Average household needs to spend an extra £1,035 a year to maintain standard of living

Despite the fall in the annual CPI inflation rate to 3%, MGM Advantage, the retirement income specialist, estimates that collectively UK households will need to find an extra £27 billion¹ to maintain the same standard of living enjoyed 12 months ago.  The typical UK household will need to spend an extra £1,035 a year to maintain their standard of living from a year ago.  Each person in the UK will need to find an additional £436 a year to maintain their standard of living.

Aston Goodey, Sales and Marketing Director, MGM Advantage comments: “Inflation continues to have a big impact on our financial health.  To illustrate this, goods and services costing £100 back in 1991 would have cost £176 in 2011², just twenty years later.  Inflation has an even bigger impact on our retirement nation, who spend more of their income on food and fuel, and where we continue to see price rises above average.  The ‘baby boomers’ are now looking at ways of managing the corrosive effects of inflation, and 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 they need to guard against the impact of both high inflation and falling annuity rates.”

MGM Advantage research shows that nearly a fifth (19%)³ of non-retired people are 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: www.retirementnation.co.uk

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Notes to editors

1. Source: MGM Advantage analysis of ONS Family Spending Report 2011, ONS population statistics and the Consumer Price Index (May 2012).

2. Source: Bank of England inflation calculator, average cost of goods and services £100 in 1991 would cost £176 in 2011, average inflation of 2.8% over that period.

3. Research conducted by Research Plus with 2086 UK adults aged 55+, published in December 2011.

4. 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 £2.33 billion and where they are aged 75 and over, £1.54 billion.