Spending in retirement falls by almost 50 per cent amongst those aged 50 to 65 compared to those aged 75 plus, research by Aegon has revealed.

Analysis of retirement income and average expenditure found that those aged 50 to 65 spend £463 a week in comparison to £373 spent by 65-75 year olds and £241 by pensioners aged 75 and over.

The firm highlighted that at the same time, incomes fall by just six per cent between 50-65 and over 75 from £556 to £521, so as living costs drop, pension incomes remain mostly consistent throughout retirement.

The differences in expenditure have been attributed to the fact that those in the early stages of their retirement are more likely to be more active and travel more frequently, spending more on recreational activities per week in comparison to older retirees.

Nonetheless, while there were concerns that the pension freedoms, launched last year, would lead to an influx in luxury spending, this hasn’t been reflected in withdrawal statistics, Aegon found. Average withdrawals have been around £11,000 under the freedoms.

The research also revealed that a larger number of people in early retirement should be seeking financial advice. Only 18 per cent of people aged 50 to 64 had spoken to an adviser, while one in five, 21 per cent of 65 to 74 year olds have done so. Twenty seven per cent of pensioners over 75 had sought advice.

Aegon pensions director Steven Cameron said: “These figures really highlight the challenge of modern retirement. People now have so much choice over how and when they access their retirement savings but this freedom creates greater complexity as to how they should spread their income.

“Today, people are increasingly retiring with defined contribution pensions and have the opportunity to better match their income to suit their evolving lifestyle in retirement. This is a positive, but accurately predicting how much income you’ll need and when over a period which could last 30 years of more is a complex task.

“Over time we expect to see people increasingly drawing a larger income in early retirement to reflect their active lifestyles, while at the same time ensuring they have enough money set aside to cover any big costs in later life like care costs.”

Share Story: