Are we spending more than everyone else?
Clients often ask Financial Planners whether they are spending more, or less, than everyone else.
For those who are interested in an answer to this question, the Office for National Statistics’ Family Spending Report, which was released last week, is a goldmine of information.
It samples a huge number of households, and sets out how much the typical family spend in the UK, and what they spend their money on.
The average expenditure of a one person retired household is £13,265 per year, whilst for a two person retired household it is £26,244.
The average two person retired household spends just less than double the average one person household in retirement.
However, it would be wrong to conclude that spending immediately reduces by half on the death of the first partner. The average one person household is, of course, older than the average two person household, and discretionary expenditure reduces with age.
It’s also useful to know that average expenditure in the South-East is about 14% higher than for the rest of the UK.
If you apply this additional percentage to retired people, average expenditure is about £15,100 per year for one person households and £29,800 for two person households.
There is also a massive range of expenditure, according to your income; the highest 20% of retirees spend 42% more than the average, and 2.75 times more than the lowest 20%.
Retired couples spend around 17.5% of their money on “recreation and culture” (which includes holidays) on average, with retired couples spending more on this than on any other item.
For working households, the largest element of annual expenditure is on housing, fuel and power, with mortgage payments making up a large part of this. Transport is not far behind.
Average spending on health is just 1.2% of the total.
This year’s survey has illustrated an interesting social trend – average spending on alcoholic drinks has declined over the last ten years, with reductions in money spent at home and away from home.
Despite the careful work of the ONS in compiling its statistics, and the recognised validity of this annual survey, I’ve yet to convince my wife and daughter of the credibility of the official ONS announcement that the average household expenditure on “footwear for women” is £119.60 per year (and that it has reduced compared to last year).
I’m keeping quiet about the official figure for “bicycle purchases, accessories, repairs and other costs” of £26 per household per year (there must be a lot of people spending nothing on bikes!)Are you spending more, or less, than everyone else? These new figures offer a useful insight. Click To Tweet