Retirement ‘despairs’ as older Britons ‘go back to work’ to cover rising inflation | Personal finance | Finance
Inflation hit 10.1% in July according to the latest statistics, and indicative analysis from the Office for National Statistics (ONS) suggests this may be the highest CPI rate since 1982 With prices soaring and the cost of living crisis continuing, retirees are finding it harder to make their money last.
This could result in more returning to work to make up the difference.
Becky O’Connor, Head of Pensions and Savings at Interactive Investor, warned: “The latest inflation figures will further despair people trying to plan for a decent retirement.
“They will also dismay those who have recently retired thinking they would be fine, but can no longer keep track of it.
“Those who chose to retire early during the pandemic may now regret that decision.
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She continued: “To retire, people will need bigger pension pots than before to cope with rising prices, but at the same time they will probably feel even more cautious about using their retirement savings for fear of running out of money. too early.
“They are caught between a rock and a hard place.
“The pressure to make retirement savings last is great at the best of times. At the worst times, it becomes too much. Working again is starting to look like the best option.
But of course, this is only true for those who have the ability to work, as others may find it harder as they get older.
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Ms O’Connor added: “Work will not be an option for many older people. Those who cannot increase their income will find it increasingly difficult to weather this winter without more help.
If people decide to withdraw from their pension to cover the rising cost of living, they should be aware of the potential implications.
An increase in the amount withdrawn from a pension from £5,000 a year to £5,500 a year to cover a 10% rise in prices could mean a pension runs out two years early.
This would mean a depleted fund at 83, rather than 85 – which could make a substantial difference.
Similarly, in the short term, energy bills could end up eating up more than half of retirees’ retirement income.
This risks putting pressure on the pockets of older people, which can be difficult to manage.
Ms O’Connor explained: ‘The average weekly state pension payment was £159.81 in February this year, or £8,310 a year.
“A rise in energy bills to £3,582 in October would mean that energy costs would account for 43% of average pensioner income this autumn.
“It would leave those on state pensions with just £90 a week to spend on food, petrol and other basic living costs, such as clothing, home maintenance and of the car.”
Therefore, Britons may wish to consider all the options available to them and possibly seek advice.
PensionWise is the government-backed service offering free advice on what people can do next, or some may wish to hire a paid independent financial adviser for help.