A report by LV= and reported in the Guardian shows that 1 in 5 people approaching retirement are reducing their pension savings by more than £300 a month.
With the cost of living increasing and the economic downturn hitting savings and investments, pre-retirees are having to make the choice between meeting their current lifestyle requirements and their planned future lifestyle.
This worrying trend is compounded by the fact that those in retirement are often most exposed to inflation because their income is fixed and the goods and services they purchase are affected by rising inflation the most.
In addition, we are all living longer and will be required to rely more on our own financial resources than receive support from the State in old age.
The cost of care increases well above the official rates of inflation (be it RPI or CPI) so the most expensive period of retirement may be in later life.
If you are at or near retirement you should consider how much you will need in retirement to meet your costs and consider forgoing avoidable expenditures now if it will have a detrimental affect on your lifestyle in retirement.
Now is the time to use any disposable income to maximise savings and investments, through pensions and ISAs as a priority, to build up a retirement war chest.
It is also imperative to shop around and seek advice when considering your retirement option to ensure you get the most appropriate product and best deal for you.
The golden rule is never to accept the annuity offered by your pension provider without first ensuring it is competitive and, if it isn’t, to take the ‘Open Market Option’ and purchase an annuity for the most competitive provider for your needs. Remember too that you can get enhanced or impaired life rates if you suffer from certain medical conditions or if your lifestyle habits decrease your life expectancy.
