A study, by wealth manager Quilter, in collaboration with the Centre for Economics and Business Research (CEBR), shows the typical pensioner spends £22,140 a year.
At the same time, many older people are quietly keeping younger generations afloat, gifting thousands each year to children and grandchildren despite their own tight budgets.
Here, we take a look at what an “adequate” retirement really means, where the money goes, and why so many pensioners feel they are falling behind.
Quilter’s study, based on a survey of 5,001 retirees, found spending levels fall well short of this figure for most households.
Where pensioners’ money is going
Retirees spend an average of £1,985 on home improvements, £1,579 on debt repayments, and £1,374 on healthcare, despite NHS provision, each year.
Perhaps surprisingly, gifting to others absorbs more than 10 per cent of annual budgets, with £1,323 going to relatives and a further £1,175 towards education for grandchildren.
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“Our index shows the average retiree still parts with about £22,000 a year, with holidays, home improvements and groceries absorbing most of the budget.
“Clearly, reliance on the ‘Bank of Mum and Dad’, or for some the ‘Bank of Gran and Grandad’, is prevalent.”
Why people are falling short
The report highlights deep reliance on the state pension, which makes up 47 per cent of income for 70 to 74-year-olds and 50 per cent for those over 80.
While it found the median retiree household income to be £35,000, regional gaps are stark.
In Wales, 42 per cent of retirees report less than £30,000 – the highest proportion across the UK, compared with an average of £58,113 in London.
He added: “There are also broader implications for younger generations, especially those reliant on the ‘Bank of Mum and Dad’, or the ‘Bank of Gran and Grandad’, to help them onto the housing ladder or even children looking to their parents to provide seed capital for their fledgling ventures.
“It is clear that not only are the retired community an important funder of relatives’ financial aspirations, but that this support may shrink as retirees contend with rising living costs, impending changes to pensions being drawn into estates from 2027 and the limitations of current gifting allowances.”
Mr Levin said it is “alarming” to see so many retirees deeply concerned about their financial future.
The Government has been contacted for comment.
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