The average retired household needs around £23,675 a year in income but costs drop after pensioners hit 75, according to a new analysis from iSIPP.
According to its research of the most recent government data, households with retired adults aged 65 to 74 spend an average of £455.30 each week, or £23,675 annually. That is a 19 per cent increase above the £383.40 weekly or £19,936.80 annual spending of retired households in 2021.
The end of pandemic restrictions and growing prices are contributing factors to the increase in expenditure, according to iSIPP, which is also putting strain on households with retired members’ retirement savings.
The increase in expenses further highlights the need for retirement savings outside of the state pension. The amount of money needed to support a retirement for households dependent solely on the entire flat-rate state pension, which is now worth £203.85 per week or £10,600.20 per year, is just 44 per cent. Even worse are those relying on the basic State Pension, which is worth £156.20 a week or £8,122.40 annually says iSIPP.
Bills and home maintenance take up 13 per cent of annual spending, compared to 14 per cent on transportation. 12.5 per cent of annual spending is towards food, while 12 per cent is spent on recreation and leisure. Compared to the prior year, spending on restaurants in the UK and abroad accounted for 7 per cent of total spending last year.
The typical household spends £356.30 per week, or £18,527.60 per year, after they reach the age of 75. That is 18 per cent more than the £302.60 or £15,680 in 2021.
Tthe average yearly household expenditure in the UK is close to £27,500, with people in their 30s and 49s spending the most, on average, at £31,636.
iSIPP managing director Hrishi Kulkarni says: “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.”
