How spiralling inflation is damaging pension savers in the UK
Inflation can have a devastating effect on pension savers in the UK. With the cost of living rising year on year, many retirees are finding it increasingly difficult to make ends meet. The problem is compounded by the fact that pensions are often fixed, meaning that they do not keep pace with inflation. This means that over time, pensioners' purchasing power diminishes, and they are left with less and less to live on.
The impact of inflation on pensioners can be severe. It can eat into their savings, and make it harder for them to afford essential items such as food and heating. In extreme cases, it can push people into poverty.
There are a number of steps that pensioners can take to try and mitigate the effects of inflation. One is to invest in index-linked assets, which are designed to track the rate of inflation. Another is to make sure that they claim all the benefits to which they are entitled. However, for many people, these measures will not be enough, and they will continue to struggle as the cost of living continues to rise.
5 Positive steps to take to improve your pension prospects
So with inflation on the rise what can you do to help mitigate the effects of high inflation when saving for retirement, here are 5 recommendations which may help provide a better retirement.
1. Review your current pension arrangements and make changes if necessary – this may include consolidating pensions, increasing contributions or taking advantage of employer contributions.
2. Consider how you can increase your income in retirement – this may include working part-time, downsizing your home or releasing equity from your property.
3. Make the most of tax reliefs available on pension contributions – higher and additional rate taxpayers can receive up to 45% relief on their contributions, while basic rate taxpayers get 20%.
4. Invest in assets that are linked to inflation – index-linked gilts and bonds are a good option, as are certain types of annuity.
5. Seek professional financial advice – a qualified adviser can help you understand your options and make the best decisions for your individual circumstances.
Taking these steps could help to protect your pension from the effects of inflation and ensure that you have a comfortable retirement.