Covering basic essential bills such as food, heating and clothing requires an income double that of the current state pension, according to a new report. These costs are now signficantly higher than they were just three years ago, with new retirees now being hit by both lower returns and higher outgoings.
Laith Khalaf who works at retirement specialists Hargreaves Lansdown argues that…“…millions of people are sleepwalking into an impoverished old age. You can’t expect to spend twenty or thirty years in retirement without stashing away a substantial amount of money while you are still working.”
Average homes in the UK need to save a staggering £564,227 just to cover the first two decades in retirment. This based on an average yearly spend for those aged 65 to 74 of £23,107. Those who are aged 75 or over on average spend £14,926 a year. Just a mere five years ago these figures were £17,737 and £11,700 respectively.
However there are huge regional differences in the amount needed for a comfortable retirement. For example in London the figure for 20 years is £668,553, but in the North East homes need a much lower figure of £473,178. Chris Evans the boss at MGM Advantage noted the extra financial burder being placed on pensioners saying that…“…there is significant pressure on pensioner income. Those people retiring today can expect to live for twenty years but with annuity rates falling and the cost of living rising, funding retirement is a difficult task.”
He added that he would not be surprised at all if people considered relocating to other parts of the UK in order to reduce the amount of money they needed to spend. This claim is backed up by the fact that many annuity providers use postcode profiling in order to assess annuity applications.
