How our spending might change in retirement

Living longer is a good thing, right? Most people would probably agree with that. Living longer means more time to enjoy all the world has to offer and more time to spend with cherished family and friends – and everyone wants at some point to stop working and enjoy their retirement.

It’s no secret that we are generally living longer. The average time spent in retirement in the UK is currently 22 to 25 years[1]. Whilst this means you’ll have more time to enjoy your retirement, it also means you’ll need to plan to ensure your money can last.

Things to take into account
As we’re living longer, have you considered once you’ve retired where your money will go?

1. Spending money on your home
If you’ve paid off your mortgage, then your costs will be low. Consider how you’ll pay for upkeep on your home, including repairs, replacements and improvements. If you’re renting, you need to factor this cost into your budget.
2. Costs for your children and grandchildren
If your children are yet to fly the nest, planning on going into higher education or wanting to buy a house, you may need to budget to support them. You might want to help your grandchildren too.
3. Travel
You may save money on transport costs because you won’t be commuting. You may even be eligible for free or discounted public transport. These savings could be put towards other areas of your budget.
4. Entitlements
Remember to check out all the potential help and support you could be entitled to when you reach retirement or certain ages. For example, travel passes, reduced costs at leisure centres and help with your winter fuel bills.

Things you’ll need to plan more carefully once you’ve retired

1. Holidays
Chances are, you’ll want to travel and take more holidays once you’re retired. What’s on your wish list, and will your budget stretch to cover these trips? It’s also worth factoring in travel insurance, which can be more expensive for over-65s.
2. Heating and bills
Your utility bills could increase if you spend more time at home. Look into the Winter Fuel Payment – you could be eligible for some tax-free support to help towards your bills.
3. Looking ahead to the long term
We’re living longer now than ever before. Careful planning for things like long-term care for you, your partner or your parents will help you budget for your whole retirement.

Source data:
[1] Based on data for England and Wales. Office for National Statistics, Nov 2014.