The average yearly cost of being a pensioner, based on basic key living essentials, has risen to £11,200 a year, Dean Mirfin, group director of Key Retirement, has said.
He urged pensioners and those approaching retirement to maximise income from all sources including property wealth to ensure they can meet future costs.
“The basic cost of being a pensioner highlights the importance of planning carefully for retirement and getting the best possible advice to ensure a comfortable lifestyle”, he said, adding that in 2014, the average client released nearly £64,800 from their homes.
The comments came as Key Retirement research showed that, over 2014, each pensioner spent an average of £215 a week on basics such as food, clothes, travel and heating. Although food bills increased by just £5 year on year, spending on fuel and housing increased by nearly £200.
Its analysis also revealed that the average retired household spent 15 per cent of its budget on fuel and housing, the equivalent to £1,680 a year, 14 per cent on food and 11 per cent on transport.
There were also significant regional variations in the findings. The cost of being a pensioner was 37 per cent lower in the North East than the South East of the country. Pensioners in the North East needed £9,630 a year compared to £13,216 in the South East, a difference of about £3,600.
Ros Altmann, the government’s business champion for older workers, said: “It is surprising to see there are such huge regional variations in the cost of being a pensioner. These estimates suggest that most of us will need far more than the state pension to live decently in later life.
“Many pensioners have less than £10,000 a year in income and those without private pensions will need substantial other savings, or keep working to make ends meet. If they have a home, they might use some of its value to boost their income, either by downsizing or borrowing against it.”
Nick Evans, financial planner at Hertfordshire-based One Life Wealth Planning, said: “The state pension benefits already from a triple lock guarantee on its level of indexation. This report simply demonstrates how dangerous it is to rely upon it as your sole source of retirement provision.”