Retirees will need several thousand pounds more a year to enjoy a comfortable retirement amid the cost-of-living crisis, says iSIPP.
According to analysis from the pension provider, 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, retired households were spending in 2021. Average spending drops to £18,527.60 a year once households hit the age of 75 but this is still 18% higher than in 2021.
iSIPP said the rise in spending is partly down to the end of pandemic restrictions, but also driven by rising inflation and increased living costs placing financial pressure on their retirement savings.
The rise in costs also highlights the need for retirement savings beyond the State Pension. Households relying on the full flat-rate State Pension alone – currently worth £10,600.20 a year – would have just 44% of the funds needed to fund a comfortable retirement. Those relying on the basic State Pension worth £8,122.40 will face even greater hardship.
The research found that the highest costs for retirees are transport, bills and housing maintenance as well as food and recreation. Transport accounts for around 14% of annual spending, while retirees spend around 13% of their income on bills and house maintenance.
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.”
