State pension age warning as hundreds of thousands missing out on £3,300 boost | Personal Finance | Finance

The cost of living crisis is creating a squeeze on already limited budgets for many over 65s. Many of those who have reached state pension age – currently 66 – will have left the workforce for good, to go it alone relying on their own financial position.

However, one expert has urged people to consider important aspects of finances to secure their future. 

Lorna Shah, managing director of retail retirement at Legal and General Retail, spoke to about the key issues people over 65 should be looking out for to keep their financial plans on track.

The expert stressed reviewing one’s financial plans should be a priority when looking ahead to the future.

This is particularly the case amid a retirement squeeze compounded by the cost of living.

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Ms Shah continued: “This extra financial help can be worth over £3,300 a year and is there to support people over state pension age and on a low income with their daily living costs, housing costs, council tax or heating bills. 

“Pension Credit can be claimed by phone and online, ensuring that people can apply safely and easily, wherever they are.”

If people are keen to find out whether they are eligible for the benefit, the Pension Credit calculator available on the GOV.UK website is likely to be helpful.

The expert added: “Making people aware of their allowances has always been important, but against the backdrop of the cost of living crisis, it is now critical.”

Finally, Ms Shah suggested it will be important for Britons to consider annuities, whether they are close to retirement or have already left the workforce.

Annuities were once the only option for pension savers, but upon the introduction of drawdown in 1995, the latter option grew in popularity.

While drawdown often seems like an obvious choice, Ms Shah argues the current environment may signal the necessary return of annuities. 

She explained: “With interest rates on the rise and stock market fluctuations, annuities are likely to continue to grow in appeal in 2023.

“Not only do they provide a hassle-free guaranteed income for life, but you can also set an annuity up to pay you monthly, so it is like a salary payment that you may have received when you were working, allowing you to budget in a way that is comfortable and familiar to you. 

“But remember that once you have chosen an annuity you cannot switch out. You should consider your options carefully, ensure they are suitable for your needs, and shop around to make sure you are getting the best deal.”

Some may not be comfortable buying a whole-life annuity, and in this stance, Ms Shah recommends investigating a fixed term annuity (FTA), which can offer flexibility for the short term.

Before making any decisions on pensions, people are typically urged to get financial guidance or seek independent, regulated financial advice. 

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