LONDON, June 16, 2011 /PRNewswire/ --
Standard Life is warning anyone thinking about retirement to consider the effects of inflation eroding their income. New data released today by the savings and investments specialist shows that many people could see their retirement income swallowed up by the basic costs of living within seven years, as the effect of inflation impacts their spending power.
Using Office for National Statistics data and official Government inflation figures, Standard Life has calculated that someone with a personal pension pot of £80,000, buying a level annuity, will spend their entire monthly income (from private and state pensions) on basic living costs like food and fuel within just 7 years of retirement*.
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. 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% 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."
For further information on inflation proofing retirement income, and the choices available, interested parties can visit http://www.standardlife.co.uk/retirement_solutions/search.html.
Notes to Editors:
*Couple, male aged 65 and female aged 62, with a £80,000 pension fund who have purchased an annuity
** For example, see Age UK, 'silver RPI', http://www.ageuk.org.uk/latest-press/archive/silver-rpi-impact-of-inflation-for-those-in-later-life/.
About Standard Life:
Standard Life is a leading long term savings and investments company headquartered in Edinburgh and operating internationally. Established in 1825, Standard Life provides ISAs, life assurance, annuities, mutual funds, investment bonds, tax efficiencies, pension planning advice, and investment management to over 6.5 million customers worldwide.
Senior Media Affairs Manager
Standard Life plc
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SOURCE Standard Life plc