Glass milk bottle deliveries are on the way back. In 1975 94% of UK milk was sold in glass recyclable bottles, by 2012 that figure had fallen to only 4%. Britain in 1975, was an interesting example of extreme inflation, across 1975 the price of a pint of milk rose from 5 pence to 8.5 pence, a 70% annual inflation rate. UK inflation in the 21st century had been largely benign until 2022. Since then inflation has become part of everyday conversation. Yet I often wonder if we’ve fully appreciated what the inflationary period since 2022 has really done to our perception of wealth.

I found myself exploring data from the Office for National Statistics (ONS), one of my favourite sources of information.

The latest Wealth and Assets Survey output (completed in April 2022) provides some interesting data about median v mean wealth across age brackets.[1]

Why Mean and Median Matter

The average (mean) wealth of these same groups is considerably higher than the median. Across all households the difference between mean and median is roughly £200,000, with that difference most pronounced from 45 years onwards.

The explanation is simple. A relatively small number of very wealthy households pull the average upwards, making the mean less representative of the “typical” household. The median, which represents the middle household, often provides a much clearer picture of reality for your typical household across England and Wales.

The wealth disparity across UK regions also skews this figure with London and the South East pulling the figures upwards.

Source: Office for National Statistics (ONS)

It’s a useful reminder whenever we hear statistics about average wealth, average savings, or average pensions. The typical household is often in a different position from the headline numbers.

Inflation Has Moved the Goalposts

Due to inflation a household with £500,000 wealth in 2022 is not in the same position as a household with £500,000 today.

According to the Bank of England, in the past 4 years CPI inflation has run at an annualised figure of 3.6% per year. More simply expressed, a £100 basket of goods in 2022 now costs £117.

Most of us have felt that reality ourselves. Everyday spending has risen noticeably over recent years, gradually eroding the purchasing power of cash and increasing the cost of maintaining the same lifestyle.

This is one of the reasons financial planning is about much more than simply accumulating a large number. The objective isn’t to reach a figure and stop. It’s to ensure that wealth continues to support the lifestyle you want throughout your lifetime.

So, What Does a Comfortable Retirement Cost?

The Retirement Living Standards research from Loughborough University estimates that a comfortable retirement currently requires around £45,700 per year for a single person and approximately £62,700 per year for a couple. This excludes mortgage costs or rent. [2]

Considering £500,000 may need to last 20-30 years in retirement, inflation adjusted, and much of this £500,000 is tied up in property, then achieving this comfortable retirement can be challenging. Of course, state pension and other defined benefit pensions (commonly known as  final salary or career average pensions) can provide a sizeable proportion of the required income, but not everyone can rely on a full state pension, and only 43% of 50–59-year-olds have a defined benefit pension. [3]

Therefore, the challenge isn’t simply protecting and retaining wealth but rather making sure that wealth can continue to provide the lifestyle you want for the rest of your life.

Why Investment Growth Matters

This is where long-term investing becomes so important.

One of the key assumptions underpinning most financial plans is that investments grow faster than inflation over time. Without growth, inflation can quietly erode purchasing power year after year. It’s a force that directly impacts retirement plans, future spending power and long-term financial security.

*Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Final Thoughts

If this type of data piques your interest, you may find part two to this blog even more fascinating, where I dive deeper into the latest ONS household wealth statistics by decile, and see how achievable a comfortable retirement is for the majority of the UK.

*This article is considered accurate at the time of publication. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.

[1] Office for National Statistics Study “Household total wealth in Great Britain: April 2020 to March 2022”
[2] Retirement Living Standards 2026
[3] Institute for Fiscal Studies, Report June 2023 “How important are defined contribution pensions for financing retirement?”