Did you know that inflation can eat away at the value of your pension savings over time?
It’s really important to regularly review how much you’re saving into your pension to make sure you’re on track to achieve your retirement goals.
Rising inflation
You have probably noticed that your shopping today costs significantly more than it did a year ago – and probably a lot more than it did 10 years ago. That’s down to inflation. When prices go up, it can eat away at the value of your pension savings – meaning your money won’t go as far tomorrow as it does today.
Saving money in a bank account is unlikely to protect you against rising costs. This is largely due to the low levels of growth you can expect from current low-interest bank accounts.
Increasing your regular contributions
If you have a mobile phone contract or monthly TV subscription, this is likely to increase every year in line with the Retail Prices Index (RPI). When it comes to increasing your payments, you probably don’t think twice. But what about your pension?
Increasing your contributions every year in line with RPI is a great way to help protect the spending power of your money as the cost of goods and services could go up in price – so you can continue to enjoy the things you love when you retire.
You should remember that investment returns are never guaranteed. So, while there’s a chance your savings could grow, their value can also go down. This means you could get back less than you started with.
If you’d like to chat about increasing your contributions and the difference this could make to your retirement goals, please get in touch with James or Ben on 01253 405900 and we can arrange an appointment to review your pension.
