The latest data shows UK inflation (CPI) grew by 2.9% in May 2017, up from 2.7% in April. This change in inflation leaves UK households collectively needing to find an extra £21.7bn a year to maintain their standard of living compared to 12 months ago, according to Retirement Advantage.
Each household will typically need to spend an extra £797 a year to maintain their standard of living compared to a year ago.
Andrew Tully from Retirement Advantage commented: ‘Households across the UK will be left reeling from the latest inflation numbers. We are feeling the financial pressure of rising prices and flat wage growth, as evidenced by the slowdown in consumer spending and impact on living standards.’
The cost of living rises can have a significant impact on people with fixed incomes, including retirees who typically live off pension income. Over the course of a 20 year retirement, if inflation averaged 2%, the typical retired household would need to find a further £187 a week to maintain their standard of living.
Tully added: ‘Inflation is the hidden force that can wreak havoc with retirement plans. People thinking about their future need to consider how they can mitigate against losing half or more of their spending power over the course of retirement. The new retirement accounts create the flexibility for people to bank a guaranteed income to pay the bills and can leave money invested to pay for life’s little luxuries and help protect against inflation.
‘A professional financial adviser can help you decide the best course of action for your personal circumstances and ensure you stay on track to enjoy the retirement you have worked hard for.’
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