The high cost of living over the past two years has forced many over-75s to dip into their savings, a new report has found.

Insurer Aviva has published a new report which shows that, in the summer of 2010, the average person over the age of 75 had put aside £22,500 in a savings account, but this figure has now shrunk to just £13,000.

The report, which analysed the finances of over-55s in the UK, attributed the 40 per cent reduction in savings pots to the persistently high levels of inflation over the past two years.

Older people have been particularly hard hit by the rising price of food, petrol and utility bills, where they spend a larger proportion of their income in comparison to younger generations.

Joanne Segars, chief executive of the National Association of Pension Funds, also claimed low interest rates had caused the fall in pensioners' savings pots.

She said: "Many of those who are deep into their retirement are having to knock lumps out of their nest egg to get by. It's a very difficult and worrying position to be in, and many could see their savings run out."