Quantcast
Menu
Save, make, understand money

News

Retirees enjoy spending boom as strength of silver pound surges

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
08/12/2015

Retirees have increased their spending at almost three times the rate of non-retirees in the last decade, figures from Canada Life’s Retire UK report show.

Annual spending by retirees is now around £17,400 per household, a rise of 53% in ten years.

Retired households will spend a total of £130bn this year, up 71% compared to 2005 – and a majority of the money will go towards enjoying life.

Spending on fun activities and goods – including alcohol, cultural pursuits, entertainment, restaurants and hotels – is now at £13.6bn more a year than it was a decade ago. In comparison, pensioners spend £22bn on essentials, like food and clothing.

Housing and fuel spending has increased the most at 70%, though at £4,681 per year, it is only a little bit more than the amount spent on fun. The rise in costs reflects, among other things, higher energy costs in heating and lighting and higher rents for the relatively small proportion of retirees who do not own their own home.

Disposable income 

Disposable income for retirees has increased by 43% over the decade, and Canada Life estimates that if this keeps pace with spending over the next ten years, pensioners will part with £194bn by 2025. Retired households now make up 15% of UK’s overall spending – increasing by 3% in ten years.

The rapid growth of the retired population, which reached 11.7 million this year, has been a key driving factor – and it is estimated that pensioners will make up two fifths of the UK population in 2025.

Growth for non-retired households has been significantly more modest. Collective spending is up just 27% over the last decade, with the average household spending up 21% since 2005. In contrast, disposable income has risen by 26% in the same time period.

This means that not only is spending growth increasing slower for non-retirees, but households are also holding on a lot more tightly to their money.

Spending on housing for non-retirees is up by 36% – but record low interest rates have helped reduce mortgage costs among the home-owning population.

Richard Priestley, executive director of Retirement Income, said that while pensioner poverty has not been eradicated altogether, most retirees live comfortably and have the ‘financial firepower’ to make the most of later life.

He added that the figures highlight the importance of the older demographic in our economy.

“The silver pound is growing in strength, and as the UK’s retired population swells, its spending power will only increase further. This has clear implications for businesses marketing their products and services, and highlights the opportunity for those able to meet the needs of this segment of the population.”

[article_related_posts]


Share: