New pensioners will need to halve their cost of living following the introduction of the new state pension, according to recent research from retiresavvy.co.uk.
The study found that millions of Brits will be £165.05 short each week as they struggle to live on the £155.65 issued by the government. The average person nearing pension age currently spends £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 monthly spend of £1,379.03; however, those in receipt of the new state pension will have to cope on a maximum handout of just £669.30. As a result, Brits will be forced to cut their spending by 51% on items such as eating out, socialising, house maintenance, DIY and travel.
Researchers found that 42% of respondents were unaware of the drop in the new state pension payout. Almost one in six were shocked at the figure and claim they would never be able to cope, while 21% felt they would need to find an alternative form of income. Just 40% were content with the revelations as they already had other financial plans in place to help them cope when they reach retirement.
Two-thirds of those aged 50 to 65 say they will have to cut corners by the time they reach pension age, making the biggest cutbacks on eating out, treats such as magazines, beauty products and gadgets, clothes and shoes. Around 70% admitted they will have to cut back on socialising when they reach pension age.
Andrew Sheen, editor of retiresavvy.co.uk, said: “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.
“At retiresavvy.co.uk, 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.”