Pensioners are saving more as they move through retirement, according to a new report.
The figures, gathered by the International Longevity Centre (ILC) and Prudential, bust the myth of older people splashing their retirement cash on leisure and holidays.
Instead, it seems retirees are taking a sensible, even frugal, approach to managing their money.
Find out more: How much money will I need in retirement? – our guide to budgeting for old age
Older households save more
At a time when many experts fear the pension changes will encourage people to fritter away their money, the ILC calculates that UK retirees are saving a total of around £48.7bn per annum. This equates to 2.8% of GDP.
The table below shows that households are saving £4,142 annually when the head of the household is 65-69, with the figure rising to £5,872.50 by the time the head of household is 80+.
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Find out more: How much do I need to save in my pension? – what you’ll need for a comfortable retirement
Spend less, save more
Savings levels are boosted in later years, but not always for positive reasons. Health concerns restrict an increasing proportion of older people from doing the things they want in retirement. This partially explains the fall in expenditure and rise in saving levels.
The report reveals that from the age of 50 onwards, spending on most non-essential items begins a slow decline.
With the exception of the early stage of retirement, retirement does not lead to more holidays or other leisure activities. Nor does retirement lead to a sudden splurge in eating out.
Speaking about the implications for pension provision, Ben Franklin, head of economics of ageing at ILC, said: ‘In light of the pension freedoms, there has been much speculation about consumption needs in retirement and the types of retirement income products that might be required to meet these needs.
‘Striking the right balance between flexibility and security will not be an easy task and will require financial guidance and advice throughout retirement.’
The data was gathered via the Office for National Statistics’ latest Living Costs and Food Survey and is based on the average for the highest-earning member of the household.