Many people in the Lancashire area are using a Cash ISA to save for retirement, but in the current climate of low interest rates and high inflation, this route may not be the most appropriate for many customers. This type of climate guarantees to mean you will have less money in real terms in retirement than you are saving now.
To provide you with an example, we will compare a couple, Mr & Mrs Smith, whose household bills cost £1,000 a month. In 10 years time, if inflation remained at the government target of 2% a year and all of those bills went up by 2% a year in line with inflation, those bills may cost the Smith’s £1,221 a month.
If they’d saved £1,000 in a Cash ISA that returned 1% a year (higher than the current average Cash ISA return of around 0.7% a year), in 10 years time that savings pot would only be worth £1,105, a ‘loss’ in real terms.
There are many other options available to clients for longer term savings, including pensions and stocks and shares ISA’s, but it is important to review your individual circumstances to see which route is most appropriate to your needs.
Fernleigh Wearden & Co are specialists in long term financial planning. If you are thinking of planning ahead for retirement, or are about to retire and want to know about your options, please do get in touch
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