New pensioners will need to halve the cost of their living with the introduction of the New State Pension, according to new research.
The in-depth study by Retirementsavvy found millions of Brits will be short of £165.05 per week as they struggle to live on the £155.65 issued to them by the government.
The New State Pension is equal to an hourly wage of just £3.57
The average person nearing pension age currently spends an average of £320.70 each week on essential living costs such as utilities, bills, rent share, food and clothing.
Assuming the average calendar month has 4.3 weeks this equates to an overall normal spend of £1,379.03 – but those in receipt of the New State Pension, due to launch 6th April 2016, will have to cope on maximum handout of just £669.30.
As a consequence, Brits will be forced to cut their spending on things such as eating out, socialising, house maintenance, DIY and travel by 51 per cent.
Andrew Sheen, editor of online retirement community www.retiresavvy.co.uk says: "It's amazing how many people don't know how much State Pension they can expect. Although the New State Pension that comes in from April 6 is more generous than the system it replaces, it's still less than half of what the average 50-65 year-old currently needs to live on.
"If they get to State Pension Age without having their own plans in place, a lot of people will have a big surprise and face a huge change in the kind of lifestyle they can afford. We worked out the New State Pension is equal to an hourly wage of just £3.57 – that's less than half the new National Living Wage.
“People need to plan ahead if they’re going to make the most of later life.”
CURRENT COST OF LIVING PER MONTH PER PERSON AGED 50-65
Food – £254.13
Socialising with friends and family – £77.12
Alcohol – £49.10
Exercise, sports, clubs and hobbies – £29.36
Utilities, insurance, council tax and bills – £326.25
Mortgage or rent – £219.46
Travel – £80.83
Clothing and shoes – £47.29
Gifts for others – £41.58
Little luxuries – £30.56
Credit cards and loans – £129.89
House maintenance, DIY and gardening – £46.00
Eating out – £47.46
TOTAL CURRENT SPEND PER MONTH = £1,379.03
TOTAL MONTHLY NEW STATE PENSION = £155.65 X 4.3 (average weeks in a month) = £669.30
£1,379.03 – £669.30 = short of £709.73 (51 per cent) per month
Normal spend per week = £1,379.03 / 4.3 weeks = £320.70
£709.73 / 4.3 weeks = short of £165.05 per week
- There are more money-saving tips in every issue of Yours magazine, out every fortnight on a Tuesday.