The annual cost of being retired mounts up to £11,830 a year or nearly £230 a week, according to UK independent equity release adviser Key.
Retirees are spending their money on basics such as food, clothes and utility bills while leaving some spare cash for eating out and entertainment, the analysis of the latest government spending data shows.
The weekly bill of £227.50 per person needed to fund the basics amounts to 35%more than the full basic State Pension of £168.60 available for those who qualify underlining the need for other sources of income in retirement.
Retired people in the South East, South West, London, East Anglia and the East Midlands all need to find more than the national average while the less expensive areas of the country include Wales, Northern Ireland and the North East of England.
The basic costs in retirement underlines the need to maximise income from all sources available including property.
Key’s data shows retired homeowners using equity release plans take an average £76,500 in property wealth from their homes which is enough to fund six-and-a-half years of the basics without spending on anything else.
Jamie Smith-Thompson, managing director of pensions advice specialist, Portafina says: “Stats and figures are useful starting points to help people frame their thinking about retirement. And advice on applying them to pension savings strategies varies. One adviser might recommend a client to save half their age as a percentage of their income each year into a pension. Others suggest the rule of thirds. And then there’s research like this that attempts to pin point an exact figure of how much you’re going to need to live on in retirement.
“What these magic numbers and formulas don’t allow for is change. The big costs are the usual everyday living costs and essential bills that will remain largely unchanged. It’s the unexpected costs that are difficult to factor in and can create a shock if not planned for. And that’s where clients who seek advice from a financial adviser have the upper hand. Tailored retirement planning and ongoing account management are essential for clients looking to get the most from their pension pot.”
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