Retirement costs soar as lifespans increase

Retirement in the UK costs a typical household £413,000, and costs an individual living alone £326,700, a study has claimed.

If an individual retires at 65 and lives to 100 – an age which someone who is 35 today has a one in seven chance of reaching – retirement could cost £708,500, the Centre for Economics and Business Research (CEBR) said.

The CEBR said while current predictions of life expectancy are 85 for a man and 88 for a woman, these are set to rise significantly and people need to take this into account when planning for retirement.

The research was carried out for Life Trust, a company formed to offer financial services to protect against the likelihood of a longer lifespan.

Retirement in the UK costs a typical household £413,000, and costs an individual living alone £326,700, the research claimed.

Early retirees finishing work at the age of 50 will need an additional £373,000, or around £25,000 per year, to fund their retirement.

The spending for an early retiree peaks at 60 as people take advantage of their first years away from work, spending £5,000 a year on recreational activities, such as cinema tickets, theatre and home entertainment equipment, the study found.

Andy Briscoe, CEO of Life Trust, stated: "People are living longer, healthier lives. This is great news but only if people have the finances in place to really enjoy their post-career years.

"The combination of rising life expectancy and the impact of inflation over time can have huge financial implications, and this report allows us, for the first time, to see the scale of these trends.

"With more and more people reaching 90 and beyond, and with 90 becoming the new 70 in terms of healthy ageing, it has never been more necessary for the industry and individuals to understand the true cost of modern retirement."