With the announcement that the Bank of England’s base rate has reached 5%, Standard Life warned that retirees and those approaching pension age may be at particular financial risk.
According to the later life lender, for those who still have to deal with debt or rent costs at this stage in their lives, growing interest rates and high inflation could threaten retirement living standards.
The struggling economy and ongoing cost-of-living crisis could result in some having to put retirement plans on hold.
Dean Butler, managing director for customer at Standard Life, said: “The Bank of England’s move to raise the base interest rate another 0.5 points, to 5%, is good news for those whose savings outweigh their borrowing, but comes as a real blow to anyone with debt.
“This includes the significant minority of retirees and those approaching retirement who still have credit cards or a mortgage to pay off.
“The costs are also likely to filter through to many of those who rent their property too. It’s difficult to believe how different things were until very recently – shockingly, rates only reached 1% last May.
“The speed and severity of the change has taken everyone by surprise, and people who were financially comfortable in the spring of 2022 might now find themselves struggling and having to reassess their plans, particularly as rate rises have been coupled with double-digit inflation.”
