Older people are spending far more money than their younger counterparts, and a lot of it is going on having fun.
Retirees are splashing the cash at a much greater rate than their younger counterparts, new research has revealed.
Data from Canada Life has found that retirees have increased their spending at almost three times the rate of non-retirees in the last decade. The total retired population will spend £130 billion this year, up 71% since 2005. In contrast the working population has increased its spending by only 27% over the same period.
Overall spending among pensioners has risen partly due to the explosion in the retired population, which has reached 11.7 million people. But spending per household has increased dramatically too. A decade ago the average retired household spent £11,438 a year but that has risen to £17,465 this year.
“Times have changed for retirement in the UK. Living standards are better than ever before, and retirees now have the financial firepower to make the most of later life,” says Richard Priestley, executive director of retirement income at Canada Life.
He added that there have been dramatic improvements in retirement income across the board, with most living comfortably, even while the rest of the country are tightening their financial belts.
Power of the silver pound
Pensioners are also shifting what they are spending their cash on. They aren't spending all of their money on essentials such as food and clothing. Instead the research found spending on having fun (such as alcohol, cultural pursuits, entertainment, restaurants and hotels) is vastly outstripping spending on essentials. The average retired household is spending £4,279 a year on having fun, compared to £2,952 on essentials. That equates to a total of £31.9 billion, an increase of an almighty 74% over the last ten years.
This is in stark contrast to the rest of the country. While non-retired households spent £7,181 on having fun in 2015, that represents an increase of just 9% on 2005, suggesting there has been far more belt-tightening among non-retired households over the last decade than retired households.
“The figures shine a light on how much more important the older demographic is in our economy,” says Priestley. “The silver pound is growing in strength, and as the UK’s retired population swells, its spending power will only increase further.”
[SPOTLIGHT]It is likely we’ll see pensioner spending on fun increase even further in future as Canada Life’s data predates the pension freedoms which have given retirees far greater access to their pension savings.
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Does spending make you happy?
All of that spending money on having fun is obviously paying off too, as pensioners are the happiest people, according to new research. Satisfaction, happiness and a feeling that life is worthwhile all peak in people aged 65-79, the survey by the Office for National Statistics found.
Researchers asked 300,000 adults to rate out of 10 how happy and how anxious they had felt the day before, how satisfied they are with their life generally, and whether they felt that their life was worthwhile.
The happiest group was the 65 to 79 age bracket. Researchers suggested this could be because they have more free time to spend on activities which promote their well-being. It could also be down to financial freedom – research from the Centre for Economics and Business Research has found most of us become debt free at the age of 69.
However, life satisfaction and happiness start to decline in people over 80. Researchers believe this could be due to personal circumstances such as ill health and loneliness.
Adults aged 45 to 59 had the lowest levels of life satisfaction and the highest anxiety levels. This could be because this age group are bearing the burden of having to care for both their children and their elderly parents.
People aged over 90 reported the lowest levels of feeling their life was worthwhile despite simultaneously having levels of happiness and life satisfaction that was on a par with people in their 20s and 30s.