UK households continue to feel the pressure as they need to find an extra £25.4 billion to maintain standard of living
Average household needs to spend an extra £966.78 a year to maintain standard of living
Despite the fall in the annual CPI inflation rate to 2.8%, MGM Advantage, the retirement income specialist, estimates that collectively UK households will need to find an extra £25.4 billion1 to maintain the same standard of living enjoyed 12 months ago. The typical UK household will need to spend an extra £966.78 a year to maintain their standard of living from just one year ago.
Aston Goodey, Sales and Marketing Director, MGM Advantage comments: “The fall in inflation will come as a welcome respite for many people who continue to feel the pinch. But each UK household will somehow still need to find an extra £966 a year to maintain their standard of living, or as many millions of UK families have seen, their standard of living falls dramatically.
“Inflation is particularly damaging for pensioners. But there is good news in the latest data as the largest downward pressures came from reducing costs of fuel and food. These commodities are where retired households normally spend a disproportionate amount of their income so this will offer some welcome relief.
“But given the backdrop of recent high inflation, people approaching retirement are continuing to look for ways of managing the corrosive effects of inflation. This has created strong demand for retirement income solutions that can provide some protection against the rising cost of living.
“Our Flexible Income Annuity, which offers both flexibility and potential for investment growth, continues to grow in popularity as more people begin to understand that they need to guard against the impact of both inflation and falling annuity rates.”
MGM Advantage research2 shows that 38% of retirees are concerned about inflation eroding spending power. Nearly a fifth (19%)3 of non-retired people were unaware of the negative impact of inflation, while over half (54%) were not aware of any way of off-setting it. For further details please go to: http://www.mgmadvantage.co.uk/category/retirement-nation/
Notes to editors
- Source: MGM Advantage analysis of ONS Family Spending Report 2011, ONS population statistics and the Consumer Price Index (June 2012).
- Source: MGM Advantage research among financial advisers using SurveyMonkey. Fieldwork May and June 2012.
- Research conducted by Research Plus with 2086 UK adults aged 55+, published in December 2011.
- Graphic shows the impact of inflation on £1000 today going forward:
Source: MGM Advantage
5. To maintain the same living standards as a year ago, households where the main occupant is aged 65 -74 will need to find £2.1billion and where they are aged 75 and over, £1.4billion.