On the one year anniversary of the Silver RPI, published by Age UK Enterprises, latest findings show that over 55s have seen an 18% rise in living costs since 2008 – almost 5% more than the general population. This means that someone aged 55 or over is now, on average, £978 a year worse off than official measures recognise. This increases to over £1,100 in additional annual costs for those aged 65-69.

In the last 12 months alone the cost of living for those aged over 55 has risen by £1173 in absolute terms.

The dramatic increase in costs experienced by those in later life comes at a time when retirement income is under increased pressure. Low interest rates means savings returns have been hit while annuity rates are at an all-time low of £5,600 per £100,000 or 5.6%. Combined with increasing life expectancy, those retiring today will have a smaller pot of cash to sustain them over a longer period of time than those who retired five years ago.

The Silver RPI shows that those over 55 do not experience cost rises at the same rate. ‘Younger’ people in later life aged between 55 and 59 have experienced inflation at 0.11% below Headline RPI since June 2011 in contrast to ‘older’ people in later life over the age of 75 who have experienced a larger increase in prices.  Those over 75 have experienced additional cost increases at 0.39% above the general population.

Those in later life experience cost rises above the general population for two main reasons. Firstly, they typically carry less mortgage debt therefore have benefited less from the low interest rate environment of the last three years. At the same time, they spend proportionally more on products and services, including food and fuel that have increased significantly in price. Over the period June 2011 to September 2011, utilities prices rose by 10.4%.