white goods and financial products. Gordon Lishman, director general of Age Concern, advised pensioners to shop around in order to get the best rates possible on all financial products;
- Pay off debts with savings: Falling interest rates on savings happen over night, but they don't fall nearly as quickly on credit card debt. It makes sense to pay off high APR debt first.
Whilst these are tough timer for pensioners to generate a good savings income there are things that can be done to improve returns. For those living on the breadline, it is imperative that the elderly investigate various benefit entitlements to assist with affordable living.
Those that found this article useful may be interested in reading about reducing gas and electric bills and money saving ideas for senior citizens.
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