How the Cost of Living Crisis Is Reshaping Retirement Plans
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The cost of living crisis has a huge impact on everyone’s lives, including those of pension age or who are considering retirement.
When surveyed by Chums, as many as 20% of retirees were considering returning to work to help manage their finances.
For those still in work, as many as 58% said they considered working past their retirement age.
While for some this was because they enjoyed work and wanted the continued mental stimulation, others stated it was due to worries around money and being able to cope financially.
What Are The Biggest Financial Issues Retirees Are Facing?
Increased Living Costs
The overall rise in living costs means pensioners are forgoing the basics such as nutritious food or being able to heat their homes which causes anxiety as well as health concerns.
Everyday expenses have increased to the point where they often outpace pension adjustments, meaning considerably less disposable income for potential retirees.
Housing Concerns
Pensioners who are renting are particularly vulnerable to rising costs, especially when compared to retirees who have paid off their mortgages prior to retirement.
While downsizing could be an option for some, this could mean moving to a less desirable area or away from current support networks, leading to increased loneliness and isolation.
Reduced Social Activities
When cutting back on expenses, social activities are often one of the first things to go. This can lead to a huge impact on emotional and mental wellbeing.
Worrying about money can lead to stress and impact a pensioner’s overall health.
What Can Pensioners Do To Help Their Financial Situation?
Create A Detailed Budget
When spending needs to be monitored, creating a detailed budget can help to see where your money is going each month and identify areas where cutbacks could be made.
Renegotiate All Bills
Some pensioners might not be in the habit of renegotiating their bills each time they renew, and will often remain loyal to the same company for many years.
Comparison sites are a great way to compare prices on products such as broadband, home insurance and car insurance.
While the initial inputting of all your information can take some time, it will be saved ready for future quotes, so you’ll only need to go through this process once.
Check Whether They Are Entitled To Pension Credit
Pension credit is a benefit many pensioners are entitled to but aren’t claiming.
As many as 900,000 people of pension age could be missing out.
Those eligible could be entitled to further benefits that will help reduce their living costs such as a free TV licence and winter fuel payments, which recently became means-tested subsidies.
Start A Side Hustle
Side hustles aren’t just for the young – anyone can start one at any time in life and if your hustle earns less than £1000 per year, you won’t need to pay tax on it.
Plus, there are lots of tax-free side hustles such as selling your old clothes or other items you no longer need.
Find Community Support
There are lots of ways pensioners can be supported in their local communities, including access to warm spaces, community lunches and free courses to improve their skills if they decide they would like to return to work part-time or on an ad-hoc basis.
Final Thoughts
When it comes to your retirement, it’s never too early to start planning.
From increasing your pension contributions to making plans to pay off your mortgage early, choices made in your twenties and thirties can have a huge impact on when and how you can retire.
For those currently planning to retire, the Money Helper website offers a free one-hour Pension Wise appointment to help talk you through your options.
