The latest data shows UK inflation grew by 2.7% in April 2017, up from 2.3% in March.
Staff at Retirement Advantage estimated that each household will typically need to spend an extra £742 a year to maintain their standard of living compared to a year ago.
Andrew Tully, pensions technical director, Retirement Advantage, said: “We are all feeling the pain from rising prices and stagnant wages, but this latest inflation increase really will be a hammer blow to households across the country.
“The living standards squeeze can have a devastating impact on people living on fixed incomes, which typically includes retirees.”
His firm’s research showed 35% of over 50s feel adequately prepared for retirement. Some 39% of those people who don’t feel prepared said they were worried about the impact of inflation on income.
Elliott Silk, commercial director at Sanlam, said: "The rise in inflation for the third month in a row is likely to damage retirees buying power and is set to take out a serious chunk of peoples' nest eggs.
"Many don't appreciate the true cost of inflation. For those who retired before 2010 and took out a fixed annuity, the cost can be staggering.
"As bills rise across the board, retirees on a fixed income begin to feel the inflation pinch."
Nick Dixon, investment director, Aegon, said: “Inflation has topped the Bank of England’s 2% target for the third month in a row, putting yet more pressure on policy makers to pull the lever on interest rates.
“The Fed has already raised the US central rate and, despite a downgraded growth forecast in the UK economy, it may only take a more stable outlook after the General Election for the Bank of England to follow suit.
“Rising prices will continue to trim the spending power of consumers, and demands a review of investment strategies, especially for retirees who are often living on a fixed income.
“With bond yields unattractive, retired savers may be tempted to increase equity exposure, but equity valuations look toppy in a number of major markets. Staying diversified, while favouring low volatility equity dividends over capital returns, may be a more prudent approach.”
Shilen Shah, bond strategist at Investec Wealth & Investment, said: “April’s CPI print was somewhat higher than the consensus at 2.7%. The inflation figure was boosted by higher air fares due to the Easter holidays falling later in the calendar year.
“Higher electricity and clothing prices were somewhat offset by lower motor fuel prices, however the underlying inflation figure does indicate some inflationary pressures in the economy with the core CPI print increasing to 2.4%.
“Despite the higher than expected core and headline CPI prints, the BoE is likely to be unmoved given that the latest business surveys suggest employers are unlikely to compensate workers with inflation-bursting wage rises over the coming months given the uncertainty over the economic outlook and the Brexit negotiations.”
Emmanuel Lumineau, CEO at BrickVest, said: “The latest inflation numbers show signs that the Bank of England’s measures of low interest rates and quantitative easing have worked and if this trend continues, they may start to raise interest rates which is likely to have a negative impact on real estate.
“In the last 12 months and since Brexit we’ve seen a 72% increase in the number of investors joining the platform and expect to see the highest level of volatility from the office sector as many international firms currently headquartered in the UK may put decisions on hold over their long term office space requirements.”