Analysis of household expenditure between 2002 and 2006 reveals that on average, annual expenditure in households where the main occupant is aged 65–74 has increased by around 9 per cent as opposed to a national average of 4 per cent.
For households where the main occupant is aged 75 and over, the figure rises to 10 per cent.
Pru says these results are not surprising given that the average household spends 10 per cent of its annual income on food and non-alcoholic drink, compared to 15 per cent for households where the main occupants are aged 75 and over and 13 per cent for those aged 65-74.
Despite this, pensioner income is only growing by around 3 per cent a year.
Pru says if these household expenditure figures continue to rise at the same rate, the average cost of living for pensioner households where the occupants are aged 65 – 74 would increase by 55 per cent by 2012.
Prudential Retail Life & Pensions managing director Gary Shaughnessy says: “When compared to the average home, older households see a greater share of their expenditure go on housing costs, fuel and household goods and services and in recent years these have seen some of the highest increases in costs, which helps explain why retired people are seeing a higher rate than the average in their annual expenditure. This, coupled with the fact that life expectancy has increased, is putting much greater pressure on income in retirement.”