Inflation manifests itself in two ways. Not only can goods and services cost more, but people will also find the products they do buy won’t go as far due to ‘shrinkflation’.
11% increase in over 50s to work part-time following retirement
Fears of inflation and a ‘Toblerone Retirement’ force new thinking
- 52% (11% increase) of over 50s say they will work part-time post retirement
- Paying the bills a priority for 72% of over 50s
- 30% of over 50s worried about the cost of living in retirement
People are increasingly worried about the rising cost of living, paying the bills and are increasingly considering working longer to make ends meet, according to new research1 from Retirement Advantage.
The retirement specialist is warning that the concerns around inflation and the rising cost of living is forcing the over 50s to consider working for longer or face a ‘Toblerone Retirement’. ‘Toblerone Retirement’ highlights the effects of inflation and ‘shrinkflation’, in light of the decision by the chocolate bar manufacturer to reduce the size of the product by 10% due to the rising costs of raw materials.
Andrew Tully, pensions technical director at Retirement Advantage, said: ‘People are worried about how their finances are being stretched and are clearly concerned about how they will be able to pay the bills. We’ve seen an increase in the number of people who say they will work part-time following retirement due to the pressures on household finances.
‘Inflation manifests itself in two ways. Not only can goods and services cost more, but people will also find the products they do buy won’t go as far due to ‘shrinkflation’. Both can have a significant effect on household budgets, especially when you typically have fixed incomes in retirement.
‘People need a financial plan which not only secures an income to pay the bills throughout retirement, but is flexible enough to cope with inflation. Only then can people start thinking about how other savings can be used to create the retirement they’ve worked so hard for.’
The Bank of England recently forecast that inflation will rise to 2.7% this year2, up from the current 1.6%3. The Bank predicts inflation will return to its 2% target in 2020. This predicted rise in inflation is due to the fall in the value of the pound, which makes imported goods more expensive.
- Research was conducted by YouGov Plc. Quantitative fieldwork between 15/08/2016 and 19/08/2016, with a wave surveying 1000 UK adults aged 50+ who have a DC pension and who are not in retirement.
- Source: Bank of England via http://www.bbc.co.uk/news/business-37860880
- Source: ONS CPI for December 2016, published 17 January 2017.