How much the average household spends - and anti-panic tips for retirement savings!

New data this week from the Office of National Statistics shows that the average weekly spend per household is £528.80. That’s about £27,500 a year. This falls as we get older – for households where the Master Jedi is aged between 65-74, it’s £455.30. Or £23,000 a year.

Getting nosier, on average each week, we spend £88 on housing, £74 on transport, £62 on food, £35 on restaurants and hotels and £21 on communications. I couldn’t seem to find the category for wine which was odd…

Thinking to the future – how much do I need?

An industry body – the PLSA – publishes data on retirement living standards which is a helpful guide to start to think about this.

If you’re a Single Pringle, then a comfortable retirement with some luxuries would need £37,300 a year. A moderate retirement would take £23,300 and the minimum would be £12,800.

Couples of course get some economies of scale – £54,500 a year takes you into comfortable zone with a couple of cars, 3 weeks in Europe a year and £1,300 per person for clothing and shoes. A moderate lifestyle would require £34,000 and a minimum standard of living would take £19,900 a year.

OK so if that’s the goal, how do I get there?

Retirement income is like a shamrock. State Pension. Any workplace pension. And a private pension.

The full new State Pension is £10,800 a year – if you have a full National Insurance record. You can check out what you’re in line for here.

Then think about other pensions from work or private ones. Tot up what you’ve got. As a very rough rule of thumb, divide this by about 20 or 25 (actuaries squabble about this incessantly so purists – it’s only a guide!) for an indicator of what that lump sum would translate to in terms of an annual income.

So if you have £100,000 in pensions savings, for example, that could bring in about £4 or £5 grand a year. On top of the State Pension.

Then think about ISAs, cash savings, rental income and other bits to add to the mix.

Don’t get depressed!

At this point, lots of us start panicking and feeling sick. What can we do? Here are 7 tips to help:

• If you’re in your 30s and 40s and haven’t done much (or anything?), then I think your 2023 job is just to get started. Even if it’s the tip of an iceberg. Most providers let you open a pension online with £100 and it takes about 15 minutes to do. Our 2023 Pension Best Buys are very good place to start for good online options – AJ Bell, Aviva, Fidelity and Hargreaves Lansdown are good options for smaller amounts and all let you start with £25 a month. To quote Yoda, “Do. Or do not. There is no try.”

• Self-employed people – open up an online pension and consider putting a % of every invoice paid into this – even if it’s a tiny amount. Just start. 2% of every invoice maybe?

• You can watch a 30 minute workshop on catch-up with adviser Tanya Laing on how to save for retirement – helpful, practical tips.

• If your money stresses are more general, then adviser Rachel Efetha is running a live online workshop next Wednesday lunchtime and will take your questions – Money and Managing Financial Stress.

• Grandparents could open a Junior SIPP for the grandkids. Of course they won’t think this is that exciting BUT I think it’s the definition of selflessness if you have a spare £100. One asset manager boss I know has done this and just put it all in a low-cost S&P 500 tracker to tick along for 60 years!

• Or if you want some financial advice, our adviser directory has some brilliant advisers – you can also look at other readers’ questions on pensions, and read the advisers’ answers.

Alternatively, looking at the breakdown of our weekly spend, you could adopt my new Holly Hermit Budget plan. Go nowhere – cut transport costs. Talk to no-one – bye-bye communications costs. Give the children away – see ya! Find a cave, banish those mortgage blues, and make like Yoda. Voila!

Look out for the release of my new bestseller Holly Hermit Budget book, as I remodel myself into a Wellness Guru and launch scented Hermit candles, a Jedi Robes fashion range and my Carrie’n’Boris cave wallpaper range…

Have a great weekend everyone,

Holly

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