A couple who plan to give up work at 65 would need to have saved £413,000 in order to fund their retirement, new figures reveal.
Increasing longevity means saving for a pension is more essential than ever before. According to the Office for National Statistics, a 65-year-old man could expect to live for 20 further years, while a woman could expect to live for another 23 years.
As a result, the average couple will need £413,000 to fund their retirement while an individual living alone will need to have saved £326,700. These figures assume inflation of around 2%. However, if inflation was 3.4% (just 0.1% over its current rate) then the cost of retirement would increase to £1 million.
Paying for food, fuel and housing costs remain the biggest expenditure for retirees. The report, produced by the Centre for Economics and Business Research (cebr) on behalf of Life Trust Insurance, found that the amount of money spent on these items will increase nearly fourfold during retirement, rising from £34 per week at 65 to £116 per week at 92.
Andy Briscoe, chief executive of Life Trust, says: “The combination of rising life expectancy and the impact of inflation over time can have huge financial implications, and this report allows us, for the first time, to see the scale of these trends.
"With more and more people reaching 90 and beyond, and with 90 becoming the new 70 in terms of healthy ageing, it has never been more necessary for the industry and individuals to understand the true cost of modern retirement."
What it costs:
|Weekly spending breakdown for an 85-year-old|
|Housing, fuel and power||£80.80 (21%)|
|Food and non-alcoholic drinks||£48.50 (13%)|
|Household goods and services||£57.48 (16%)|
|Recreation and culture||£53.76 (15%)|
|Alcoholic drinks and tobacco||£4.13 (1%)|
|Eating out and hotels||£16.93 (5%)|
|Miscellaneous goods and services||£43.87 (12%)|
|Source: Life Trust/cebr|