Inflation is Biggest Risk to Retirement Income

Approaching retirement? Inflation is the biggest threat to your pension pot

Emma Wall 20 August, 2013 | 4:26PM
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The rising cost of living is threatening to erode Europe's pension pot. According to a survey commissioned by Allianz Global Investors, those approaching retirement are most concerned about the effects of inflation, citing it as the biggest financial risk to their pension savings. 

A study asked workers aged between 50 and 70 living in Austria, France, Germany, Italy, Netherlands, Switzerland and the UK, and more than half of the respondents admitted they were uncertain as to whether they would be able to maintain their current standard of living in retirement. 

Those aged between 50 and 54 were most pessimistic about their ability to provide themselves with sufficient retirement income.

Many surveyed also confessed they should have started retirement planning earlier in their careers and a quarter said they should have saved more than they had. 

Dr Renate Finke, Senior Economist at Allianz said that retirement planning is crucial to ensure ease of living in later life.

The problem lies in how people approach pension saving, with one third of respondents saying they started planning too late and one in four highlighting that they did not save enough.

Finke said: "Saving for a pension is arguably more challenging in the current economic environment of financial repression.

"In order to maintain their existing standard of living, many will people will need to build additional savings either through particular retirement savings plans or general individual saving. Hopefully the experience of those about to enter or in retirement should motivate the younger generations to start thinking about saving for their retirement."

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar