A fifth of Brits (20%) over the age of 55 have consistently spent more than they’d expected to during their retirements so far, with an additional 11% expressing that this occurred early on in their retirement, according to new analysis by PensionBee.
Daily living expenses emerged as the largest financial burden for retirees, with 28% citing this as their top item of expenditure which may be attributed to the rising cost of living in the UK since 20221. Housing costs, including mortgage payments and general property maintenance, ranked as the second-largest expense, with 21% of retirees identifying it as their biggest financial commitment.
PensionBee also surveyed pre-retirees (aged 18 to 54) about what they anticipate will be their largest expense in retirement. For savers aged 18 to 44, housing costs emerged as the most common concern (28%), reflecting worries over rising property prices in the UK. Additionally, nearly a fifth (19%) of young savers (aged 18 to 24), believe they’ll need to use their retirement savings to support their families, for example as money for a house deposit. Meanwhile, a fifth (20%) of pre-retirees (aged 18 to 54) expect care costs to be a significant financial burden in retirement
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “Overspending in retirement is a real risk. It can be hard to know how much you are likely to spend. With living and home maintenance costs often exceeding expectations, a significant chunk of today’s retirees are overspending.
There are other areas of spending, such as helping out younger family members, that could become even more demanding on pension pots over the coming years, so the next crop of retirees may find they are stretched even further beyond their expectations.
The survey data suggests that when retirement planning, assuming you will overspend beyond the budget that you initially set could be a wise way to minimise any nasty surprises.
Using generic guidance on how much you might need for different living standards may be useful, however, bear in mind that spending needs are extremely subjective and based on many factors, such as housing costs, the number of children or grandchildren you may have, health and life expectancy.”
Table 1: How does your current retirement spending compare to what you initially expected?
| Question | Response (%) |
|---|---|
| I’ve consistently spent approximately what I expected | 36% |
| I’m unsure how my current spending compares to my expectations | 24% |
| I’ve consistently spent significantly more than expected | 20% |
| I spent more than expected in the early years of retirement, but my spending has now aligned with my expectations | 11% |
| I’ve consistently spent significantly less than I expected. | 6% |
| I spent less than expected in the early years of retirement, but my spending has now aligned with my expectations. | 3% |
Source: PensionBee, August 2024. Responses from a nationally representative sample of 1,000 UK adults aged 55-85. Numbers have been rounded.
Table 2: What has been your biggest expense in retirement so far?
| Question | Response (%) |
|---|---|
| Daily living expenses | 28% |
| Housing costs | 21% |
| I’ve not retired yet | 21% |
| Travel | 14% |
| Support for family | 7% |
| Leisure | 6% |
| Healthcare | 3% |
Source: PensionBee, August 2024. Responses from a nationally representative sample of 1,000 UK adults aged 55-85. Numbers have been rounded.
Table 3: What do you think will be your biggest expense in retirement?
| Question | Response (%) |
|---|---|
| Daily living expenses | 29% |
| Housing costs | 27% |
| Healthcare | 20% |
| Travel | 10% |
| Support for family | 9% |
| Leisure | 5% |
Source: PensionBee, August 2024. Responses from a nationally representative sample of 1,000 UK adults aged 18-54. Numbers have been rounded.
Table 4: What do you think will be your biggest expense in retirement? (By age).
| Question | 18 - 24 | 25 - 34 | 35 - 44 | 45 - 54 |
|---|---|---|---|---|
| Housing costs | 24% | 30% | 29% | 24% |
| Daily living expenses | 17% | 29% | 28% | 39% |
| Travel | 16% | 6% | 11% | 8% |
| Support for family | 19% | 10% | 7% | 3% |
| Leisure | 7% | 8% | 4% | 4% |
| Healthcare | 18% | 18% | 21% | 22% |
Source: PensionBee, August 2024. Responses from a nationally representative sample of 1,000 UK adults aged 18-54. Numbers have been rounded.
