Retirement in the UK currently costs a typical household £413,000 and could rise to around £1m, a study suggests.
The Cost of Retirement report, issued today by Life Trust Insurance, also costs an individual living alone £326,700.
But Life Trust insurance says current predictions of life expectancy – 85 for a man and 88 for a woman – are set to soar to around 100.
It says retiring at 65 and living to 100 could see retirement costs climb to over £700,000 for most families and £1.55m for the wealthy, based on an inflation rate of 2.3%.
Andy Briscoe, CEO of Life Trust, says: “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.”
The report, written by cebr (centre for economics and business research), warns that people need to factor in increasing longevity when planning their retirement finances.
It says, for example, someone who is 55 today has a one in four chance of reaching 95 and a one in 10 chance of making 100. Similarly, someone who is 35 today has an almost one in three chance of reaching 95 and a one in seven chance of reaching 100.
The report also says living a longer life highlights that a retiree’s spending differs greatly across their retirement years.
It says overall, the latter stages of retirement are the most expensive, with the annual cost of retirement for an individual peaking at 92. At this age, a retiree would spend 50% more across the year than they would have spent at 65, it argues.
020 7034 2636
Smoking biggest culprit; obesity second
Average earner will gain £840 in 2018
Will also move heritage items
Responding to letter from Treasury Committee chair Nicky Morgan