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Rising pensioner inflation highlights value of retirement preparation
18 April 2008 12:00
Older people are seeing their outgoings rising at a particularly rapid rate, according to a new report, underlining the importance of preparing sufficiently for retirement.
Research by Prudential has shown that the average person retiring in 2008 faces an annual income 21.4 per cent lower than that of the typical Briton, while the average pension contribution is currently down 48 per cent year-on-year at £144.57 a month.
This lack of provision is worrying as retirees' expenses are actually growing substantially, with Alliance Trust's study showing that the rate of inflation is currently 3.2 per cent for 65-to-74 year-olds and 3.4 per cent for over-75s, compared to 2.6 per cent for under-30s.
Their rising cost of living has been driven by six per cent growth in food prices over the past year, a four per cent increase in utility bills and a 20 per cent hike in petrol prices, whereas younger people spend more on items like clothes, on which prices are falling.
Alliance Trust's Shona Dobbie explained that inflation is harder on the elderly as they spend a higher share of their budgets on basic food items and warned that, with oil prices remaining high and shortages of some types of food, there is little sign of respite ahead.
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