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Keep inflation on your agenda

Scott Jamieson, head of multi-asset investing at Kames Capital, says: "The cost of living in the UK today is exactly the same as it was one year ago; that is if you don't drive, eat, smoke or have the odd tipple. If you aren't that person then prices are 1.2 per cent higher than they were in February 2014."

The good news is that the state pension will increase by 2.5 per cent in April, meaning many less well-off pensioners will be seeing significant real-term increases to their income. But for wealthier retirees taking advantage of the new pension freedoms, inflation remains one of the biggest investment risks. It may not stay this low over the next 25 years and you need to focus on the long-term effects that even mild inflation will have on your retirement income plans.

Chris Williams, chief executive of Wealth Horizon, says: "Having a diversified portfolio which can grow above a more 'normal' level of inflation, such as the 2 per cent the Bank of England targets, should still be a key goal for investors, and is something they assets like cash cannot match with rates where they are."

Many advisers say investors should consider equity income funds that offer a significantly higher yield than inflation with the potential to grow.