Cost of being a pensioner 10,830 pounds a year

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Spending on the basics adds up to 210 pounds a week, Key Retirement analysis shows

The average annual cost of being a pensioner adds up to £10,830 or around £210 a week, according to new analysis* from leading over-55s financial specialist Key Retirement.

The cost mounts up from spending on the basics such as food, clothes and bills with a weekly £210 needed to get by – nearly 32% more than the full new State Pension of £159.55 a week available for those who qualify. 

But the national average conceals huge regional variations with pensioners in London needing around £4,700 more a year than pensioners in the North East of England. The average annual cost in London is £13,400 compared with £8,700 in the North East. 

Pensioners in the South East of England and East Anglia face annual costs above the UK average while retired people in the South West pay around the national average of £10,830, the data shows.

Key’s analysis shows the average retired household spends around 14% of their cash on housing and fuel – which equates to around £1,500 a year – roughly the same as what is spent on food and non-alcoholic drinks, the equivalent to almost £1,560. 

Transport including the cost of running a car eats up 11% of their annual spending - around £1,200 a year. Any spare cash is used for entertainment and eating out with around £1,600 a year of their budget going on leisure spending.

Key highlights how the basic costs pensioners face underlines the need to maximise income from all sources available including property with anyone who relies only on the State Pension facing significant shortfalls. Key’s data shows retired homeowners using equity release plans take an average £73,600 from their homes – enough to fund more than six years of basic spending. 

Dean Mirfin, technical director at Keyretirement.com, said: “The basic cost of being a pensioner at around £10,830 a year demonstrates the importance of saving for retirement and generating income on top of State Pensions.

“Over-65s own property worth more than £1 trillion and are literally sitting on spare cash which can be used tax-free to boost their income particularly when inflation is rising and interest rates remain at historic lows.”

The table below shows the cost of being a pensioner varies around the country.

Region

Annual cost of a pensioner

London

£13,400

South East

£12,570

East Anglia

£11,750

South West

£10,860

East Midlands

£10,550

Northern Ireland

£10,320

Scotland

£9,900

Yorkshire & Humberside

£9,780

North West

£9,710

West Midlands

£9,330

Wales

£9,180

North East

£8,700

UK

£10,830

Source: Key Retirement, 2017

Anyone looking to release equity from their home can get Key’s independent guide to equity release by calling 0800 531 6010 or visiting:

https://www.keyretirement.co.uk/equity-release/free-guide/

 

 

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