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Over 55s doing the sums on pension shortfall

In a surprising and counter-intuitive switch, it was suggested this week that the over-55s demographic has become more likely than their middle-aged counterparts to require debt advice in the coming decade. It was once the case that this generation was associated with a natural frugality and social values, which instilled admiration for financial independence and staying debt free. While this is no less true today than in the past, it is unfortunately the case that many older people are facing retirement on a fixed annual income that simply is not worth today what it was predicted to be worth, due to unprecedented levels of inflation.




New figures published by the Prudential recently used statistics to show that the average pensioner will need their fixed annual retirement income to double in a period of barely 20 years in order to stay clear of the high inflation levels that are now in effect. Over this time, the average fixed annual retirement income - which is regrettably not adjusted according to inflation or higher costs of living - will lose more than £10,000 in relative value. For many pensioners this will represent the difference between rating their personal financial situation as "comfortably off" and rating it as "poor."




Saving for a rainy day



What this means for today's over 55s who are not yet drawing their pension is that saving is more important than ever. Any older people who do find themselves in the red cannot afford to be complacent, and should act now using an independent debt reduction service in order to safeguard their funds for the financial "rainy day", which appears to be fast approaching. The head of business development at the Prudential, Mr. Vince Smith Hughes, stated categorically that: "Pensioners on a fixed income are particularly vulnerable when it comes to rising living costs". He recommended high interest savings accounts, early and effective debt consolidation, and seeking a pension scheme with a flexible income plan.




With the costs of long term care in later life skyrocketing, the report makes unhappy reading for the over-55s. This comes when MPs have recently been pushed yet again to defend the country's annual £3billion expenditure on the winter fuel allowance for the over 60s, after a report stated that only one in every eight recipients actually has what it termed "severe difficulties" paying to heat their home. Other universal benefits like free bus travel and TV licences look set to come under fire too, in a mass drive to save money as millions apply for debt consolidation following summer holiday expenditure.




The current director of financial advisory company Ark Financial Planning suggested to pensioners keen to make the most of their savings interest rates that they make gaining solid deposit accounts their first priority. This would help them to get the best rate out of their money. A deposit account has high interest and other healthy financial attributes, but avoids exposing the holder to high risk access such as overdrafts, credit or loans capacity.




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