A new study shows that the average pensioner is so well off that they can afford to splurge on the good life. Apparently, retirees now spend more on having fun than they do on the basic essentials.
The study by Retirement Advantage, found that £2.36 of every five pounds spent by pensioners goes on the boring basics - like heat and light, food and drink, clothes and shoes. The other £2.64 gets spent on much more entertaining non-essentials - like eating out and holidays.
The breakdown of an average fiver includes £1.19 on housing and bills, 67p on food and drink, 19p on insurance, 16p on clothes and 15p on health and education.
At the more exciting end of the spectrum it also includes 91p on leisure and holidays, 61p on transport, and 42p on eating out, alcohol and tobacco.
It's hardly surprising really. Pensioners are now richer than more than 60% of the working population - thanks to careful saving in generous pensions - and house price rises that have brought a number of people a downsizing windfall.
A new opportunity
The fact that pensioners retire with so much wealth means that despite facing collapsing annuity rates, many of them can afford to live off the income from an annuity. However, Andrew Tully, Pensions Technical Director at Retirement Advantage, is urging them to consider the alternatives.
Thanks to the introduction of pension freedoms, they could, for example, use part of their pension pot to buy an annuity to cover the essentials. They could then leave the rest invested to give it the opportunity to grow during their retirement, and draw money from the pot occasionally when they wanted non-essentials - like an annual golf club subscription or a holiday.
It would mean they might have more left in the pot later in retirement to pay for things like the cost of care, property maintenance or adaption - or indeed anything else they fancied.
This won't suit everyone, but for many a hybrid approach like this offers a mixture of security and flexibility that appeals. It means that when you come to retirement, it's well worth getting advice, or speaking to someone like the government's Pension Wise service, so you understand all of your options before you make a decision.
Dream retirement destinations
Dream retirement destinations
A study by MGM Advantage discovered that Portugal is the 10th most popular dream retirement destination among Brits.
You get the attractions of the sun, a more relaxed way of life, lower living costs and cheaper property. You can also benefit from pension arrangements that mean your pension rises with inflation.
And if you choose to, you can spend your time with the enormous expat population, feeling like you never left.
In the tradition of the Best Exotic Marigold Hotel, there’s a large number of people keen to move to India, partly in order to enjoy a much higher standard of living than they would be able to afford in the UK.
If course it’s important to consider that your state pension will not rise in line with inflation - so will halve in real terms during your retirement.
This part of Europe offers a great combination of some of the lowest living and housing costs on the continent, along with a more forgiving climate than the UK.
For that reason Bosnia and Herzegovina, Bulgaria, Croatia, Romania, Greece and Turkey are a big draw for retirees.
However, state pension provision varies across the region, so you will need to check whether retiring to these locations will mean your pension continues to rise in line with increases in the UK, or will be frozen when you move overseas.
Italy is a country of contrasts, so anyone planing a retirement there needs to think carefully about whether they want to call a bustling city home, or whether they would be happiest in the mountains or by the sea.
Housing tends to cost less than in the UK, and in some regions it's incredibly cheap. Living costs are also lower than in Britain, and your pension will rise in line with increases in the UK.
Canada is a big draw for British expats of all ages. This spectacular country is known for being welcoming to people from all over the world, and in many cases has no language barrier for Brits. The quality of life is high, and the cost of housing lower than in the UK.
However, you will need to factor in the fact that your UK state pension will be frozen on the day you leave, and you will need some health insurance if you want to replicate the sorts of things that are available for free on the NHS.
As with India, the Far East offers an exciting and dramatic change from life in the UK, with much lower costs, which can buy you a higher standard of living (although bear in mind your state pension will be frozen).
You will need to consider the cultural and practical differences associated with the move, but you will have the opportunity to live in one of the most exciting places in the world.
The weather, lifestyle, space, and lower cost of living means that British expats of all ages are keen to move to Australia.
Property can be a bit of a stumbling block in some areas, as prices have gone up so much. The currency is also strong, which has posed some issues for those who receive their income in pounds, and there’s the fact that the UK state pension will be frozen if you move. However, if you can overcome these things, then a new life in the sun awaits.
The US offers much more affordable housing, and in many respects a lower cost of living than in the UK.
It appeals to those who don’t want to live with a language barrier, but want more space, possibly more sun, and an American Dream of their own.
There are some important things to factor in before you move, such as the additional cost of healthcare, and the exchange rate. However, one bonus is that your state pension will rise at the same rate it does in the UK.
France is close to home, and yet offers cheaper accommodation than the UK, a lower cost of living, and in many regions there’s better weather too.
Your pension will rise at the same rate it would in the UK, and at any time friends and family are just a short boat or plane ride away. It’s no wonder France is the second most popular dream destination for retirees.
It will come as little surprise that Spain tops the list - largely because it’s already the most common overseas retirement destination for Brits.
Millions of us have experienced the delights of the sun, sea, and the lower cost of living while we were on holiday in the country, so it’s hardly a shock that so many want to experience it on a full-time basis in retirement.
Huge falls in the price of property has made this a cheap place to buy, and the fact that your state pension will keep pace with rises in the UK means you’ll be able to maintain your standard of living throughout your retirement.