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Saving when retired ?

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modeller | 10:55 Wed 24th Feb 2010 | Personal Finance
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In view of the fact that saving in equities is a long term policy, should retired people keep any savings in cash accounts like cash ISAs and interest bearing cash accounts. ?
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many banks are currently offering 2year bonds (which have much higher interest). You must tie your money up for 2 years but it's worth it. Don't do the 5year bond.
Yes, everyone should have savings which can be accesed quickly for emergencies and some longer term savings. For retired people some longer term savingsa re still needed if they are in good health as they may have 20-30 years ahead of them and want to preserve some money for later years. But it all depends on what they can afford now. Another factor is whether they pay tax on savings interest
Everybody needs to have a portion of their savings in an easy access account for emergencies. However, over time inflation will erode the value of cash savings unless interest rates are higher than inflation which is why over the length of retirement, equities will probably grow and stay ahead of inflation. Having said that, with the current volatility of the stock market, they are not, and never will be a safe bet either. However, for those retired pensioners who pay tax, ISAs are worth holding on the basis that you use your allowance every year or lose it, and hopefully over time, interest rates on them will rise to a more competitive level.

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