Workers and retirees alike need advice more than ever

Simon Chrystal

Simon Chrystal

It might have come down slightly last month, but inflation is still a major issue across the UK for people who are currently in work, as well as those who have already retired.

As revealed on Wednesday, the latest UK CPI fell to 10.5 per cent in December – modestly lower than the 10.7 per cent we saw in the previous month.

While this is the second consecutive cooling of inflation from the alarming 41-year high of 11.1 per cent experienced in October, make no mistake: the sustained sky-high price jumps are going to remain a pernicious, painful issue for some time to come yet.

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It is all too easy to regard inflation as ‘economic data’; meaning sometimes we can wrap it in generic or cold language. 

However, for both workers and pensioners it can have a hugely detrimental impact on their retirement savings and future plans.

All assets and the values that they have spent a lifetime creating, building and carefully safeguarding can be eroded by inflation. It puts at risk what they have and continue to hold dear as well as their legacies.

As we can all – including financial regulators – agree, when what you have worked hard for for years is suddenly under threat, it creates vulnerability and can cause significant challenges when it comes to decision-making.

Those who are approaching retirement and are still building funds for their futures may find themselves in between a rock and a hard place – 'do I stop saving for the future so I can continue to afford to look after myself and loved ones today?', which boils down to: 'putting off today’s issues to another day'. Or 'do I make compromises now in order to remain on track to meet my retirement planning targets?'

These are tricky and complex decisions and sadly for many, they might find their savings, indeed those things built up over many years, will be impacted.

Those who are on the cusp of retirement or already retired do not have the benefit of time to plug gaps in savings and, together with decreasing values amid bleak market and economic environments, their pension and savings will be hit and, therefore, so will the quality of the rest of their lives.

Again, unfortunately, many will face the real possibility of running out of their savings sooner than they anticipated in retirement.

This is all a major concern and forces many to make purely emotional decisions at a time when they are vulnerable, rather than informed decisions about the future.  

From experience, we know that this vulnerability, for some, will see them become easy targets for scammers or industry ‘bad actors’ guaranteeing higher investment returns, more income and greater access to lump sums.