Average cost of living - £1.8m

Posted by Sam Twyford in Personal Finance on 9 July 2013 - Sam is a Product Manager at checkmyfile

The insurer Prudential has conducted a new report highlighting the average total costs of running a household over a lifetime.

Using data from the Office for National Statistics (ONS) it was found that a typical family will spend an average of £1,802,000 over their lifetime with housing, fuel and power costs making up £508,000 of these costs and other taxes equating to around £385,000.

The second biggest expenditure for families is recreation, amounting to £230,000, and transport expenses and food costs follows closely behind averaging £212,000 and £177,000 respectively.

The report highlights that the highest costs are expended between the ages of 30 and 49, the typical time of bringing up children. During this period the average annual costs can reach up to £49,000.

These figures drop sharply when people hit the age of 65 or above, dropping to £25,000 a year and again dropping to £17,000 for over 75's. Both health and education are the smallest outgoings, as this is often funded and provided by the state.

Vince Smith-Hughes of Prudential says, "These figures are startling, showing a gulf of more than £14,000 annually between income and expenditure in the early years of retirement if the householders rely solely on the basic state pension. This pays just £10,310 a year currently to the average retired household. To make up the difference, pensioners will have to dig deep into their savings or personal pension plans, unless they simply choose to go without."

He adds, "Our analysis shows that the average household spends £230,000 on recreation and £128,000 on hotels over the course of a lifetime, so by tightening their belts a little people could afford to save more towards retirement."

Sam Twyford is a Credit Analyst at Checkmyfile, has a degree in Business Studies and is an Associate of the Institute of Credit Management. He can be contacted at sam.twyford@checkmyfile.com

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