Investments  

Middle-aged hit worst by inflation

The head of UK retail at BlackRock said people “underestimated” the impact of these two forces on their savings, yet inflation is having an effect “similar” to that in the 1970s.

“Headline rates were much higher then but the differential between the inflation and interest rate is much the same now as back then,” he said. “There is a cost to being in cash that many people are just not aware of.

“Perhaps it is time to reassess the unintended risk that inflation and record low interest rates are having... and consider investments with the potential for higher returns and income over the longer term.”

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Mr Stenning was commenting on the Investor Pulse Survey published by BlackRock, which found that 40 per cent of people aged between 45-54 think funding a comfortable retirement is their “top financial priority”.

However, when asked what they would do with an additional £100 a month, only one in five respondents said they would save more towards retirement.

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Gordon Bowden, director of Buckinghamshire-based Quainton Hills Financial Planning, said: “Inflation is hitting everyone, regardless of age, and the interest rate environment has forced everyone to take higher risks, but they have been handsomely rewarded for doing so in the last three or four years.”