SAVING is more of a priority for 66% of over-55 homeowners in the West Midlands in 2014 but with 91% braced for rising living costs, many look set to continue raiding their existing savings pots or resorting to unsecured credit to make ends meet.

The findings come in new research from the Equity Release Council.

The research among UK homeowners aged 55-plus shows savings are the first place they turn to when they need extra money, yet that has not shielded a number from racking up debts they are struggling to clear.

One in three (33%) are concerned about how to pay back what they owe in 2014 - almost three in four of them (74%) have no plan in place, while 68% are avoiding the issue.

Meanwhile, the value of equity release loans grew significantly in 2013 as more homeowners took that option to ease their finances. The typical customer withdrew almost £60,000 of equity from their home’s value. Analysis of homeowners over the age of 55 in the West Midlands suggests that sum would boost retirement incomes, clear debts and offer peace of mind, with more than one in 10 (12%) saying that sum would save them from being forced to downsize their homes.

Almost three in four over-55 homeowners in the region (77%) view their savings as the first port of call for extra funds, with 22% using savings capital to pay everyday household bills and expenses in 2013 while 22% used savings interest for it.

Beyond savings, over-55s in the West Midlands are most likely to turn to bank loans (49%), overdrafts (42%) and credit cards (46%) to supplement their income. Growing numbers are exploring those routes - two per cent with outstanding credit card debt took that out in the last year or owe more now than they did a year ago. The same is true of 25% with overdrafts and 20% with loans.

Nearly one in three (31%) used a credit card to pay everyday bills and expenses in 2013, including seven per cent who fail to clear their balance every month.

Despite their difficulties, more than half of over-55 homeowners in the West Midlands (66%) want to improve their savings habits in 2014, making it their top financial priority, yet with many savings rates stuck below inflation, seven per cent predict rates will drop even further, while another 74% expect no improvement.

The chances of achieving their savings ambitions this year look slim, with 91% expecting living costs to rise. Almost one in three (31%) are braced for a significant increase. Keeping up with regular bills is their biggest concern (26%), along with boosting their income (22%).

Despite their reliance on savings and unsecured credit, 67% of over-55 homeowners in the West Midlands believe their home is their biggest financial asset in retirement. With equity release loans increasingly popular in 2013, industry figures show customers accessed almost £60,000, on average, to boost their finances in later life.

More than a quarter over-55 homeowners in the region (26%) believe that sum would significantly improve their quality of life, while it would also provide 17% with peace of mind. For 12% it would make the difference between staying in their existing home or having to downsize.

Drawdown products accounted for two thirds (66%) of equity release loans in Q3 2013, offering customers an extra source of regular income. Among the many uses for equity release loans, providing extra retirement income to manage everyday costs (41%) appeals most to over-55 homeowners, while 39% would fund home improvements.

Nigel Waterson, The Equity Release Council Chairman, said: “These findings suggest over-55s in the West Midlands are certainly aware just how important it is to save.

"The difficulty lies in putting their good intentions into practice when the cost of living and a persistently low interest rate environment are pushing people to use existing savings or turn to credit as a short-term solution.

“Taking these steps may ease their immediate cash flow problems but with dwindling savings and outstanding borrowing to clear, this approach can hold many back from saving enough to cope with everyday costs in retirement, let alone allowing for extras or supporting family.

“It is no surprise that equity release is growing in popularity as an extra income source to cope with the realities of managing money in later life. Customers are attracted to the flexibility of using their housing wealth exactly how they choose, with the option to receive regular instalments, a one-off lump sum or a combination of both.

“With some products allowing monthly repayments and protecting an inheritance, over-55s can work with advisers to make a choice that best suits their needs at a time of life when borrowing options are often limited.

" Double digit rates for personal loans, overdrafts and credit cards remain the norm, while equity release rates increasingly offer excellent value in comparison for the protections they provide."