The average retired household will spend an astonishing £420,500 in retirement. It's a terrifying thought given how little most of us have set aside for retirement - and what a small fraction of this the state pension will stretch to, but where does the money go?
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The spend was uncovered by Tilney, who discovered that households spend £1 million by the age of 50 - and £893,500 thereafter - so that in our life each household will spend almost £2 million.
For younger adults, housing dominates this spending - as a third of outgoings for those under the age of 30 are tied up in keeping a roof over their head. However, that doesn't mean we are priced out of having fun during our working lives, and by the time we reach the age of 50, the household will have spent an astonishing £203,000 on holidays, restaurants and entertainment.
What we spend in retirement
In retirement, we send less on housing - a household total of £141,000 during retirement. We do, however, continue to spend a small fortune on having fun - costing the typical retired household £99,500 - broken down into £41,000 for holidays, £36,000 on entertainment, and £22,000 on restaurants.
£51,957 on food and non-alcoholic drink (including £3,656 on buns, cakes and biscuits)
£25,591 on electricity and gas
£23,637 on package holidays abroad
£12,029 on alcoholic drinks
£10,073 on clothes
£2,270 on internet fees
£3,300 on the garden
£3,308 on pets
The researchers also discovered that people aged between 45 and 65 underestimate how much they will spend in retirement by an astonishing £100,000. This is a shocking miscalculation, and while it may not have made much difference at a time when everyone was compelled to buy an annuity, it could have dramatic repercussions now we can dip into our retirement savings whenever we like. It would seem to indicate that we're set for a horrifying shortfall in our most elderly years.
An average household will spend £26,500 every year between the ages of 65 and 75. The combined state pension will cover £12,047 of this, but it means households need an additional income of £14,100 a year if we are to avoid this shortfall.
Andy Cowan, Head of Financial Planning at Tilney said: "The key to enjoying a comfortable or even prosperous lifestyle in later life when you are no longer earning is, of course, to plan ahead and to start investing as early as possible. People set expectations for their living standards in retirement during their peak earning years in their 50s, and this is the time when most ramp up saving, but it is also important to invest it in the right places and minimise the burden of tax. Taking advice on how to do this effectively is vital to ensure our aspirations can be realised."