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Households need to find an extra £381 a year each to maintain standard of living

16th September 2014 Print

The latest data shows UK inflation (CPI) grew by 1.5% in August 2014, down from 1.6% in July. This change in inflation leaves UK households collectively needing to find an extra £10.1bn a year to maintain their standard of living compared to 12 months ago, according to MGM Advantage, the retirement income specialist.

Each household will typically need to spend an extra £381 a year to maintain their standard of living compared to a year ago.

Over the past year, 51% of people have said they have cut back on spending to cover the rising cost of living. Things they have cut back on include food bills (63% or an estimated 16.2M people) while 56% (14.4M) said they had reduced Household energy use. 53% of UK adults, (or an estimated 26.8M people), said the rising cost of living was their biggest fear for their retirement.

Aston Goodey, MGM Advantage said: ‘Inflation continues to have an impact on the family finances with many people having cut back on every day essentials to balance the household budget. Until we see some real wage growth, people will continue to feel the pinch of the cost of living.

‘We shouldn’t ignore those in retirement, who are typically on fixed incomes. They face the challenge of not only insuring their savings last as long as they do, but also need to try and maintain a standard of living. Although the state pension increases every year, older generations face a unique set of challenges which can typically play out over a 25 year period or more.

‘A professional financial adviser will be able to help you navigate the retirement income maze and decide what is best for your personal circumstances.’