Annual pensioner household spending increases by 19%

Our latest analysis shows that the cost of a comfortable retirement has increased by nearly a fifth as average spending by retired households climbs to £23,675 a year.

Our analysis of latest Government data shows retired households aged between 65 and 74 spend £455.30 a week adding up to £23,675 a year. That is 19% higher than the £383.40 a week or £19,936.80 a year retired households were spending in 2021.

The rise in spending is partly down to the end of pandemic restrictions but also driven by rising inflation increasing costs for retired households and the financial pressure on their retirement savings.

The rise in spending further underlines the need for retirement savings beyond the State Pension. Households relying on the full flat-rate State Pension alone – currently worth £203.85 a week or £10,600.20 a year – would have just 44% of the money needed to fund a comfortable retirement. Those relying on basic State Pension which is worth £156.20 a week or £8,122.40 a year are even worse off.

The analysis shows the biggest costs are transport including cars and public transport fares, bills and housing maintenance, food, transport, and recreation.

Transport accounts for around 14% of annual spending while bills and house maintenance takes 13%. Food makes up 12.5% of annual spending and recreation and leisure spending takes up 12%. Spending on restaurants in the UK and overseas accounted for 7% last year compared with just 3% previously

Annual spending drops once households hit the age of 75 – average spending a week is £356.30 or £18,527.60 a year. That is however 18% higher than the £302.60 or £15,680 in 2021.

The average annual spending for all households in the UK is nearly £27,500 with those aged between 30 and 49 spending the most at £31,636 a year.

iSIPP Managing Director Hrishi Kulkarni said: “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.”

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