Silver savers under pressure as inflation takes its toll
As the UK continues to experience high inflation with low interest rates, the combination spells double trouble for those saving in later life.
Latest data from the Silver RPI published by Age UK Enterprises, the commercial services arm of charity Age UK, shows the average person aged over 55 has experienced price increases at five percent above headline inflation measures. In monetary terms this means they are £30 per month worse off before putting money aside.
Latest figures show the gap between the price rises experienced and headline RPI now costs an average over 55 year old £907.202 a year, rising to £1,038 for those between 65 - 69.
The recent figures are doom and gloom for the silver savers trying to save for life after work. Gordon Morris, Managing Director at Age UK Enterprises said: "Many people in later life have worked hard with the ultimate goal of a comfortable retirement in their sights. It is saddening to see that this may not be possible for some as they continue to be under financial pressure thanks to rising living costs. Without the financial services industry recognising the particular needs of this age group, saving may become an expensive luxury in the future. It makes clear how crucial it is for customers to do all they can to manage costs and ensure they have the most appropriate, best value financial product for their circumstances."
The Silver RPI is published to coincide with the Bank of England Quarterly Inflation Report in February 2011 and shows that the gap between costs for those in later life and the general population has widened. This is due to the continued impact of low mortgage interest rates which have less effect on those in later life as they are less likely to carry mortgage debt, and in the last quarter, cost increases in products and services such as energy and food that over 55s spend proportionally more on.
Morris continued: "The latest Silver RPI demonstrates the shocking impact of rising prices on over 55s who are now more than £907.20 a year worse off than official inflation measures estimate. There is a widening gap between the inflation experienced by the general population and those in later life, and this worsens with age. A typical 70-74 year old now experiences ‘real' price rises at 5.3 percent above headline RPI figures."
Erik Britton from Fathom Consulting said: "The Silver RPI shows that inflation has been far higher over the last few years for those over 55 than for the general population. Inflation effects are not homogeneous, and measuring those differences helps those in later life plan for their financial future by taking them into account."