There’s a new quid on the block today as the old pound coin bows out in favour of a sleeker, shinier version.
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The old pound coin was introduced in 1983 when a loaf of bread cost 38p and a kilo of Cheddar cheese weighed in at £2.55.
Today, the bread costs £1 and the cheese an eye-watering £7.19.
For retirement savers this highlights a desperate plight.
In 1983, the pound coin was worth just that, but in spending power, the new pound coin is worth £3.19.
Cost of living up 300% since 1983
For savers, that means squirrelling away 300% or three times more than their counterparts in 1983 just to stay level.
Inflation makes the difference as a rising cost of living means savers must put more aside to stand still as the rate rises.
The Bank of England target is inflation of 2.5% a year, so for every £100 of savings an extra £2.50 should be added to account for rising prices.
Vince Smith-Hughes, a retirement expert at financial firm Prudential, said: “Putting more money aside while still in work is, for many, the only way to offset rising inflation and ensure a higher standard of living in retirement.
Online money tips for savers
“While saving as much as possible from as early as possible is the best way to build up a decent pension pot, spare money often feels hard to come by. However, making small changes to our lifestyles can help us when it comes to saving.”
The Pru has a host of online tips for savers, including where to find discount vouchers, buying own brands and taking part in online surveys.
“It is important to consider ways in which you can make your money work even harder,2 said Smith-Hughes. “For couples, splitting pension contributions ahead of retirement, such as both having your own pension plan, is often the best way to maximise your individual personal tax allowances when the time comes to access pension benefits.”
The new 12-sided £1 coin is designed to stop counterfeiters, with £1.5 billion going into circulation.
The old £1 coin will stay legal tender until October 15, 2017. After that date, banks will accept the coins but traders and machines will not.
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