This is significantly higher than the increase in average pensioners income, which has only risen by 26%3, from £11,440 to £14,404, and highlights the growing affordability problems over 65s are experiencing.
TYPICAL PENSIONER SHOPPING BASKET4
Service/Product
Increase1
(Nov' 94 - Nov' 04)
Basic Expenditure
Basket of Shopping including staples such as bread, milk vegetables, meat and tea.
15.2%
Chemist Goods including NHS prescription charges
17.1%
Household Expenditure
Council Tax and rates
101.64%
Electricity
-3.4%
Water and other related charges
35.5%
Household repairs and maintenance
88%
Gas
17.8%
Telephone Charges
-19.1%
Non-essential Expenditure
Foreign Holidays
63%
Gardening Products
146.2%
Pet Care including vets and boarding fees
21.3%
Vehicle Maintenance and Tax
50.35%
Average Increase
44.53%
The cost of basic products such as food and prescriptions has not risen more than pensioner incomes but household expenditure has increased dramatically with Council Tax rising by 101% and repairs/maintenance by 88%.The price tag on 'life's little luxuries' such as travel and gardening products has also grown substantially. This will have a particular impact on today's retirees who aspire to enjoy their retirement by travelling more and pursuing new interests. KRS suggests that homeowners over 65 may wish to consider the benefits offered by equity release - additional disposable retirement income without the worry of meeting regular repayments.
Dean Mirfin, Business Development Director, Key Retirement Solutions says, "We are all concerned about the rising cost of living but pensioners who tend to have a fixed income are particularly vulnerable. Today's retirees also expect more out of retirement and are likely to find reduced spending power more of a burden than previous generations.
"However, with the value of equity held in property by the over 60s now calculated at over £1.03 trillion5, there is tremendous scope for today's retirees to use Equity Release to boost their disposable income. Equity Release is however not suitable for all retirees and people need to discuss all their options and alternatives with an independent financial adviser before choosing this route."
