Inflation and Annuities – Pensionfinder
Although we cannot predict the future and how much we will need exactly, it is clear that the cost of living has skyrocketed over the years and will continue to do so. The following regular items are priced now and in 30 years time with an average inflation rate of 2.5% used to calculate the future figure. This inflation rate is actually lower than the average for the ten year period from 1997-2007 which was almost 2.8% with the January 2011 level at just over 4%.
As you can see, it appears that everything will double in cost so you need to decide if you wish to purchase an annuity with a level rate of income or one which increases over time but starts off at a low level. You will see in the next article what the options are and how much you will start off with.