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London,
11
April
2017
|
10:47
Europe/London

Inflation squeeze will hit household budgets to the tune of £17.2bn

Andrew Tully, pensions technical director, Retirement Advantage
Although we will all feel the pinch, rising bills can have a devastating impact on people with fixed incomes, typically those in retirement.
Andrew Tully, pensions technical director, Retirement Advantage

The latest data shows UK inflation (CPIH) grew by 2.3% in March 2017, the same rate as February1. This change in inflation leaves UK households collectively needing to find an extra £17.2bn a year to maintain their standard of living compared to 12 months ago, according to Retirement Advantage.

Each household will typically need to spend an extra £632.32 a year to maintain their standard of living compared to a year ago.

Andrew Tully, pensions technical director, Retirement Advantage commented: ‘Households across the country will feel the inflation squeeze as bills rise for everything from council tax, food and clothing, to water and other utilities.

‘Although we will all feel the pinch, rising bills can have a devastating impact on people with fixed incomes, typically those in retirement. People will find their private pensions and savings will simply not go as far as they once did.

‘Our research shows people are worried about paying the bills and the rising cost of living, but how do you balance the need to live and also ensure your savings last the duration of your retirement? If you blend annuity and drawdown you can have the best of both worlds, with guaranteed income to pay the bills while funds invested can be seen as a natural hedge against inflation.

‘Seeking professional financial advice can help you decide the best course of action for your personal circumstances and ensure you enjoy the retirement you have worked hard for.’

Retirement Advantage research3 shows 72% of people think paying the bills is a priority in retirement while 30% are worried about the cost of living.

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  1. Source: Statistics Consumer Price Index (March 2017).
  2. Source: Retirement Advantage calculations based on the ONS Family Spending Report 2016 https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/datasets/householdexpenditurebyageofhouseholdreferencepersonuktablea9
  3. Source: 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.