Research compiled by MGM Advantage has revealed the worrying state of retirees' finances, with many having to make significant cutbacks in order to make ends meet and cover the rising cost of living.
The retirement income specialist found that 41% of retirees polled have had to cut back on spending over the last year. While some are denying themselves luxuries such as holidays and eating out, what's perhaps more worrying is the number of people who have had to compromise their basic living standards – 27% have had to reduce their household energy use, whilst 23% have had to cut down on food shopping.
This highlights the need for retirees to carefully consider their pension income, ideally through a combination of savings products and finding the right annuity rates to meet their needs, bearing in mind that inflation could significantly strip purchasing power over the course of their retirement.
Andrew Tully, pensions technical director at MGM Advantage, said: "We are in the midst of a cost of living crisis and this shows no sign of going away. These figures highlight the perilous state many find themselves in, cutting back on essentials like food and heating to make ends meet.
"Retirees find it particularly tough as they face the double whammy of a typically fixed pension income and currently low returns on their savings. They also spend a disproportionate amount of that income on the essentials to live compared to other groups.
"People need to consider inflation when thinking about their income needs. Over a 20-year period, you could find your buying power halve through inflation. This makes it vitally important to ensure any pension income considers the rising cost of living."
Use our annuity service to find the best product to fund your retirement
Compare savings accounts to make the most of your money
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.