The average cost of being a pensioner in the UK is GBP11,200 a year, analysis by leading over-55s financial provider Key Retirement shows.
The cost adds up from spending on the basics including food, clothes, travel and heating with a weekly GBP215 needed per head, Key’s analysis of Government figures on household expenditure shows.
However the annual average for the country as a whole conceals huge regional variations with retired people in the North East needing GBP9,630 a year compared to GBP13,216 in the South East – nearly GBP3,600 a year less or 37% lower.
Key’s analysis shows the average retired household spends around 15% of their budget on fuel and housing – equivalent to around GBP1,680 a year – narrowly ahead of the 14% they spend on food and non-alcoholic drinks – which equates to around GBP1,568 – with transport taking an 11% bite out of budgets. Average food bills have increased by just GBP5 on last year while spending on fuel and housing has increased by nearly GBP200.
Key is urging pensioners and those approaching retirement to maximise income from all sources including property wealth to ensure they have the money to fund the average annual cost. Its research shows over-65s have GBP827 billion invested in their homes.
Dean Mirfin, group director at Key Retirement, says: “The basic cost of being a pensioner at around GBP11,200 a year highlights the importance of planning carefully for retirement and getting the best possible advice to ensure a comfortable lifestyle.
“The recent good news on price rises slowing down as inflation falls, as well as cuts to major expenses such as gas and electricity bills and the fall in petrol and diesel costs, should mean a drop in the cost of being a pensioner this year.
“But it is crucial that pensioners and those in the run-up to retirement focus on their retirement income as the current basic State Pension, and even the new State Pension planned for next year, will not cover the basic costs of being retired in any region of the UK.
“Anyone approaching retirement will need to find other income in order to meet the basic costs and should look at all their assets including savings or pensions, plus the money invested in their home. On average customers released nearly GBP64,800 from their homes last year through equity release; which could, for many, prove life-changing in meeting the costs of retirement.”
The table below shows the differences across the UK and how costs this year compares with 2014.