Inflation swallowing up pensioners income
Many people will see their retirement income swallowed up by the basic costs of living which are being driven up by rising levels of inflation, Standard Life has warned.
It says it is vital that those thinking about retirement should consider the effects inflation may have on their income.
Using the Office for National Statistics and official government inflation figures, Standard Life has calculated that someone with a pension pot of £80,000, buying a level annuity will spend their entire monthly income from both private and state pensions on basic living costs like food and fuel within 20 years of retirement.
However, this calculation only includes essential expenditure, so if non-essential spend is added in then the effect on income will be felt much sooner.
Andrew Tully, senior pensions policy manager at Standard Life, said: "The cost of living is rising fast for most people in the UK, but this is particularly acute for pensioners.
"Their spending habits are drive by commodities such as food and fuel bills and these inflation rates are much higher than the overall UK inflation rate.
"Pensioners relying on a fixed income will be feeling the pinch, with no sign of an immediate end to their misery.
"If pensioner inflation remains at around 6 per cent per year, people with a fixed income could lose as much as half of their spending power over as little as 10 years."
