Research by Prudential of the ONS Family Spending Report showed that household costs fluctuate over time, with annual costs peaking at £45,000 when the head of the household is aged between 30 and 49, reflecting the costs of raising children.

By comparison, pensioner household expenditure drops to £25,000 a year when the head of the household is aged between 65 and 74, and to £17,000 for those aged 75 and above.

Commenting on the figures, Vince Smith-Hughes, retirement expert at Prudential, said: “These figures are startling, showing a gulf of more than £14,000 annually between income and expenditure in the early years of retirement if the householders rely solely on the Basic State Pension. This pays just £10,310 a year currently to the average retired household. To make up the difference, pensioners will have to dig deep into their savings or personal pension plans, unless they simply choose to go without.

“Although living costs do fall as people reach their twilight years, health costs tend to increase, so the average household costs are nowhere near covered by the State Pension, even in households with two pension incomes.”

The analysis also revealed that the lifetime cost of people’s direct taxation, (income tax and national insurance contributions), is £385,000 for the average household.

Smith-Hughes continued: “Saving into a pension scheme can also be an excellent way of reducing tax liability as basic rate taxpayers can claw back 25p in income tax relief for every pound they save into a pension, and for high rate taxpayers this rises to 67p in the pound.”

Housing is the single largest expense for a typical UK household, with mortgages, rent, repairs, energy and council tax costing, on average, a total of £508,000 over a lifetime.