Retirement
UK pensioners expect fall in spending power
Eight in ten pensioners expect the value to their pension will decline due to inflation, according to AXA Wealth.
The providers’ report, Cost of Living in Retirement – which polled 200 pensioners – found British retirees know they will face falls in income but are under-prepared.
Simon Smallcombe, head of guaranteed distribution for AXA UK said: “It’s very concerning that despite people knowing their purchasing power will reduce, they aren’t doing anything about it.”
The report found many pensioners (69%) had not made sufficient plans to counter inflation as a result of early retirement due to ill-health or redundancy.
But half (58%) of respondents admitted to having not sought any financial advice prior to retirement. One in seven waited until just before they retired. And two-fifths (45%) said they have never calculated their pension benefits.
As a result, a third reported they are feeling anxious about money. Sixty per cent said they would need an additional £4,000 a year to feel comfortable.
Smallcombe said: “Retirement is supposed to give you the freedom and opportunity to pursue leisurely interests, so to see food and heating bills presenting a problem is a worrying situation for today’s baby-boomers.
“Retirement planning should be an on-going process that can adapt to changing circumstances using a combination of products; perhaps with guaranteed products forming a core income, supplemented by capped or flexible drawdown as well as income from other tax wrappers as required. Advice is not just something you seek a few months before your last day at work.”