The problem that newly retired people are facing is the ever present affect of inflation as the cost of goods and services is rising at a higher rate than their incomes.
(PRWEB UK) 23 October 2012
As inflation has risen to 2.6%, people are worried that their income will not be enough to handle the ever-increasing cost of living.
Research conducted by uSwitch showed that British families need almost £4,000 a month to feel that they can live adequately, even though many are bringing home £1,435 less than that. Crucially, 6 in 10 don’t feel financially comfortable and 66% have been affected by a pay freeze.
The research also showed that over a third of Britons believed that financial security meant meeting everyday expenses without having to rely on other means of credit.
Recent data from MGM Advantage revealed that households would need to spend a further £900 every year to have the same standard of living as they did in 2011.
The rise in inflation will affect many households and significantly, many will see their standard of living fall as they continue to feel the squeeze.
Pensioners are set to be be hit the hardest as age related inflation is much higher still. The cost of goods and services that retired people are likely to use the most like energy and food are rising at the highest rate meaning inflation in real terms for retired people could be 2 to 3 times that of the national rate.
Scott Mullen of My Pension Expert the annuity specialists said "The problem that newly retired people are facing is the ever present affect of inflation as the cost of goods and services is rising at a higher rate than their incomes. This is made worst still as most people who buy an annuity cannot afford inflation protection for their annuity income. An annuity with a level income of £10,000 would drop to £7,220 if an escalation of 2.5% was added. Annuity rates are low enough without a significant reduction through the cost of escalation."
With a range of other annuity options available at retirement Scott also went on to say "It is crucial that retirees should take Independent advice at retirement as there are lots of alternatives available these days that could be more suitable."
My Pension Expert is a company of Diploma qualified Independent Financial Advisors who specialise in the at retirement market.