The state pension is seen as a critical source of income and makes up 50% of income for those aged 80-84 and 47% of household income for those aged 70-74.
This is according to Quilter’s inaugural retirement lifestyle report in collaboration with the Centre for Economics and Business Research (Cebr).
Additionally, UK retirees are spending an average of around £22,000 a year, which includes an average of £2,500 on gifting to loved ones.
This is nearly £10,000 below the recommended pensions UK level for an adequate lifestyle in retirement.
This has resulted in 18% being very concerned about their ability to maintain their current standard of living, rising to 29% of retirees aged under 65 with an above-median income.
Holidays and home renovations come in at the highest areas of discretionary spending for retirees at £2,137.34 and £1,985.26, respectively.
Retirees also provide a further £1,175 in assistance to fund education for their grandchildren or other relatives.
This represents over 10% of their annual spending and an annual contribution to the UK economy of £16.1bn.
The median retiree household income is £35,000 but this is not evenly spread across gender and regions.
Over two-fifths (42%) of retirees in Wales report an income below £30,000, compared with an average of over £58,000 in London.
The report said: “This leaves many retirees with very little room to save or cover unexpected expenses, after meeting their regular outgoings.”
Even after they have finished working, the average retiree spends more than £1,500 annually to pay down debt, although this figure declines with age.
Quilter CEO Steven Levin said: “We are proud to launch our inaugural Retirement Lifestyle Report, which represents the first comprehensive study of retirement spending, income and financial concerns in the UK. The research paints a nuanced but urgent picture of retirement in the UK today.
“Retirees aren’t just budgeting for themselves; they’re quietly propping up the next generation too. With nearly £2,500 a year being gifted to family and to help with the education of loved ones, it’s clear many are playing a bigger economic role than they’re often given credit for.
“That’s on top of rising living costs, ongoing debt repayments and increasing concerns about the future. These aren’t luxury years, they’re active financial years, and planning needs to reflect that.
“It is clear from our research that, despite the stereotype of the cash-rich Baby Boomer, too many people are over-reliant on the state pension to make ends meet. Also, too few are taking financial advice, despite the significant benefits seen by recipients.”
To safeguard the future of retirement in Britain, Levin is urging policymakers to:
- Consult on the most appropriate State Pension uprating and initiate a cross-party commitment to consistency;
- Introduce a nationwide system of targeted financial support to help those who cannot access full financial advice;
- Modernise the gifting allowance to promote intergenerational support, raising the allowance to, for example, £9,000, from the £3,000 level, which has been in place for over 40 years.
The report is based on a survey of 5,001 UK retirees.
In May 2025, it was found just under half (48%) of mid-retirees aged 65-75 who do not pay for financial advice are confident they are on track to make their private pension savings last for life.
This was according to the report Retirement Reality: Managing money in mid-retirement from Aviva and Age UK.
