If inflation rates are maintained, the “baby boomer” generation can expect to find a purchasing power of £100 decrease to £49.86 by 2024, according to M&G.
Anthony Doyle, head of investment specialists at M&G, says analysis shows pensioners will be the least affected, with baby boomers suffering the most if rates remain at the same level.
Inflation for a student works out as 5%, for a parent of a young family it is 5.3%, and it is 5.5% for the baby boomer category and 4.8% for pensioners, according to M&G.
The population of pensioners in the UK is predicted to rise from 16% of the population to 23% by 2035, a trend which Doyle predicts will have a “substantial impact on inflation going forward”.
More people are predicted to minimise consumption in order to save for retirement, leading to deflationary pressure, according to Doyle’s research.
He says inflationary pressures will come from a shortage of highly skilled workers pushing employment costs up and the production of goods, services and productivity down.
“It is rumoured that if you place a frog into a pot of water and slowly increase the heat to boiling, it will not feel it,” says Doyle.
“With the Bank of England embarking on another round of quantitative easing, the water could reach boiling point very soon for UK savers.”
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