The cost of a comfortable retirement has increased by nearly a fifth as average spending by retired households climbs to £23,675 a year, new analysis* from pension provider iSIPP shows.
Its 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, iSIPP says.
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 by iSIPP, a service designed to support UK and international customers to consolidate their pensions, 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, whose speciality is UK and international customers who wish to consolidate UK pensions, enables customers to sign up easily at www.isipp.co.uk and also offers regular and ad-hoc contributions. Its service is particularly suited to the self-employed and contractors or those who have become self-employed recently as they can combine all their existing pensions.
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.”
iSIPP’s free to set up service has no dealing charges or charges to transfer in existing pension funds and enables clients to create their own investment portfolio complementing its existing ‘Choice’ range of Ready-Made funds from world-leading fund managers BlackRock and Schroders.
iSIPP’s digital pension consolidation service is available to all customers with UK pension funds who are working or have worked in the UK. Built around flexibility, iSIPP provides access to over 100 funds under its ‘Create’ option allowing users to build their own portfolio. Its ‘Choice’ range include Ready-Made Portfolios from world-leading fund managers BlackRock and Schroders. BlackRock’s multi-asset, risk-managed MyMap range of funds are available which include an ESG fund and iSIPP also provides access to the Schroders’s Shariah compliant fund. Focusing on transparency, the annual trust fee is £200 plus a 0.25% platform services fee. Funds with OCF (Ongoing Charges Figure) start at as low as 0.16%.
iSIPP are not authorised or regulated to provide financial advice. This article is for information purposes only and should not be construed as financial advice or as a personal recommendation. Pension rules are subject to changes in the future.
