Pension savers need to put away an extra £800 to beat inflation, according to MGM Advantage.

The retirement specialists have discovered that the latest increase will push up the cost of living dramatically for those saving for retirement.

The consumer price index rose to 3.7 per cent last week, well above the government’s 2 per cent inflation target.

This means the average retired household, where the main occupant is aged between 65-74, needs to find around an extra £800 a year to maintain the standard of living they enjoyed at the end of 2008, if they spend around £23,000 a year.

Aston Goodey, Sales and Marketing Director, MGM Advantage said: “Inflation is a real menace and it is pushing up the cost of living.  This is particularly difficult for retired households where they often have fixed incomes.  Increasingly, they will need to take more proactive steps to tackle the risk of inflation through for example, asset backed annuities that keep some funds invested in the stock market allowing for potential growth.”

The news comes after figures released by Aviva showed that a lack of savings and poor pension funds among the over 55s will mean having to work into their 70s.

Clive Bolton, at-retirement director for Aviva Life, said: “Government proposals mean that the state retirement age is set to increase over the next few years, but it appears that many UK adults already see themselves working well past the traditional retirement age.”

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