THE COST OF TOMORROW - Tilney Group · The Cost of Tomorrow: Forecasting Our Future Spending maps a typical lifetime’s spending based on today’s prices and spending patterns

THE COST OF TOMORROW

Forecasting our future spendingEDITION 1 – FEBRUARY 2017

PLANNING | ADVISING | INVESTING

2 THE COST OF TOMORROW

Foreword by Andy Cowan Head of Financial Planning at Tilney

We can all imagine what sort of lifestyle we might like to lead. But how much will it cost us? And how much money will we need to put by in savings and investments to enable us to comfortably fund our future lifestyles? The further we look into the future, the less certain we may feel.

At Tilney we recognise that everyone’s future is personal to them, which makes it personal to us. Financial security and family life are personal. They’re not just figures, they are family dreams and peace of mind. At Tilney, we know there is no ‘one size fits all’ solution to financial planning. For more than 180 years we have been helping people achieve financial peace of mind and secure their financial futures through our expert investment management and financial planning.

Our new report, The Cost of Tomorrow: Forecasting Our Future Spending, examines how much we will spend across our lifetime and, importantly, highlights what our likely future household spending will be once we have retired. The amounts we will spend are astonishing and provide a lot of food for thought. By having a realistic view on what our futures may cost, we can ensure we are managing our savings and investments sufficiently now, to be able to support our future dreams and ambitions.

A LIFETIME OF SPENDING 3

Introduction

As we enter the workplace, grow our families, build our careers, and then prepare for retirement, we also make choices that allow us to live the lifestyle we want. During our working years, while much of our income funds our daily living, we have to be able to put aside savings and make smart investment decisions that will in time come to provide an income for our retired years. That money needs to fuel our day-to-day spending on household basics, but it also needs to support our ambitions and dreams for the nicer things in life.

The Cost of Tomorrow: Forecasting Our Future Spending maps a typical lifetime’s spending based on today’s prices and spending patterns. It looks at how much we in the UK spend as a household on expenses such as housing, utilities, clothing, food, entertainment and holidays during different stages of our lives, and how these spending totals and patterns change throughout a lifetime. Specifically, the report provides us with some interesting reading when it comes to retirement, highlighting how much households will still spend annually once they have left their working life behind. Whilst spending in certain areas is obviously reduced, retirees are enjoying greater spending on entertainment, recreation and holidays. Of course, in reality, living standards tend to grow over time, and the things we spend our money on change with trends and developments in technology, but even without that crystal ball, this report still gives us fascinating glimpses of our likely future story – and its cost.

We have also asked people what they think their future holds, their aspirations, the opportunities, and what they see as challenges to their future wealth, and we consider some of the steps they can take now to ensure their savings and investments are able to fuel those dreams.

We hope you enjoy reading about how your own tomorrow might look.


Executive Summary

Part 1 – A lifetime of spending

• Spending habits evolve over our lifetimes, according to lifestyle changes and household size

• People under the age of 30 see their spending dominated by housing costs, while having fun makes up just one fifth of spending. In contrast, those aged 65-74 spend a quarter of their total spending on having fun

• The average 20-year-old will see household spending of £1.9m over the course of their lifetime; higher earning households (the top 25%) will spend a total of £2.4m

• The average 50-year-old will have already spent £1m in today’s money. A third of this will have been spent on housing costs, whilst holidays, restaurants and entertainment will have cost them £203,000

• At the same stage in life, the wealthiest 25% will have spent £1.4m, with much higher spending on leisure activities (£342,000)

• After the age of 50, those in the wealthiest 25% of households can expect to spend another £1.4m during the rest of their life – half a million pounds more than the average household

• From the age of 65, the top quarter can expect to enjoy spending £683,000; the average over-65 household £420,000

• Housing costs diminish with age – so a typical retired household can expect to spend £99,500 on having fun, £41,000 of which is on holidays

• One in 16 retired households will enjoy £1m of spending over their future lifetime, and is able to devote disproportionately more to the finer things in life

Part 2 – Aspiration and spending

• People anticipate their lifestyles will improve as they get older; 36% of non-retirees expect their lifestyle to improve; a further 48% expect to maintain their current living standard

• And retirees are seeing this in action. Three times as many say they have seen their lifestyle improve rather than deteriorate since retiring

• Leaving behind the stresses of the workplace, and having more time, were the top reasons for retirees’ lifestyles improving; having sufficient money to spend on fun was third

• Of those who felt living standards had deteriorated, nearly half blamed this on having less money to spend on things they enjoy


• For over-45s, holidays dominate their future aspirations; and the average household in retirement is living out these dreams spending £41,000 on holidays – half of this on foreign travel

• Worryingly those yet to retire underestimate the amount they will actually spend in later life by almost £100,000

Part 3 – Financing your future spending

• A typical household will spend £420,000 in retirement in today’s prices. They can expect to spend £26,500 every year until they reach 75, dropping to just below £16,000 per year after the age of 75

• Assuming a proportion of retirees’ income is covered by the state pension, an average retired household will still need to find a further annual income of £14,100 to sustain their spending levels

• For wealthier households, aspirations and spending totals are significantly greater. The annual spend in today’s money is £43,300 for the first ten years, dropping to just £25,500 after the age of 75

• This leaves a significant post-tax income shortfall of £30,900 every year between the ages of 65 and 74, after accounting for a state pension

Conclusion

• Having spent £1m already, we still have half our lifetime’s spending to go beyond the age of 50

• But people underestimate how much they will spend in retirement, running the risk of not being able to maintain their current standard of living, let alone fulfil retirement aspirations

• The wealthiest quarter will need to source an annual income of £30,900 between the ages of 65 and 75, after state pension income is factored in

• Financial planning is vital; people need to think about the future and ensure they have a portfolio of suitable savings and investments set in place early enough in their lifetime to generate a sufficient pot of money (after tax) to support spending levels in retirement, support their families and leave an inheritance

• Having access to the specialist financial planning expertise that is required to navigate the maze of regulatory and tax changes and protect against rising inflation levels, is the only way to ensure standards of living in retirement are met, and that retirement aspirations, whatever they may be, can become a reality


A lifetime of spending

PART 1

over a lifetime,

The average householdwill spend £1.9M

£1M£2.4Mfor higher earners

BY 50the average householdhas spent its first £1M

Spending on fun

JUMPS TO A QUARTERof the household budget between

65 74and

ONEin 16 households will enjoy a

retirement


The lifecycle of spending

As lives change, so household spending habits naturally change too. In their 20s most people in Britain are getting their careers going and starting families. Spending is relatively high in this stage, mainly reflecting the costs of setting up home. As incomes rise and families grow, so spending grows too, peaking between 30 and 49 years old. Nests then gradually empty, and mortgages reduce, and outgoings begin to fall. People start preparing for their retirement, and this is the time when they will typically spend the least, particularly in the latter days. Higher income and lower income groups alike share this broad pattern through life, though in absolute terms, the wealthier obviously spend more at each stage than others, and most retirees are enjoying a comfortable standard of living.

The evolution of spending

At each phase of life, the complexion of spending is very different. Housing, for example, takes up a steadily smaller share of the household budget over time. A third of under-30s’ outgoings is devoted to keeping a roof over their heads, compared to a little over a quarter among over-65s. And though the younger groups might think they are having more fun than their older peers, entertainment, eating out and holidays account for an ever greater share of spending until people reach 75. Having fun makes up just one fifth of under-30s’ spending but one quarter of those aged 65-74. The older group spends more on it in absolute terms too.

“ Having fun makes up just one fifth of under-30s’ spending but one quarter of those aged 65-74”

£60,000

£50,000

£40,000

£30,000

£20,000

£10,000

£0

Annual spending in each life stage

50-6420-29 75+65-7430-49 Lifetime average

Top quarter

Average household

Bottom quarter


“ An average 20-year-old will spend £1.9m over the course of their life”

“ By age 50, the average householder has already just spent their first £1m in today’s prices”

A lifetime of spending

This all adds up over a lifetime. An average 20-year-old will spend £1.9m over the course of their life (in today’s prices). This is for his or her whole household, so it will include any money their partner spends if they have one, and any outgoings related to their children.

Someone in the top quarter of UK households by income will spend much more. Wealthier 20-year-olds on average can expect to spend £2.8m in their lifetime, half as much again as the average. But even those in the bottom quarter will spend over £1.1m in total.

By age 50, the average householder has already just spent their first £1m in today’s prices. A third of this has gone on housing and utilities, £45,000 on clothing and shoes, and £89,000 on food, these essentials adding up to about 45% of all spending. Holidays, restaurants and entertainment have made up £203,000, or one fifth of the total. The average household reaches the lifetime-spending halfway mark at the age of 48.

Share of annual household spending – selected life stages

35%

30%

25%

20%

15%

10%

5%

0

Other

Holidays

Restaura

nts &

cafes

Enterta

inm

ent & re

creatio

n

Telephone &

inte

rnet

Transport

Health &

personal c

are

Household goods &

services

Housing &

utiliti

es

Clothin

g & shoes

Alcohol & to

bacco

Food & drin

k (ex alcohol)

65-74

20-29

50-64

£3.0

£2.5

£2.0

£1.5

£1.0

£0.5

£0

Lifetime at each age

Mill

ions

20 25 30 35 40 45 50 55 60 65 70 75 80 85

Top quarter Average household

Bottom quarter


The wealthier quarter has in fact only done half a lifetime’s spending by the age of 50. Beyond 50, the typical top-quarter household can still expect to spend another £1.4m in today’s prices, half a million pounds more than the average. Not only is this focusing more intensely on planning for retirement, but its standard of living is steadily pulling further ahead of the average too. Between 50 and 64, they will spend £708,000, 1.5 times as much the average household.

Meanwhile, by the age of 50 someone in the top quarter has splashed £1.4m, two fifths more than an average household. 38% (£550,000) of this has been carved out for housing, clothing and food, a much smaller share of their overall spending than the average, though not surprisingly somewhat more in absolute cash terms. With their higher disposable incomes, a greater share of the top quarter’s spending has been on leisure activities: a quarter of their outgoings (£342,000) has been on entertainment, holidays and eating out, three fifths more than an average household. Interestingly, they have spent £70,000 more on transport, most of which is on buying and running cars.

“ Beyond 50, the typical top-quarter household can still expect to spend another £1.4m”

Cost of the future – aged 50

Holidays

Restaura

nts &

cafes

Enterta

inm

ent & re

creatio

n

Telephone &

inte

rnet

Transport

Health &

personal c

are

Household goods &

services

Housing &

utiliti

es

Clothin

g & shoes

Alcohol & to

bacco

Food & drin

k (ex alcohol)

Bottom quarterAverage Top quarter£0.4

£0.3

£0.2

£0.1

£0

Mill

ions

Other


65+ – the wonder years

From the age of 65, when most people are retiring, the top quarter can still expect to enjoy spending of £683,000, almost two thirds more than the average over-65 household’s £420,000 cost of retirement. But in both cases, how their spending is apportioned across household expenses is changing markedly.

“ From the age of 65, a typical household can expect to spend £99,500 on having fun, of which £41,000 is on holidays”

20-29

30-49

50-64

65-74

75+

Lifetime

Top quarter spending v average spending – multiple

1.30 1.35 1.40 1.45 1.50 1.55 1.60 1.65

Average household – over-65 spending

Food & drink (ex alcohol) £52,000

Alcohol & tobacco £10,000

Clothing & shoes £10,000

Housing & utilities £113,000

Household goods & services £28,000

Health & personal care £19,000

Transport £41,500

Telephone & internet £11,000

Entertainment & recreation £36,500

Restaurants & cafes £22,500

Holidays £41,000

Other £34,000

Top quarter – over-65 spending

Food & drink (ex alcohol) £79,500

Alcohol & tobacco £15,500

Clothing & shoes £22,000

Housing & utilities £145,500

Household goods & services £46,500

Health & personal care £38,500

Transport £81,500

Telephone & internet £15,000

Entertainment & recreation £66,000

Restaurants & cafes £42,500

Holidays £74,000

Other £57,500

Millions


As housing costs consume a smaller and smaller portion of the budget, people are able to enjoy their money more. From the age of 65, a typical household can expect to spend £99,500 on having fun, of which £41,000 is on holidays. More than half of that is spent on foreign travel. By comparison, keeping a roof over their heads will cost only a little more than their leisure pursuits.

The wealthier quarter of over-65s will spend slightly more on their homes, but almost twice as much (£182,000) having fun, of which an astonishing £74,000 will be on holidays. They are still spending significantly on motoring too: of their £81,500 transport budget, £79,000 is devoted to buying and maintaining their cars almost twice as much as their age group overall, suggesting they are replacing their vehicles regularly.

One in 16 retired households will enjoy £1m of spending over their future lifetime. This more privileged group has far more disposable income, which it devotes disproportionately to the finer things in life. In fact, at £410,000 the top 6% of over-65s will spend approximately the same on entertainment, holidays, restaurants and cars as the average retired household will on everything. One key difference for this group is health and personal care. Not only are they more likely to devote resources to private medical treatment, but since their later-life care costs are means-tested, they must also fund these, should they need them, without support from the state.

“ One in 16 households will enjoy a £1m retirement”

Over 65 future lifetime spending – by region

South East

East

South W

est

England

United K

ingdom

East Mid

lands

Scotland

North W

est

West M

idlands

Yorkshire

and The Hum

ber

Wales

North East

£550,000

£500,000

£450,000

£400,000

£350,000

£300,000

London


In later life, the lowest income households become harder to compare to the average and higher income groups. This is because they are much more likely to be single-person households, and so have lower incomes and lower spending. Among over-65s, there are only just over 1.1 adults in each household on average in this lower income group, well below the average for that age. Their future lifetime spending is £242,000.

Regional patterns broadly reflect income levels around the country. Retiring Londoners are the only group where the average household will spend more than £500,000, though there are additional living costs to contend with in the capital. Meanwhile, those in the North East spend the least.


Aspiration and spending

PART 2

SAME OR BETTER

84%expect their lifestyle will be the

People most look

FORWARD TO HOLIDAYSin retirement, and will spend

£41,000£100,000

on them

PEOPLE UNDERESTIMATEactual retirement spending by almost

in retirement


Planning for later life can seem like a complex undertaking. We surveyed 2,000 people aged over 45 to gauge their lifestyle aspirations, comparing the views of those still working to those who have retired, as well as against actual spending patterns in later life.

An improving lifestyle

Most respondents are rather optimistic. 36% of those who haven’t yet retired expect their lifestyle to improve; a further 48% expect to maintain their current living standards. The experience of over-65s can reassure them. Three times as many retirees say they have seen their lifestyles improve rather than deteriorate since they retired.

Crucially this is because people are able to spend money on the things they enjoy, which Part 1 shows takes up a larger share of later-life spending. While leaving behind the stresses of the workplace (62%), and having more time to spend on hobbies and passions (47%), were the top reasons for retirees’ lifestyles improving, having sufficient money to spend on things they enjoy was not far behind (45%). One fifth even cited an increased amount that they had to spend on hobbies and pursuits, as a reason for their lifestyle improving.

“ Those approaching retirement see holidays as an important part of their future”

70%

60%

50%

40%

30%

20%

10%

0%

I have more money to spend on

things I enjoy

I have enough money to spend on

things I enjoy

I have more time to spend

on hobbies and passions

My health has improved

I no longer have stress associated with work

Reasons for lifestyle improvement


While money is quite naturally not the most important aspect of retirement, a lack of sufficient income can be a barrier to securing that lifestyle for some. Of those who felt their living standards had deteriorated in later life, nearly half (49%) noted it was due to having less money to spend on things they enjoy, while 44% simply stated they did not have enough money to support their desired lifestyle.

“ 36% of those who haven’t yet retired expect their lifestyle to improve after 65”

Evolving aspiration

What we want in our lives, and what we will want in the future, evolve with our circumstances. Not only do holidays and spending on leisure activities remain top priorities as people retire – the importance placed on these increases with age.

For over-45s who haven’t retired, holidays dominate their view of the future; 37% see multiple trips abroad as important goals, and 28% say the same of staycations. Those in retirement place holidays as an important part of their future too, with 44% and 43% of retirees saying the same about foreign and UK trips. It’s hardly surprising, then, that Part 1 shows over-65s are splashing out on average £41,000 on holidays.

Regularly eating out or enjoying cultural pursuits such as theatre trips also increases in importance, climbing from 25% among those who haven’t retired, to 37% among those who have. Freed from the shackles of the working day, and often with more disposable income, volunteering or donating to charity also becomes a more prominent lifestyle goal, cited by 23% of retirees compared to just one in ten of those who still work.

My lifestyle has improved 39%

My lifestyle has deteriorated 13%

My lifestyle has neither improved nor deteriorated 48%

Lifestyle changes in retirement


How aspirations evolve

Top aspirations Non-retirees Retirees

One or more holiday(s) abroad each year 37% 44%

One or more holiday(s) within the UK each year 28% 43%

Regularly eating out at restaurants, going to museums, art galleries, cinema or theatre

27% 37%

Owning a home 25% 34%

Take up or continue a sport/hobby 19% 21%

Update car/motorbike regularly 16% 20%

Planning my estate so I can pass money to my children

15% 23%

Move to a part-time job 15% 1%

Financially supporting children’s/grandchildren’s house purchase

12% 15%

Make charitable donations/volunteer 10% 23%

Regularly going to support sports team 7% 5%

Owning a second home/holiday home 6% 4%

Move abroad permanently 6% 3%

Afford monthly membership to the gym 6% 8%

Enrolling in a further/higher education course/learn a new skill

5% 5%

Find employment 5% 1%

Increase spending on luxury items 2% 2%

Other 2% 6%


Expectation versus reality

One of the key challenges for saving enough to meet future goals is understanding how much is needed in total to pursue their chosen lifestyle. In reality people are underestimating their likely standard of living in retirement. Those who have not yet retired underestimate their total retirement spending by almost £100,000. On average, they expect to spend £16,456 per year, a total spend of £325,800. In reality a typical household, as we have seen, will spend £420,000. If this unrealistic forecasting translates into poor financial planning, people risk sleepwalking into a frugal retirement.

Underestimating spending on fun

People are pretty accurate in their assessment of roughly how they will spend their money. Housing costs are correctly identified by the majority (51%) as a top item of expenditure in retirement, followed by spending on food and drink (37%) then holidays (33%) and transport (23%). This broadly matches the reality.

But when it comes to accumulating goods versus enjoying experiences, people overestimate their likely appetite for things and underestimate their likely spending on fun. A quarter incorrectly see household goods and services as one of the three highest costs for later life. Meanwhile, just 9% say entertainment and recreation spending will be among the activities they will spend the most on, and 5% say the same about eating in restaurants. In reality, these two pursuits will account for twice the spending of household goods and services. For many, this will a mean a more active or enjoyable later life than they anticipate, but also that they need to account for the amount they will end up spending on the finer things in life.

“ Those who have not yet retired underestimate their total retirement spending by almost £100,000”


Financing your future spending

PART 3

£14,100

£26,500

AFTER STATE BENEFITS, a typical household needs

of retirement incometo spend

every yearevery year

Top-quarter earners

WILL NEED PRIVATEretirement income of

£30,900

£43,300to spend


So how are the UK’s households financing their lifestyles? Naturally, working-age people are mainly relying on their earned income. But to continue to fund the essentials, the fun and the luxuries once they have stopped working, people need to plan ahead.

A typical household will spend £420,000 over the course of their retirement in today’s prices. Spending tends to be front-loaded, averaging £26,500 in the first few years, before dropping to a little below £16,000 after the age of 75. Retirees typically live as a couple in the early years, and are more aspirational and active. Those over 75 are more likely to live alone, and typically have quieter lifestyles.

A proportion of retirees’ spending needs is covered by the state pension, but a couple will still need to find £14,100 per year on top of their state pension to meet the average spending level and sustain their standard of living.

For the wealthiest quarter of households, whose aspirations and spending is significantly greater, the annual spending total is much greater and they must rely much more on private resources to fund their lifestyles. They spend £43,300 a year for the first ten years, and are still enjoying annual expenses of £25,500 after the age of 75. Their income shortfall is as much as £30,900 per annum between the ages of 65 and 75, after the basic state pension is taken into account. Again, it’s important to remember that these spending totals are based on the cost of things today. Prices typically rise over time, so when planning future income requirements so far in advance, it’s important to ensure that investment returns are able to negate the eroding impact of inflation.

Of course, retirement pots are not just intended for spending. Many may wish to leave an inheritance for their children, support their families to buy their own homes, or have other financial goals to achieve. People also need to take account of inflation, to ensure they can protect their standard of living over time.

“ A typical household will spend £420,000 over the course of their retirement in today’s prices”


People not only need to understand what the cost of their day-to-day spending might look like in retirement, they need also to think about how they will finance those dreams and aspirations that sit outside basic household expenses. For most, earnings (and income) will peak in the immediate years before retirement, therefore people need to consider how they will support the standard of living they have become accustomed to as they retire, and how they will fuel their household expenses and spending once their regular earnings have disappeared.

We must of course save enough money, but also save it in the right places. In order to make up the spending shortfall after the state pension (and not accounting for the wealth locked down in fixed assets such as housing), pre-retirees need to ensure they have a suitable portfolio of savings and investments to deliver enough income to support retirement spending. Income will come from a range of sources, including occupational pensions, drawing down on investments saved over the years, and even from inheritance. Some people may downsize their home, releasing equity in the process, or look at equity release plans to supplement their income. Ensuring capital is protected from the ravages of inflation is vital. Simply saving into a building society account would require far more to meet our income needs over a long retirement than investing that capital in assets where it can continue to grow, even as you gradually consume it.

“ Pre-retirees need to ensure they have a suitable portfolio of savings and investments to deliver enough income to support retirement spending”


ConclusionWith roughly half our lifetime’s spending still to go beyond the age of 50, planning for how we will sustain our standard of living when we are no longer earning is crucial.

Whilst no two people’s lifetime aspirations are the same, and retirement goals – not to mention personal and financial circumstances – are unique to each individual, there are broad patterns common to most households as they enter later life, that can help inform those thinking ahead and planning their retirement.

The whole arc of a lifetime’s spending shows not only the huge sums we consume, but also how our needs and tastes change over time. As we age, the focus of our household expenditure changes; retirees typically free up money from housing costs to spend on enjoying life. Today’s retirees are spending surprisingly substantial sums on the pursuit of recreation and achieving their desired lifestyle. They are living well, and those coming behind will want to ensure that they can too.

Our findings show just how much people underestimate how much they will need to spend in retirement. And whilst on the one hand, the standard of living and quality of life they are set to experience in retirement may therefore actually come as a pleasant surprise, without sufficient financial planning, future aspirations and dreams may be unattainable.

As our research demonstrates, retirement is one of the most rewarding periods of life, when people have the opportunity to spend both the time and the money on the lifestyles they want. But it comes at a cost.

Financial planning is central to making the cost of tomorrow affordable. Taking action early and having a clear vision and plan will help to ensure you have sufficient retirement income to maintain your standard of living, and most importantly, turn your retirement aspirations, whatever they may be, into a reality.

At Tilney, our Financial Planners understand that each individual has their own picture of retirement, and can provide the advice and expertise to ensure everyone’s future story makes for a good read.


Appendix 1

How much will you spend over your lifetime?

Average household 20 30 40 45 50 55 60 65 70 75 80 90

Food & drink (ex alcohol) £186,216 £162,136 £129,502 £113,358 £97,442 £81,860 £66,622 £51,957 £39,623 £28,092 £20,627 £9,930

Alcohol & tobacco £38,831 £33,974 £27,499 £24,289 £21,117 £17,279 £13,496 £9,806 £7,100 £4,523 £3,321 £1,599

Clothing & shoes £76,864 £62,919 £47,417 £39,697 £32,021 £25,452 £18,948 £12,551 £8,812 £5,223 £3,835 £1,846

Housing & utilities £568,522 £470,041 £356,900 £300,644 £244,807 £200,154 £156,129 £113,152 £81,517 £51,350 £37,706 £18,151

Household goods & services £113,210 £96,673 £76,431 £66,396 £56,477 £46,828 £37,351 £28,162 £20,919 £14,078 £10,337 £4,976

Health & personal care £58,661 £51,724 £42,500 £37,950 £33,483 £28,527 £23,696 £19,074 £14,487 £10,192 £7,484 £3,603

Transport £205,389 £176,823 £137,448 £117,858 £98,399 £79,174 £60,146 £41,443 £28,487 £15,989 £11,740 £5,652

Telephone & internet £50,113 £40,863 £31,882 £27,428 £23,024 £18,849 £14,749 £10,770 £8,293 £5,988 £4,397 £2,117

Entertainment & recreation £144,877 £127,482 £101,770 £89,009 £76,376 £62,802 £49,420 £36,354 £25,726 £15,543 £11,413 £5,494

Restaurants & cafes £114,516 £90,350 £69,736 £59,490 £49,328 £40,184 £31,164 £22,351 £16,095 £10,128 £7,437 £3,580

Holidays £156,979 £139,118 £113,124 £100,218 £87,433 £71,648 £56,044 £40,742 £27,554 £14,788 £10,858 £5,227

Other £174,377 £136,789 £104,941 £89,123 £73,448 £60,046 £46,857 £34,022 £25,450 £17,373 £12,757 £6,141

Grand total £1,888,555 £1,588,893 £1,239,151 £1,065,463 £893,353 £732,804 £574,622 £420,385 £304,064 £193,266 £141,912 £68,314

Top quarter of households 20 30 40 45 50 55 60 65 70 75 80 90


Alcohol & tobacco £50,520 £44,497 £36,929 £33,192 £29,519 £24,686 £19,949 £15,370 £11,466 £7,785 £5,716 £2,752

Clothing & shoes £127,335 £106,017 £81,164 £68,793 £56,494 £44,885 £33,385 £22,068 £15,383 £8,954 £6,575 £3,165




Transport £362,503 £313,815 £249,106 £216,962 £185,097 £150,036 £115,395 £81,454 £57,394 £34,315 £25,197 £12,129




Holidays £262,234 £233,722 £191,578 £170,671 £149,986 £124,151 £98,647 £73,695 £49,972 £27,020 £19,841 £9,551

Other £287,380 £224,740 £173,539 £148,105 £122,891 £100,692 £78,825 £57,510 £41,909 £27,083 £19,887 £9,573

Grand total £2,818,404 £2,388,619 £1,886,992 £1,638,092 £1,391,746 £1,150,997 £914,078 £683,540 £493,648 £312,689 £229,603 £110,526

Bottom quarter of households 20 30 40 45 50 55 60 65 70 75 80 90


Alcohol & tobacco £27,917 £23,991 £18,803 £16,222 £13,659 £10,905 £8,178 £5,494 £3,791 £2,148 £1,577 £759

Clothing & shoes £35,914 £28,985 £21,774 £18,187 £14,624 £11,700 £8,813 £5,986 £4,428 £2,954 £2,169 £1,044




Transport £77,931 £68,836 £51,782 £43,288 £34,836 £27,307 £19,843 £12,485 £8,786 £5,236 £3,844 £1,851




Holidays £76,454 £68,422 £55,512 £49,103 £42,755 £34,184 £25,705 £17,378 £12,335 £7,505 £5,511 £2,653

Other £98,329 £81,831 £62,822 £53,396 £44,075 £36,418 £28,919 £21,682 £17,104 £12,893 £9,467 £4,557

Grand total £1,145,722 £979,805 £755,298 £643,796 £533,296 £434,527 £337,261 £242,499 £180,844 £122,694 £90,092 £43,369


Appendix 2

Spending by 50 Bottom quarter Average Top quarter

Food & drink (ex alcohol) £63,229 £88,773 £109,643

Alcohol & tobacco £14,258 £17,714 £21,000

Clothing & shoes £21,290 £44,843 £70,841

Housing & utilities £272,011 £323,715 £370,017

Household goods & services £26,030 £56,734 £94,013

Health & personal care £10,372 £25,178 £41,778

Transport £43,095 £106,990 £177,406

Telephone & internet £17,636 £27,090 £34,632

Entertainment & recreation £28,034 £68,501 £120,222

Restaurants & cafes £28,518 £65,188 £110,369

Holidays £33,699 £69,546 £112,249

Other £54,254 £100,930 £164,489

Grand total £612,426 £995,202 £1,426,658

Average household lifetime spending – the future at each age

20 30 40 45 50 55 60 65 70 75 80 90

North East £1,574,655 £1,324,801 £1,033,190 £888,371 £744,867 £611,004 £479,114 £350,512 £253,525 £161,143 £118,325 £56,959

North West £1,720,921 £1,447,858 £1,129,160 £970,889 £814,056 £667,758 £523,617 £383,070 £277,075 £176,111 £129,316 £62,250

Yorkshire and The Humber £1,660,130 £1,396,713 £1,089,273 £936,593 £785,300 £644,170 £505,121 £369,538 £267,287 £169,890 £124,748 £60,051

East Midlands £1,822,607 £1,533,409 £1,195,879 £1,028,257 £862,157 £707,215 £554,557 £405,705 £293,446 £186,517 £136,957 £65,928

West Midlands £1,674,499 £1,408,802 £1,098,701 £944,699 £792,097 £649,746 £509,493 £372,737 £269,600 £171,360 £125,827 £60,571

East £1,991,714 £1,675,684 £1,306,837 £1,123,662 £942,151 £772,833 £606,010 £443,348 £320,673 £203,823 £149,664 £72,045

London £2,270,613 £1,910,329 £1,489,833 £1,281,008 £1,074,080 £881,052 £690,870 £505,429 £365,577 £232,364 £170,621 £82,134

South East £2,191,402 £1,843,686 £1,437,860 £1,236,319 £1,036,610 £850,316 £666,768 £487,797 £352,824 £224,258 £164,669 £79,268

South West £1,963,714 £1,652,126 £1,288,465 £1,107,865 £928,906 £761,968 £597,491 £437,115 £316,165 £200,957 £147,560 £71,032

England £1,920,977 £1,616,170 £1,260,424 £1,083,754 £908,689 £745,385 £584,487 £427,602 £309,284 £196,584 £144,349 £69,486

Wales £1,637,656 £1,377,805 £1,074,527 £923,914 £774,669 £635,450 £498,283 £364,536 £263,669 £167,590 £123,059 £59,238

Scotland £1,747,816 £1,470,485 £1,146,807 £986,062 £826,778 £678,194 £531,800 £389,057 £281,405 £178,863 £131,337 £63,223

Northern Ireland £1,783,553 £1,500,552 £1,170,255 £1,006,224 £843,683 £692,061 £542,674 £397,012 £287,159 £182,520 £134,022 £64,515

United Kingdom £1,888,555 £1,588,893 £1,239,151 £1,065,463 £893,353 £732,804 £574,622 £420,385 £304,064 £193,266 £141,912 £68,314


Methodology

The researchers analysed data from the latest ONS Family Spending Survey. They defined the spending categories set out in the report and calculated how much a household would spend at each stage of life based on the typical life expectancy for someone of that age, also sourced from ONS. Life expectancy for a household was calculated as the average for men and women. Regional data was not adjusted for differing local life-expectancy rates because of the complications of disentangling local demographics, incomes and spending levels. This means the figures may slightly understate spending for regions with higher longevity, such as the South East, and slightly overstate spending for regions where people lead shorter lives, such as Scotland.

The researchers calculated the spending for the top and bottom quarter of households in each category according to the income characteristics of each age group. The average is for all households.

Additional insight came from a survey of 2,007 adults aged over 45 conducted by Opinium in December 2016.

www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/compendium/familyspending/2015

Important Information

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This report does not constitute personal advice and is intended purely as a representation of statistical data. If you are in doubt as to the suitability of an investment please contact one of our advisers.

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Documents

THE COST OF TOMORROW - Tilney Group · The Cost of Tomorrow: Forecasting Our Future Spending maps a typical lifetime’s spending based on today’s prices and spending patterns