Simon Read: Start saving early if you aim to be debt-free when you retire

There was worrying news for all of us this week as a report revealed that millions of Britons will not be able to afford to retire. Many people approaching retirement have no pension, no savings and large debts, research by Aviva showed. What does that mean for their so-called golden years? The sad fact is they will struggle to survive in retirement.

The study revealed some alarming facts. For starters, a fifth of people over 55 still have a mortgage that owes, on average, £60,440. Having to repay that level of debt is likely to leave them little to put away towards their pensions. Even more frightening is the fact that one in 25 people aged 75 or over still have a mortgage, owing an average of £100,000. If they are paying back that level of debt, what do they have left for themselves?

Being debt-free by the time you retire is an essential part of being able to enjoy what cash you put aside to fund the lifestyle you have probably earned after a lifetime of working. But if people still owe massive amounts on a mortgage – and some even have credit card debts of several thousand pounds, too – it means a majority of their income will be eaten up simply servicing those debts.

In fact, according to Aviva, one in five older people is forced to survive on an income of less than £750 a month, which works out at about £25 a day. Bear in mind that's not spending money, that's getting-by money to cover bills and essentials.

Aviva's advice, as you might expect, is that people need to save more towards their pensions, or face struggling to get by on a pittance. Clive Bolton, one of the retirement experts at Aviva, said: "As a nation, we need to save more for retirement. With the high cost of living, we cannot all afford to put substantial amounts away each month, but even small amounts add up over the years and will help to ensure that retirement is not characterised by a struggle to survive on a tiny income."

Despite the fact the insurer hopes to profit from more people taking out its pension plans, the advice is sound. The simple fact is that the sooner you start saving for retirement, the more pleasant your later years are likely to be.

For instance, a 25-year-old saving £100 a month could have more than £95,000 by the time they reach 65, if their funds achieve growth rates of 6 per cent. But if they wait 10 years until 35 to start saving, their nest egg would only grow to £33,000. I'll leave the thought with you. Officials at HM Revenue and Customs came in for a kicking in this week, and rightly so. As The Independent reported on Wednesday, the Revenue may have cocked up the tax returns of more than 20 million people. Some of you may already have recieved demands for cash from HMRC because it calculated that you underpaid tax. But you don't have to simply pay up – the Revenue's letter is a calculation, not a demand. Check the calculation and call HMRC on 0845 3000 627 if you think it has made another mistake.

You may also be able to persuade it to write off the debt if it may cause you hardship. The Extra Statutory Concession A19 allows HMRC to waive what you owe. Find out more at the Low Income Tax Reform Group's website at www.litrg.org.uk

s.read@independent.co.uk