Pensioners with Fixed Rate Payments to lose out
The most vulnerable generation could be set to lose as much as sixty percent of their spending power over the next twenty years if they have a fixed income pension, according to research by Aviva.
Aviva found that if interest rates were to be kept the same for the next twenty years then pensioners could be seen to lose as much as £10,000 from their spending income, based on the changing value of money.
The news follows reports by Age UK that Silver RPI, which is inflation which affects pensioner spending (such as that which affects fuel and food costs), has averaged as 4.6% since January 2008.
The news means that a number of pensioners could find themselves struggling to cope financially in coming years, especially if they choose a fixed income pension.
Vince Smith Hughes, the Head of Business Development at Prudential, stressed the importance for those considering retirement and pension planning to seek “professional financial advice”.
He also added that they should consider “all of the retirement income options open to them” in order to make sure they are as prepared as possible for future financial changes.
Not only is it important for those likely to be affected by these hypotheses to consider the types of plan available to them, but it is also vital that they consider their current methods of spending and saving.
Reviewing the types of credit cards which are available can help to give people better rates and deals, helping to boost their ability to save.
Comparing bank accountscan also help savers to identify whether they are getting the best deal, allowing them to make the most of what money they are able to save.
Other ideas, such as prepaid credit cards and travel money cards, are a great way to provide consumers with greater financial freedom during what are proving to be financially uncertain times.