The Effects of Inflation on Retirement
UK’s retirees are guaranteed their pensions given the triple-lock mechanism that protects any change in the promised value a decade ago. However, the continuing inflation could render the values received monthly as useless.
Inflation affects pensioners because:
It weakens the currency: the purchasing power of the Pound Sterling could reduce savings because of increasing item prices. This will mean looking for additional sources of income
No opportunities for employment: retirees can only look to savings accounts or risk their pensions in stock market investments, which could mean losing more cash if things do not go as planned.
According to Aegon Head of Pensions Kate Smith said the inflation severely affects all UK households, most especially pensioners who only have a fixed amount of income.
She said that if the inflation continues, the inflation’s effects would continue to trample fixed incomes of pensioners and other affected individuals. She said that only 75% of UK’s population have taken action to find new ways to invest money to protect their savings from possible rising inflation troubles.
The UK’s state pension amounts only increase by 2.5 per cent every year, which is not enough to combat the effects of inflation in the country. According to Retirement Advantage pensions technical director Andrew Tully, building some form of protection “against the ravages of inflation” is important at this time.