Retirement costs soar by a fifth

The cost of a comfortable retirement has increased by nearly a fifth in the last two years as average spending by retired households climbs to £23,675 a year, new analysis of the latest Government data has shown. Pension provider iSIPP said retired households aged between 65 and 74 now spend £455.30 a week, adding up to £23,675 a year. That is 19% higher than the £383.40 a week or £19,936.80 a year retired households were spending in 2021. The rise in spending is partly down to the end of pandemic restrictions but also driven by rising inflation increasing costs for retired households and the financial pressure on their retirement savings, iSIPP said. The rise means households relying on the full flat-rate State Pension alone – currently worth £203.85 a week or £10,600.20 a year – would have just 44% of the money needed to fund a comfortable retirement. Those relying on basic State Pension, which is worth £156.20 a week or £8,122.40 a year, are even worse off. The analysis showed the biggest costs are transport including cars and public transport fares, bills and housing maintenance, food, transport, and recreation. Transport accounts for around 14% of annual spending while bills and house maintenance takes 13%. Food makes up 12.5% of annual spending and recreation and leisure spending takes up 12%. Spending on restaurants in the UK and overseas accounted for 7% last year compared with just 3% previously. Annual spending drops once households hit the age of 75 – average spending a week is £356.30 or £18,527.60 a year. That is however 18% higher than the £302.60 or £15,680 in 2021. The average annual spending for all households in the UK is nearly £27,500 with those aged between 30 and 49 spending the most at £31,636 a year. iSIPP managing director Hrishi Kulkarni said: “The cost-of-living crisis is pushing up bills for all households and increasing the cost of maintaining a comfortable lifestyle. “The pressure can be most acute for retired households who have fewer options to increase their income to keep pace with rising prices and is particularly painful for those households without private retirement savings.” The analysis was based on the Family spending workbook 1: detailed expenditure and trends, published by the ONS on 31 May.

Retirement costs soar by a fifth

Related items

News from Twitter