All of us have felt the pinch as inflation has soared to its highest level in 40 years. From energy bills and grocery costs to filling up your car and eating out, the rising cost of living has affected everybody to some extent.
But one group that’s being particularly hard hit is retirees.
According to research by the Pension and Lifetime Savings Association (PLSA), retirees who are trying to achieve a basic standard of living have seen their expenditure go up by 18 per cent over the last year.
This is defined as a lifestyle where a retiree, rather than just surviving, is able to live with dignity, participate in social and cultural activities and pay for occasional luxuries such as eating out once a month and taking a week’s holiday in the UK.
Figures from the PLSA showed that living costs for single people in this category have risen from £10,9000 to £12,800 and for couples from £16,700 to £19,900.
A similar trend was observed among those classed as living a moderate lifestyle, as their costs were found to have gone up by 12 per cent and 11 per cent for single people and couples respectively.
Meanwhile, those enjoying a comfortable standard of living in retirement saw their cost of living go up by 11 per cent if they were on their own and ten per cent if they were part of a couple.
It’s clear from these figures that the cost of living crisis is having a disproportionately large impact on those who have the least; with retirees on the most modest incomes seeing the biggest rate of price increases throughout the last year.
The statistics also demonstrate why there’s no time like the present to get started with your pension planning and make sure you’ve been automatically enrolled into a workplace pension plan by your employer.
That’s why, in response to its findings, the PLSA is calling for the government to “increase the scope and level of automatic enrolment pension contributions” when the cost of living crisis has passed.
The PLSA is far from alone in calling for automatic enrolment to be extended, as the Social Market Foundation recently proposed reducing the age of eligibility from 22 to 18 and lowering the earnings threshold for eligibility below £10,000 a year – possibly to zero.
Similarly, the think tank Onward has calculated that younger workers would save an extra £20,267 on average if they were enrolled at the age of 18 rather than 22.
But this will take time, assuming it happens at all.
Each and every one of us is affected by wider economic circumstances to varying extents, so it’s important to take matters into our own hands as much as possible.
Hopefully, such action can insulate against difficulties beyond your control, giving confidence that you’ve taken at least some charge over your own destiny.
That can, hopefully, give you some insulation from difficulties that are beyond our control, and give you confidence that you’re largely in charge of your own destiny.
While we all hope that the cost of living crisis eases soon and that inflation falls to more manageable levels, what’s happened over the last year should be a cautionary tale and a reminder as to how vulnerable our personal financial situation can be in the face of economic shocks and difficulties.
If you have any questions about how to plan for retirement and make sure you’re able to enjoy the type of lifestyle you want in the future, please don’t hesitate to get in touch with us.
We can help you make sure your money is working as hard as possible for you, so you can look to the future with confidence and a sense of security.