Prudential Reports Pensioner Inflation to Cut Spending Power 60 Per Cent Over a 20 Year Retirement
LONDON, September 5, 2011 /PRNewswire/ –
Prudential has revealed that pensioners retiring this year on a fixed
income could lose 60 per cent of their spending power over the course of a
20 year retirement.
Analysis from Prudential shows that the average person retiring in 2011
expects an annual income of GBP16,600, but if that income remains fixed it
will be worth a mere GBP6,700 in today’s money in 20 years’ time -
effectively a GBP10,000 pay cut. In fact, assuming that inflation remains at
its current level, pensioners will need their retirement income to more than
double (to over GBP40,000), if they expect to maintain their standard of
living for the next 20 years.
Pensioner inflation or ‘Silver RPI’is higher because people of
spend a greater proportion of their income on goods and services that are
subject to the highest rates of inflation – such as food and fuel.
Vince Smith Hughes, Head of Business Development at Prudential, said:
“Pensioners on a fixed income are particularly vulnerable when it comes to
rising living costs and our figures demonstrate the true extent to which
‘Silver RPI’ impacts on the spending power of those in retirement.
“There are alternatives to a fixed income in retirement, for example
choosing a flexible income plan that has the potential to grow could help
many retirees to mitigate the effects of increasing living costs. We
recommend that people approaching retirement seek professional financial
advice to help them understand all the retirement income options open them.”
Research by Age UK recently found that ‘Silver RPI’has averaged 4.6 per
cent a year since January 2008 – nearly 50 per cent more than the 3.1 per
cent average annual inflation recorded by the Retail Prices Index (RPI) over
the same period.
Notes to Editors:
* Prudential’s Class of 2011 retirement research, a survey conducted by
Research Plus between 6 and 14 December 2010 using an online methodology
among 10,143 UK non-retired adults aged 45+ including 1,005 planning to
retire in 2011
** Pensioner inflation figures based on data from – ‘Age UK Enterprises
Silver RPI – Measuring the true impact of inflation on those in later life’
- 11 May 2011
‘Prudential’ is a trading name of The Prudential Assurance Company
Limited, which is registered in England and Wales. This name is also used by
other companies within the Prudential Group, which between them provide a
range of financial products including money advice, life assurance, advice
on planning for retirement
, which includes pensions
[http://www.pru.co.uk/pensions_annuities/annuities_brainshark ] service.
Media enquiries: Ben Davies 3 Sheldon Square London W2 6PR +44(0)20 7150 3017 http://www.pru.co.uk