In my last post I talked about a claim that over-60s are particularly hard-hit by debt nowadays. The claim originated from a report from the charity StepChange, which was picked up by the “This Is Money” website.
I’ve just seen an endorsement of this statement from someone else with financial credibility. Peter Hargreaves is Chairman of financial service provider Hargreaves Lansdown and he writes in their monthly magazine as follows:
“Most of the industrialised world is enduring interest rates lower than inflation.
“There are material implications for savers, especially for people who rely on their savings for income. The problem is further aggravated for the retired, as their personal rate of inflation is probably greater than the published figure.
Official figures take into account many items which have come down in price but which are discretionary purchases. These include consumer durables such as PCs, cameras and other hi-tech gadgetry.
On the other hand staples and essentials – food, power, water, council taxes (??) etc are all increasing in price, meaning that retired people on fixed pensions or dependent on income from their investment capital are the hardest hit by the current situation.”
Hargreaves makes a good point. I have often written that we should not get too hung up on the official inflation rate, because that is an average, based on a “basket” of goods and services. We might not need or want to spend money on all these items in the “average” way, so our own personal RPI (retail price index) is what counts. But he stresses that for older people (and I am one of them) their personal RPI might well be above the official figure.
That’s true; I haven’t bought a PC or a camera lately but I have definitely noticed energy and food getting more expensive. Some of those cost increases I can mitigate by changing my buying choices; but some of them I can’t.
WANT TO KNOW MORE?
1. To read the full article by Peter Hargreaves, click HERE.
2. To read the StepChange story from This is Money, click HERE.
Editor’s note: StepChange was formerly known as Consumer Credit Counselling Services, one of the three national independent debt advisory organisations, so they know whereof they speak.