Don’t let the downturn put a downer on retirement

With low interest rates and inflation, retirement is looking increasingly fraught – but there is a solution…

We are increasingly told that retirement should be thought of as a process rather than a one-off event. Unfortunately too few of us are heeding these warnings and taking control of our financial futures.

Scores of us are reaching the point in our lives where we expect to stop work, but if we are going to realise these aspirations then the planning for life after work has to start now.

Against the current economic backdrop in the UK, is it any wonder that the prospect of retirement fills as many of us with trepidation? As we near the end of 2018, interest rates remain low and inflation looks set to increase. This double whammy means those approaching, at, or already in retirement face the worst possible scenario. Low interest rates hamper retirement income growth, effectively leaving people with much less than they expected. And at the other end of the spectrum, inflation and, in particular, the rising cost of daily staples such as food and fuel constitute a far bigger share of spending for the over-55s than they do for any other group in society.

The fact that we are all living longer is, of course, a reason to be cheerful, but the financial implications of an ageing society shouldn’t be overlooked. We all need to think about how we best preserve our income for the future.

But what if there were a way to safeguard savings? What if savers could mitigate some of the economic risks at play and have access to savings solutions or products that would offer a guaranteed level of income in retirement? Whereas previously such ‘guarantees’ would have been the preserve of those in a defined benefit pension scheme and therefore in line for a retirement income based on a percentage of their salary today, unit-linked investments can offer a potential solution to more and more.

According to Aegon’s Simon Skinner, “The reality of longer life expectancy, coupled with continuing low interest-rate environment and inflationary pressures, is creating the worst possible scenario for retirees. As a consequence many people approaching retirement are looking for the peace of mind in an investment product which targets a level of risk they are comfortable with and which suits their needs.”

Aegon’s Secure Lifetime Income Plan offers investors a minimum guaranteed annual income and the opportunity to lock in a higher retirement income through its unique ‘monthiversary’ feature. The product, aimed at those aged between 45 and 79, is suited to those investors who want to preserve their retirement income and who are keen to benefit from any market increases. Investors have the opportunity to increase their guaranteed lifetime income; meaning, as the name suggests, there are 12 opportunities – for each year of the plan – to lock in any growth in income.

“These  products have been designed with what we understand the needs of our customers to be, and our research tells us that is the chance to safeguard against risk as much as possible and to protect their hard-earned retirement income,” adds Skinner.

For more information contact your financial adviser or visit