Annual cost of being a pensioner is £10,387
07 July 2014
- But it's 15% cheaper to be a pensioner in Wales
- Cost of being a pensioner is highest in the South East of England, Key Retirement Solutions analysis shows
The average cost of being a pensioner is £10,387 a year, based on Key Retirement Solutions' analysis* of spending across the basic necessities.
But the cost varies widely with over-65s in Wales spending more than £3,100 a year less than pensioners in the South East.
Key's research shows the average over-65 household spends £10,387 a year with the biggest cost coming from their annual average food bill of £1,563 narrowly ahead of spending on housing and fuel at £1,485.
In total, pensioner spending contributes nearly £107.9 billion to total spending across the UK, with more than £16.2 billion spent on food and non-alcoholic drinks and £15.4 billion spent on housing and fuel.
The pensioners with the lowest average annual bill live in Wales, where it costs £8,829 a year compared to the South East of England where the over-65s need an average £11,945. London is only the second most expensive at £11,322 followed by the East of England at £11,144.
Key is urging pensioners and those approaching retirement to maximise income as much as possible to ensure they can meet the average spending bill.
Dean Mirfin, group director at Key, said "The basic cost of being a pensioner at more than £10,000 will come as a considerable shock to many, and those approaching retirement must be made aware of the real need to plan carefully, as the annual income does not cover much in the way of luxuries or leave scope for any emergencies.
"Where people live is also a major factor as the difference of more than £3,100 a year - or 35% - between Wales and the South East of England demonstrates.
"It is crucial that pensioners and those in the run-up to retirement focus on their retirement planning, as current basic State Pension and even the new planned Flat Rate State Pension will not cover the basic costs of being a pensioner in any region of the UK. The proposed new Flat Rate has been set initially at just over £7,700 per year, leaving potential average shortfalls of nearly £2,700 for those only receiving this level of annual income. This analysis shows how many pensioners will have harsh spending decisions to make unless they have other provision, be that in the form of savings or pensions, or from other assets such as the home."
The table below shows the differences between the average cost of living across the UK and the total spent by the over-65s in each region.
|REGION||ANNUAL COST OF BEING A PENSIONER||TOTAL SPENT BY PENSIONERS|
|South East||£11,945||£17.702 billion|
|East of England||£11,144||£11.382 billion|
|South West||£10,906||£11.292 billion|
|Northern Ireland||£10,179||£2.684 billion|
|East Midlands||£9,971||£7.707 billion|
|North West||£9,764||£11.434 billion|
|North East||£9,348||£4.201 billion|
|West Midlands||£9,348||£8.843 billion|
|Yorkshire & Humberside||£9,348||£8.175 billion|
Key's Pensioner Property Equity Index published in June shows over-65 homeowners own property wealth of £807.4 billion with the average homeowner making £1,346 each from their homes in the past three months.
The growth in property prices is helping to drive the equity release market which enables homeowners to release money from their houses - Key's figures show £339.8 million was released in the first three months of this year with the average customer taking more than £61,230 from their home.
Anyone looking to release equity from their home can get Key's independent guide to equity release by calling 0800 531 6010 or visiting www.keyadvice.co.uk/equity-release/request-a-free-guide.
*Key analysis of ONS 2013 Family Spending data