25% of UK adults are relying on discounts and subsidies to make their retirement more affordable, but new research from Aviva shows many overestimate what they will receive.
23% say they have a good idea of the discounts and subsidies available for retirees. But one in four think rail travel (24%) and spectacles (25%) are free for retirees, when in fact they are only discounted.
15% believe they won’t have to pay any council tax when they are retired, while 42% think there is a discount. In reality, only those aged 65 and over receiving pension credit (an income related benefit) or those living on their own are eligible for a discount on council tax.
Other products that UK adults expect to receive for free in retirement are broadband (11%), water rates (9%), pet insurance (8%), package holidays (7%) and pet food (7%). More than a fifth mistakenly think pet insurance (22%) and broadband (24%) will be discounted when they are retired, with a predicted price reduction of almost a third (30%).
15% believe they will be given social care or will be looked after in a care home for free, while 32% are expecting a discount. Local councils contribute towards care costs on a means tested basis, social care is not free, and anyone living in England with capital and savings above £23,250 will have to fund all of their own social care, although they are likely to qualify for some allowances. This demonstrates the need to provide public clarity on how social care funding works.
25% of UK adults already say they will struggle to live off their pension despite the discounts and subsidies available for retirees. With many overestimating the help they will receive, this struggle could be even more pronounced in reality.
Table 1: UK adults indicate whether they think it’s possible for retirees/over-65s to receive discounts or free services, or have to pay full price, on a range of products/services
| Full price | Discounted | Free | |
| NHS sight tests | 13% | 25% | 62% |
| Dental treatment | 27% | 36% | 37% |
| TV licence | 42% | 30% | 29% |
| Bus or tube travel | 11% | 32% | 57% |
| Rail travel | 17% | 60% | 24% |
| Coach travel | 22% | 58% | 21% |
| Spectacles | 24% | 51% | 25% |
| Council tax | 43% | 42% | 15% |
| Broadband | 65% | 24% | 11% |
| Pet insurance | 71% | 22% | 8% |
| Pet food | 78% | 16% | 7% |
| Water rates | 60% | 31% | 9% |
| Library book fines | 61% | 23% | 16% |
| NHS prescriptions | 14% | 24% | 62% |
| Package holidays | 64% | 29% | 7% |
| Social care/care home | 52% | 32% | 15% |
| Cinema tickets | 33% | 60% | 7% |
| Entry to attractions | 22% | 70% | 8% |
Correct answers are highlighted.
According to Aviva’s research, UK adults are currently spending £917 a month on running a home (excluding rent or mortgage costs), food, travel and holidays, family days out and hobbies.
The majority of UK adults say they expect to spend the same on common areas of spending when they retire. However, nearly a third (32%) believe the amount they will spend on running a home will increase, while 29% expect to increase spending on hobbies.
Table 2: UK adults estimate whether they will spend less, more or the same in retirement
| More | Less | The same | |
| Costs of running a home | 32% | 18% | 47% |
| Food | 24% | 24% | 50% |
| Travel and holidays | 28% | 23% | 44% |
| Family days out etc. | 25% | 22% | 47% |
| Hobbies | 29% | 14% | 48% |
A common reason for increased expenditure on essential items is the rising cost of living, with this being given by 40% who expect to spend more on food, and 37% who will spend more on home costs. Others say it is because they will be at home more so will be forced to increase their expenditure, with this being particularly true of those who expect spend more on running their home (60%).
For non-essential items such as travel (48%), family days out (41%) and hobbies (38%), the most common reason for spending more cited by those who expect to do so is the fact they will have more spare time to fill.
However, not everyone will be able to up their spending in retirement. The most common reason for cutting down expenditure in retirement is having less to spend due to reduced pension income. This is given by more than two in five of those who expect to spend less on hobbies (45%), family days out (43%), running a home (43%), food (43%) and travel and holidays (41%).
Alistair McQueen, head of savings and retirement at Aviva, said: “Older generations benefit from a range of discounted or free products and services, but our research suggests many people expect these to be more generous than they actually are. Consumers leaning too heavily on incorrect assumptions about subsidies and discounts may be in for an unpleasant surprise when the financial realities of retirement finally dawn.
“The fact that some people are depending on fictional discounts to make their retirement more affordable – or anticipate struggling despite these benefits – paints a worrying picture of consumers being poorly prepared for the financial demands of retirement. Most people expect to spend the same as they do now, if not more, once they have retired, with rising inflation playing a key role. Those who experience a dramatic fall in income once they retire are therefore likely to struggle.
“It’s crucial that people plan ahead for retirement, considering their future budget needs, and understanding the discounts and benefits that could be available. Poor planning and misguided assumptions are likely to lead to disappointment in retirement.”