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Annual cost of living for retirees up by £775

Annual cost of living for retirees up by £775

Category: Savings

Updated: 03/03/2010
First Published: 03/03/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The annual cost of living for retired households has increased significantly over the past 12 months.

Rising inflation means that in households where the main occupant is aged 65 to 75, an extra £774.70 is needed to maintain a standard of living enjoyed a year previously, figures from MGM Advantage show.

For homes where the main resident is aged 75 years and over, the corresponding figure is £383.91, while the average for all households is £1,222.66.

Research suggests that the growing cost of retirement means traditional fixed level annuities are becoming less popular, and that a growing number of people are prepared to take some risk in order to give them the greatest potential for growth in retirement.

Asset backed annuities have been suggested as alternatives, as they offer the potential for greater income, compared with traditional annuities. This is because holders can change income levels at different stages of retirement to suit their circumstances.

"January saw the biggest year on year Consumer Prices Index increase since records began which is having a dramatic impact on the income available to those in retirement," Aston Goodey, sales and marketing director of MGM Advantage commented.

"Until recently, conventional fixed level annuities have been popular as the "safe" option at retirement because they offer a guaranteed fixed income for life.

"However, the risk of not inflation-proofing their income is making more people explore alternative solutions."

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