When it comes to deciding what makes for a happy retirement, Americans can learn something from our cousins across the pond.
British retirement financial firm Liverpool Victoria surveyed 1,070 Britons age 60 to 65 what they want from their retirement. Shown below are respondents' essential ingredients for a happy retirement in the U.K., along with their costs. (Note that the survey reported the costs in British pounds; their dollar equivalent is shown below using an exchange rate of $1.6/£1).
Every year, Brits would like to:
- Spend an average of $1,203 on holidays abroad
- Spend at least 364 hours with children and grandchildren and $398 on gifts for them
- Spend 312 hours and $2,746 socializing with friends
- Spend 468 hours and $768 indulging in their hobbies
- Retire at the age of 65
- Live in a detached house with a garden
- Live in a village
- Have good transport links and be within walking distance of local amenities
- Live no more than 24 miles away from their children and grandchildren
The report summed up these costs and added them to an estimate of essential annual living costs of $12,197, to arrive at a total annual cost for a contented retirement of $17,312. Add that up for the a 17-year retirement and the cost of a happy retirement would total $361,210 (with inflation factored in.) Note that these are per-person costs, not per household.
The report goes on to state that many people in the U.K. have insufficient savings to meet even these modest aspirations. So what lessons can Americans learn from this study?
First, Britons, like Americans, seems to accept that they must
have modest monetary aspirations for their retirement. The reported cost of a
happy retirement in Britain is actually much less than the average spending amounts reported on the U.S. Consumer Expenditure Survey. In 2011, for
instance, U.S. households headed by someone age 65 to 74 spent on average of $44,646 per year, and households headed by someone age 75 and older spent $32,688 per
One reason for the difference is that the U.K. figures are per person, while the American figures are per household. The average American household headed by someone age 65 to 74 had 1.9 people, while the average household headed by someone age 75 and over had 1.6 people.
Another difference is spending on health care. In the U.K., medical costs and premiums are far lower than in the U.S. due to the British system of government-controlled medical care. Accounting for these two important differences, the spending amounts shown are very roughly in the same ballpark.
The British survey also shows age 65 as the desired retirement age. While several surveys have reported that Americans are starting to accept and anticipate retirement ages later than 65, it remains to be seen whether Americans will actually be able to find work in their later years in order to keep working beyond their mid-60s.
The retirement aspirations for Brits line up well with the standard best practices for longevity. Spending time with friends and family, traveling, pursuing engaging interests, and getting exercise through gardening are all linked with health and prosperity. Living in a supportive community with good links to public transportation and to be within walking distance of local amenities also aligns with recommendations on the best place for you to retire. And living close to children and grandchildren not only adds to your enjoyment of life, but also gives you the potential for a support network if you become frail in your later years.
All in all, the Brits’ blueprint for a happy retirement is pretty good. While modest, however, it won’t happen without any planning. Take the hours that are needed for you to plan a successful retirement. My free online retirement planning guide is a good place to start.