Investors buying a level annuity with a pension pot of £80,000 will spend their entire monthly income on basic living costs within seven years of retirement, according to new statistics.
Standard Life researchers have warned that many people could see their retirement income consumed by the basic costs of living as the effect of inflation eats into the money they set aside for retirement.
The FTSE 100 company’s retirement team today warned that investors to take financial advice or risk losing out from inflation restricting living standards in the future.
John Lawson, head of pensions policy at Standard Life, said the cost of living is rising fast for most people in the UK, but this can be particularly acute for pensioners.
He explained, ‘Their spending habits are driven by commodities such as food and fuel bills and these inflation rates are much higher than the overall UK inflation rate.
‘People need to consider how to protect their buying power in retirement from the ravages of inflation over a long period of time, which could be 30 years or more.
‘If pensioner inflation remains at around 6 per cent a year, people with a fixed income could lose almost half of their spending power within a ten year period.
‘There are many options to consider at retirement which could minimise the impact of inflation on your income, so seeking professional financial advice is vital.’
Im guessing you'd use up all your resources first
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