Research undertaken by retirement specialists MGM Advantage has shown that at least 500,000 retirees in the UK plan to return to some form of employment. Shrinking retirement incomes, rocketing inflation and poor financial planning are the main reasons why so many are planning to return to employment, either part time or full time. The research also found that 37% of retirees…”…have scaled back on their daily expenditure.” Essentials such as food, energy and fuel have also increased in price over the last 12 months, meaning retirees who are often on fixed incomes are having to reduce the amount they spend on these items. We reported earlier this year that many retirees are having to make the unenviable choice of ‘heating or eating‘ due to rising energy costs. This week it was announced that inflation had risen again to 4.4%, up from 4.2% in June, heaping further pressure on retirees.
To deal with this squeeze on incomes, MGM also found that over a quarter of a million retirees were having to turn to the state for assistance. On top of this there is also thought to be up to 725,000 retirees…”…who regularly rely upon credit.” The number of people relying on credit in 2010 was substantially less at 486,000. Another option that many retirees are having to rely on is equity release. However, if none of these options are available then it is evident that many retirees will see their living standards fall as a consequence. Those about to retire who may be considering their financial options will also face the prospect of a lower income as annuity rates have also been falling this year.
Craig Fazzini-Jones, director at MGM Advantage highlighted how many retirees lose out on a potentially higher income through a lack of understanding of retirement income products. He said that…”…it’s tragic that so many people’s retirement dreams fail to come to fruition, often because consumers lack understanding about their options or are unaware of some simple, easy steps that they can take to boost their retirement income by shopping around for the best annuity rate.”
Another recent survey carried out by SAGA found that millions of retirees were considering having to sell their property in order to maintain their income, with many others cutting back on essential and non-essential items. Even more concerning than this was the discovery from tenancy specialist HomeLet that the number of people who had to sell their home and move into rented accommodation increased by 16% in the 66 – 70 age bracket. MD of the company John Boyle said that… “…pensioners are already feeling the pinch with the spiraling costs of fuel, energy bills and basic food. Combined with a reduction in income, old people are increasingly struggling to pay to live through their retirement.”