The annual cost of being a pensioner is £11,620
25 May 2016
The average cost of being a pensioner is £11,620 a year, analysis by leading over-55s financial provider www.keyadvice.co.uk* shows.
The cost adds up from spending on the basics including food, clothes, travel and heating with a weekly £223 needed per head, Key’s analysis of Government figures on household expenditure shows.
It’s around 3.75% up on last year for the UK as a whole – the equivalent of £420 a year or £8 a week – but the average cost has fallen in Northern Ireland and the West Midlands and is virtually unchanged in London and the South East.
However the annual average for the country as a whole conceals huge regional variations with retired people in Wales needing £9,990 a year compared to £13,270 in the South East – around £3,280 a year less or 25% lower.
Key’s analysis shows the average retired household spends around 14% of their cash on fuel and housing – which equates to around £1,630 a year – narrowly ahead of the 13% that goes on food and non-alcoholic drinks – equivalent to around £1,560.
But the data shows pensioners are feeling more confident – around 16% of their budget is spent on recreation and culture at around £1,830 a year each.
Key believes pensioners and those approaching retirement need to maximise income from all sources including property wealth to ensure they have the cash to fund the basics and to keep pace with rising prices while interest rates remain low and stock market investing remains risky.
Dean Mirfin, technical director at www.keyadvice.co.uk, said: “The basic cost of being a pensioner at around £11,620 a year underlines the need for extra income which is well in excess of the basic State Pension. For many this much needed boost can be adequately provided from the wealth in their homes.
“Over-65s own more than £920 billion of property wealth and are earning around £1,000 a month from their homes as house prices rise.
“The cash that can be generated from property easily outstrips the average amount held in private pensions demonstrating how important it is for homeowners to seek independent expert advice on how to use their housing wealth
“Low inflation is good news but it is crucial that pensioners and those in the run-up to retirement focus on their future retirement income in order to meet the basic costs. On average customers released over £76,000 from their homes in the first quarter of 2016 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 compare with 2015.
|REGION||THE ANNUAL COST
|THE ANNUAL COST 2015||£ CHANGE ON 2015||% CHANGE ON 2015|
|East of England||£12,470||£11,760||+£710||+6%|
|Yorkshire & Humberside||£10,520||£9,744||+£776||+7.9%|
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