As much as 20 per cent of retirees in the UK have consistently overspent during their retirement so far, with signs that the issue will only get worse for the next generation planning to retire, according to new findings from PensionBee.
Daily living expenses emerged as the largest financial burden for Brits during retirement, cited by 28 per cent of respondents as their largest expense, largely driven by the rising cost of living in the UK since 2021, PensionBee says.
Housing costs, including mortgage payments and general property maintenance, ranked as the second-largest expense, with 21 per cent of retirees identifying it as their biggest financial commitment.
Becky O’Connor, director of public affairs at PensionBee, commented: “Overspending in retirement is a real risk. It can be hard to know how much you are likely to spend. With living and home maintenance costs often exceeding expectations, a significant chunk of today’s retirees are overspending.”
PensionBee also surveyed pre-retirees (aged 18 to 54) about their expectations about spending during retirement. For savers aged 18 to 44, housing costs emerged as the most common concern (28 per cent), reflecting worries over rising property prices in the UK.
Preparing for the future
Additionally, nearly a fifth (19 per cent) of young savers (aged 18 to 24), believe they’ll need to use their retirement savings to support their families, for example as money for a house deposit. Meanwhile, (20 per cent) of pre-retirees (aged 18 to 54) expect care costs to be a significant financial burden in retirement.
O’Connor added: “There are other areas of spending, such as helping out younger family members, that could become even more demanding on pension pots over the coming years, so the next crop of retirees may find they are stretched even further beyond their expectations.
“The survey data suggests that when retirement planning, assuming you will overspend beyond the budget that you initially set could be a wise way to minimise any nasty surprises.
“Using generic guidance on how much you might need for different living standards may be useful, however, bear in mind that spending needs are extremely subjective and based on many factors, such as housing costs, the number of children or grandchildren you may have, health and life expectancy.”
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