Pensioners could get a much better return on their savings if they improved their saving habits.
A survey by Hargreaves Lansdown found many retired Britons are more likely to keep some of their savings in a current account while 29 percent of pensioners have never switched provider despite the recent hikes in interest rates.
Sarah Coles, head of personal finance at Hargreaves Lansdown: “Emergency savings are a vital lifeline for retirees, so it’s brilliant that the vast majority of people in retirement have done all the hard work of building a savings safety net.
“Unfortunately, there’s every chance this money is languishing neglected in miserable savings account, because significant numbers of retirees admit to alarming savings habits.”
The research found 37 percent of retirees have some of their savings in a current account, which is more than double the proportion of non-retired people who do, at 14 percent.
READ MORE Changes to your pensions – exact dates and how Autumn Statement affects your pot
Ms Coles said: “There’s a risk people are keeping it here ‘just in case’ – instead of getting a better rate in an easy access savings account.
“The problem is that in the vast majority of cases, they’re getting little or no interest on their money, and by removing any friction to spending their savings, there’s a risk it will disappear without them ever really knowing where it went.”
Four in 10 pensioners also save with the same bank as they use for their current account and only eight percent have an online savings account – but these often provide much better interest rates.
More than 60 percent of the retired Britons said they have no plans to switch. Ms Coles warned older savers may be convinced they are on the best interest rate when this is not the case.
Deadline for Winter Fuel Payment up to £600 approaching – see when payment lands[PAYMENT]
‘I top up my pensions income with £600 a month from my side-hustle'[PENSIONS]
Extreme weather ‘havoc’ and climate change increase food bills £350, study says[FOOD BILLS]
She said: “When we asked savers why they won’t switch, retired people were more likely to say they already had the best rate (34 percent compared to 25 percent of those who are not retired).
“However, given so many of them haven’t moved accounts recently, it may simply be that this is the best rate at their bank, or the best they have seen on the high street.”
Only a quarter said their top priority when looking at savings accounts was getting the highest interest rate. Of those not planning to switch, 18 percent said interest rates are so low the couldn’t see the point.
Another interesting trend that could be costing pensioners is the importance they place on making sure they trust their savings provider.
- Support fearless journalism
- Read The Daily Express online, advert free
- Get super-fast page loading
Ms Coles explained: “Retired people are more likely than their working counterparts to focus on whether their money is secure and whether they trust their bank.
“This could mean they distrust newer and online banks, and don’t realise they offer the same protections for customers as the high street giants.”
In more positive news, the research found only 11 percent of retired Britons are not switching because they find it too much hassle.
Ms Coles commented: “Once persuaded to give it a go, retired people are far more likely to take the steps to secure a great savings rate while we’re still so near the peak of the market.”
For the latest personal finance news, follow us on Twitter at @ExpressMoney_.
Source: Read Full Article