Prudential claims that many are ignoring the effects of inflation when planning for their future and that £1,000 today will only be worth £620 in 2026, meaning that many will be in debt for their retirement.
Head of retirement income at the firm, Aston Goodey, said: “Retirees don’t realise the impact that even modest changes in levels of inflation will have on the purchasing power of their income, and therefore it is important to seek independent advice before choosing an annuity.”
His comments come as the Bank of England battles to bring inflation back on target to two per cent, but Prudential claims that pensioner inflation was 3.9 per cent, the highest in a decade.
Mr Goodey urged people to plan ahead for their retirement and take advice for funding options to avoid later life filled with debt.
“Getting it right could mean the difference between a retirement where you watch every penny to one where you can do the things you want. Ignoring the effect of even modest inflation can have an irreversible effect on retirement income,” added Mr Goodey.