With state pensioners getting an 8.5 percent increase from next week, now is a good time to look at your finances to see how best to use the extra cash.
Express.co.uk has spoken to several experts to get their thoughts on how to use the extra cash as many household bills are also going up this month.
Branson Knowles, from Top Mobile Banks, encouraged pensioners to first make sure they have enough to cover their essential costs such as housing, utilities and food.
He explained: “Taking care of basic needs creates a solid foundation, reduces stress, and allows folks to focus on other areas without as many worries.
“Once essentials are covered, I would encourage pensioners to consider putting some of the extra funds towards getting rid of any credit card debt, particularly high-interest balances.
“Debt can be a heavy burden, and paying it down can significantly improve overall financial health and free up future income.”
Mr Knowles said retired Britons should also make sure they have an emergency fund with enough money for three to six months of living expenses.
He commented: “This cushion can provide real peace of mind and protect against unexpected costs like medical bills or home repairs – expenses that can easily throw off even the most carefully made budget.”
Ron Stefanski, founder of Business Guru, also encourged pensioners to prioritise their essential costs.
He said: “As the economy faces mounting cost pressures, wisely allocating this additional pension income is key.
“I advise focusing on essentials like utilities, groceries, prescriptions and taxes, avoiding ‘lifestyle inflation.’
“Some seniors may also consider bulk buying non-perishables to save small amounts on staples over time. Building even modest cash cushions will provide greater security through uncertain economic periods ahead.”
Mr Knowles said people who are debt-free with a healthy emergency fund may also want to look at low-risk investment options.
He said: “I often recommend things like Government bonds or index funds to clients, as these vehicles have the potential for long-term growth, helping to ensure retirement savings keep working for them.”
Those comfortable with risk may also want to look high-yield savings accounts to supplement their income, Mr Stefanski added.
The financial experts encouraged pensioners to look for any simple ways they can reduce their everyday costs. Mr Knowles said: “Equally important is developing good spending habits and actively looking for ways to reduce costs.
“I can’t stress enough the value of comparison shopping for better deals on utilities, insurance, and other regular expenses.
“Even small changes like generic medications or store loyalty programs for groceries can result in meaningful savings over time.”
For the latest personal finance news, follow us on Twitter at @ExpressMoney_.
