How does the rising cost of living affect retirement planning?

Hardly a day goes by without more bad news about the rising cost of living.

Its impact on food and heating bills is always in the headlines, but it’s also worth thinking about what it means when you are saving for your retirement.



To help you get started, here are 3 points to consider when you speak to your independent regulated financial adviser about your workplace pension, personal pension, SIPP, or other investment plans.


Are you saving enough?


One of the most common regrets that retirees have is not saving enough money and leaving it late in their career before starting to save. A survey earlier this year showed that half of those over 50 regretted not saving into their pension sooner. The research also revealed that 39% underestimated how much they would need to live a ‘comfortable’ retirement and mistakenly believed that between £10,000 and £20,000 per year would be enough. In 2021, an in-depth survey by consumer champions Which? calculated that couples, on average, would need a pot of around £155,000 alongside their state pension to produce an annual income of £26,000 via pension drawdown for a ‘comfortable’ retirement. That’s around £265,000 through a joint life annuity. 

By ‘comfortable’ Which? means having just enough to cover everyday cost of living expenses, as well as regular short-haul holidays, recreation and leisure, plus tobacco and alcohol if the couple smoke and/or drink. If £26,000 per annum, plus the state pension, sounds like a lot it’s worth considering the sobering thought that the survey was carried out in February 2021 when many of the retirees who took part are likely to have reduced their spending due to being at home during lockdowns. We all know that inflation and the cost of living have skyrocketed since then – so, taking into account those two factors, it’s likely that the predicted sum now required for a ‘comfortable’ lifestyle is even higher.


Is your retirement plan the smartest option for your needs?  


Setting aside more money for retirement is a good idea – but you need to do more than just pop it in a savings account and hope for the best. Many retirees today wish that they had been smarter with their investments and savings – and those still working towards their retirement would be wise to learn from their experience. For many people, the rising cost of essential household bills is putting pressure on how much they can save – so it’s even more important to make sure every pound you put in your pension pot is working as hard as it can. That means reviewing products and investment strategies with expert help from an independent regulated financial adviser. In an uncertain world having flexibility with your retirement plans is an important consideration. Our Self Invested Personal Pension (SIPP) is one example of a smart solution because it can suit those who want control, choice and flexibility when planning for retirement.


Should you focus more on paying off debts?


Carrying too much debt into your retirement years can offset many of the benefits gained from a personal or workplace pension. Ideally, you want to start your retirement with a zero balance on credit cards, loans and your mortgage because debt can really cut into your lifestyle and quality of life. A qualified regulated independent financial planner can help you to work towards being debt-free when you retire.


If you want to make sure that your plans are ahead of the curve when it comes to the impact of the rising cost of living, make sure you carry out a review ASAP. If you don’t have an independent financial adviser already, you can find one here.


Options For Your Tomorrow does not provide advice, but we can provide information about pension scheme rules and regulations, including workplace pensions and SIPPs, so if you need information please contact us on