July 26 2014 Latest news:

The vast majority of people are resigned to seeing the value of their pensions decline once they retire, yet millions of us have not made necessary provision to help mitigate future financial pressures.

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A major report into the cost of living in retirement has found that about four people in five expect to see inflation eat away at their income during their later years.

The lack of preparation is not simply down to laziness or procrastination. Millions of people retire earlier than they had expected to, for a number of possible reasons. Ill health, redundancy or offers of early retirement from employers can all mean that people finish work without having made the necessary plans.

But the report – produced by Axa – found that about 60pc of people retire without taking any professional financial advice, and nearly 50pc of people have never calculated the pension benefits they would receive in retirement.

“It’s very concerning that despite people knowing their purchasing power will reduce, they aren’t doing anything about it,” said Axa’s Simon Smallcombe.

“Seeking professional financial advice is the only way to ensure you have plans in place that are flexible enough to see you through what can be a long retirement journey.”

Sheffield university’s Liam Foster, who helped compile the report, said: “It is common for people’s expected income in retirement not to be matched by realistic financial preparations.

“This situation is exacerbated by the British pension system being one of the most complicated in the world.

“Therefore, suitable advice, information and planning have an important role to play in encouraging appropriate pension saving for retirement.”

Meanwhile, new statistics show that the elderly continue to be badly squeezed by inflation, highlighting some of the problems facing retirees.

Since the end of last year, people aged 75 and over have faced the steepest price increases, according to number-crunchers at the Alliance Trust.

Older households continue to feel the effects of domestic fuel price inflation more than any other age group, because they allocate a larger proportion of their budgets to their utility bills.

The inflation figures for both gas and electricity price inflation were unchanged in July, up 15pc and 8pc respectively on an annual basis.

The message seems to be clear. While many things are out of their control, taking financial advice can mitigate the potential hardships people face in retirement. At the very least, an estimate of your future pension income is worth knowing.

And even if you think you have a few more years to go before you stop working, that is no reason to delay planning for the future. After all, you could yet be one of the millions who end up retiring early, whether you want to or not.

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