Many people overestimate how much they spend on retirement
Many people overestimate how much they’ll need to live on in retirement, thinking that they’ll spend the equivalent of their wages.
Another common perception is that you’ll need between half and two-thirds of the final salary you had when you were working, after tax, to maintain your lifestyle once you retire. This assumes however that the mortgage has been repaid, you are no longer bringing up children and of course you won’t face the cost of commuting once you’ve retired.
Which magazine conducted a survey in April 2022 to help figure out how much individuals need in retirement. Households with two people spent a shade under £2,340 a month, or around £28,000 a year, on average to be ‘comfortable’. This covers all the basic areas of expenditure (which had a combined cost of £19,000 per year on average) and some luxuries, such as European holidays, hobbies and eating out. Aiming for this level of income will provide a good platform for your retirement. You’d need £45,000 a year if you include luxuries such as long-haul trips and a new car every five years. Travelling and holidays are a very important part of retirement, with people spending on average £4,657 a year on this part of their life.
“61% of under 65-year-olds have no idea what their retirement income will be. ”
Priorities change slightly as you move through your retirement years. People tend to spend relatively less on food and drink, housing payments and recreation as they get older, particularly over the age of 80, but more on utility bills, health, and insurance premiums.
Since the research individuals would have undoubtedly spent more on energy, food and petrol.
By Philip Harper | June 2023
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