Sunday, September 04, 2011

Inflation is bad for your health and lifestyle

When David Willetts published his dreadful book Pinch I commented that for such a supposedly intelligent man he had made half a dozen fundamental errors in his assumptions about the future wealth of 'boomers'

To add a bit more substance to this the Pru issued research  this week entitled : "RPI gloom for pensioners."

Pensioners retiring this year on a fixed income could lose 60% of their spending power in the next 20 years because of inflation.

The figures show that the average person who retires in 2011 can expect an annual income of £16,600, but if that income remains fixed it will be worth a mere £6700 in 20 years – effectively a £10,000 pay cut.

Research by Age UK recently found that the RPI for older people averaged 4.6% a year since January 2008, nearly 50% more than the 3.1% annual inflation recorded by the RPI in the same period.

When the "Baby Boomers are stealing your inheritance" nonsense was at its height not one of the people peddling the story thought to mention the impact of inflation. Strange that. Either they didn't understand its affect (that accounts for most journalists) or it spoilt their nice simplistic story (that accounts for most politicians). Dick Stroud

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