‘State’ Of the Nation – Interesting!!!

 

These last few years have been crazy, haven’t they? Financially, first with the Pandemic then coming out of that we have the situation in Ukraine, associated Energy and Food supply and cost issues all feeding into pushing the world’s inflation up sharply, which always brings with it higher interest rates to try and stem this increasing cost of living.

 

What are the side effects though of this combination of economic conditions?

 

If you are a retired person, yes, food and energy is more expensive. However, you will find that a lot of retired people now will have income that is at worse index-linked from an old final salary pension (like gold dust now if you have one) or more inflation linked like the State Pension.

 

An often-maligned State Pension but inflationary increases recently have been sizeable. Add to that retired people tend to own their own homes, so mortgage free therefore immune to the 13 on the trot interest rate rises. They are also likely to have savings which will benefit from the higher interest rates.

 

On the State Pension, no doubt some of you will have seen Martin Lewis’s show last week where the option to pay a lump sum towards making up missed years can for some be a very beneficial option to take.

 

For anyone not in receipt of the full State Pension I would encourage you to contact the DWP or go online and look at any gaps and see what payment is needed as the return can be very positive.

 

This isn’t like an old-style index-linked Annuity where you would start 20% lower than if you had purchased a level Annuity and had to wait 15 years to get back to where you would have started from. There is real value here to be had, so make your enquiries today!!

 

Compare the retired person’s story today to say someone with a young family in their 30s or 40s.

 

Likely to see their State Pension date pushed back until something like age 70, likely to have big mortgages and little savings so will conversely be affected by the rise in interest rates.

 

Add to that, that this group will also have to largely part fund their retirement income to top up their State Pension as they won’t have access to a little or no cost Final Salary scheme and you can see how the current ‘State’ of the nation treats two demographics very differently.

 

I have seen this ‘financial’ gap growing for some time and the current conditions only exacerbate this.

 

To discuss your financial future in detail with a professional please get in touch with Michael at Oyster Financial Planning today. 02380 848410 or enquiries@oysterfinancialplanning.co.uk