The idea that older people splash their retirement cash on leisure and holidays is just a myth, according to new research by the International Longevity Centre – UK and Prudential.
The report found that:
- Consumption falls during retirement: A household headed by someone aged 80 and over spends, on average, 43% less than a household headed by a 50-year-old.
- Many older households continue saving throughout retirement. Individuals aged 80 and over are saving, on average, around £5,870 per year. ILC-UK calculates total per annum savings made by those in retirement in the UK today of around £48.7 billion. This equates to 2.8% of GDP. The majority of savings made by older people are sitting in low interest current accounts. On average, retirees think they have a 70% chance of leaving an inheritance of £50,000 or more.
- Contrary to popular perceptions, retirement does not lead to more holidays. However as we age, time at home alone increases while time spent with family and friends falls. By age 90+, watching television and spending time at home alone are the most common daily activities.
- Health appears to restrict an increasing proportion of older people from doing the things they want to do in retirement. However, the vast majority of retirees say that they are able to do the things they want. Even by age 90+, 65% of the population say they can do the things they want “often” or “sometimes”.
“The research findings provide an insight into retirees’ actual behaviour that is unexpected yet thought provoking,” commented Tim Fassam, Head of Public Affairs at Prudential UK. “By having a greater understanding of spending patterns in retirement, the rate at which older people save and their hopes to leave an inheritance, it becomes easier to help them plan financially for retirement.”
“It points to financial advice being equally important in the latter stages of retirement as at the start, and of the need for our industry to focus beyond the point at which someone retires,” he added.
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