Rising living and housing costs mean that average retiree needs an income of £37,000 in 2025 — around £25,000 per year more than they will get from the state pension.
A significant part of this is housing costs, which are generally excluded from the PLSA’s living standards calculations. Analysing both household spending data and average costs, this new research from Shepherds Friendly Society, shows that the average 65-year old now has an average of £38,000 left to pay on their mortgage — the biggest single outlay in the early years of retirement.
When it comes to retirement spending, the biggest costs are predicted to be mortgage repayments (£7,600 on average per year) and additional housing costs, fuel, and power (£3,600 in total), transport (£3,392), and food and drink (£3,530).
The figures show that for the coming year retired households are predicted to spend over £3,500 on food and drink and over £1,600 on restaurants and hotels.
Meanwhile, spending on non-essentials for retirees such as recreation and culture could reach £3,238 on average, whilst spending on restaurants and hotels are predicted to be around £1,667 in the next year.
Shepherds Friendly Society said to have a comfortable standard of living in 2025, the average retired household will need an income of almost £50,000 a year.
The new state pension now pays around £11,500 a year. While this has increased significantly in recent years, due to the triple lock, this safely net is still far blow what most people need to enjoy even a moderate standard of living in retirement.
