A study report says the typical UK household will need £413,000 to cover costs including housing, clothing and recreation, according to The Guardian. In the Cost of retirement report 2008 for financial services company Life Trust, r esearchers from the Centre for Economics and Business Retirement (CEBR) contend increased life expectancy and inflation could push the cost of retirement to more than £1 million for some people in the UK.
The researchers analyzed data from the 2006 household expenditure survey to estimate how much pensioners spent at each stage of their life after work and found spending rises as retirees get older.
According to The Guardian, a 65-year-old was found to have an average spend of £308 a week, with £43.50 going on food and drink, £35 on housing and fuel costs, and £53 on leisure costs. By age 85 the weekly spend increased to £373, with housing and fuel costs leaping to £80 a week, and other household services also increasing.
The report indicates 92 is the most expensive age to be in retirement, with spending reaching 50% more than at 65.
Using these figures, researchers estimated that a person retiring at 65 and meeting the current prediction of life expectancy – 85 years for a man and 88 for a woman – will spend an average of £326,700 if he or she lives alone. If the person lives until 100 the figure soars to £708,500.
Not surprisingly, the report says the cost is even greater for those who retire early, with someone retiring at 50 spending an extra £373,000.
Jonathan Davis, chartered financial planner at Armstrong Davis, said in the news report that many pensioners would struggle to even save enough to fund a retirement cost of £400,000. “People are massively underfunded on their pension provisions,” he said.
Currently, the basic state pension is worth up to £90.70 a week to individuals or £145.05 a week to pensioner couples, according to the news report.