While life milestones are undoubtedly special moments, the reality is that they often come at a financial cost.
At a time when our finances are increasingly squeezed, money.co.uk have taken a look at how expensive such milestones are and how this has changed.
If you’re saving money for your retirement or an upcoming milestone such as a wedding or a new baby, start by comparing savings accounts to find the best account for your money.
1. Saving for retirement (£238,146)
Looking at seven major life milestones, the most expensive by some distance is saving money for retirement.
Based on the average life expectancy of 81 and average wage (post-income tax) of £22,708 the average amount required for retirement is £238,146. However, how much you need to retire is hard to predict, as it largely depends on your lifestyle and what you’ll be comfortable living on.
With the amount required for retirement being so much higher than any other saving goal, the way we save for pensions is obviously a little different to other milestones.
There’s the State Pension, which pays everyone £185.15 per week, but most people also pay into a separate pension plan too.
There are two types of private pensions, some of which are based on how much is paid in and some based on your salary. Defined contribution pensions are paid into by either you or your employer. The money is then put into investments like shares. With a defined benefit pension you’ll be paid based on the rules of your plan. For example, they’ll usually take into account how long you’ve worked in your job and you’ll receive a guaranteed retirement income each year. They can either be workplace pensions, set up by your employer, or private ones arranged by you.
There are other ways to save for retirement too, such as a Lifetime ISA or other savings accounts.
2. First home deposit (£40,424)
Estimated years to save: 8 years, 10 months
The next most expensive landmark moment is putting down a deposit on a house. Based on the current average property price (£256,660) and a cash deposit of 15%, this would cost around £40,000 (after Stamp Duty).
Again, this will depend on your own circumstances such as where you’re buying and whether you can afford to put down a bigger mortgage deposit.
Remember though, to secure a mortgage you need more than just a deposit. You’ll also need to prove that you’ll be able to keep up with the monthly mortgage payments by earning a certain wage, depending on how much you’re borrowing.
If you are wondering how to save for a house, you can increase your savings for a mortgage deposit with a Lifetime ISA, where the Government will add 25% to your savings, to a maximum of £1,000 a year.
3. Home extension (£34,000)
Estimated years to save: 7 years, 5 months
Rather than moving home, you may decide to make additions to your own, but doing so can be costly.
It’s estimated that a home extension can cost up to £34,000. Other home renovations can also prove to be costly too.
For example, a new roof can cost up to £12,000, a new kitchen is around £10,000, while a new bathroom or garage can cost £6,000.
1. First car (97%)
2012 price: £9,795
2022 price: £19,330
Estimated years to save (2012): 2 years, 10 months
Estimated years to save (2022): 4 years, 3 months
The cost of buying a brand new Ford Fiesta, the UK’s most popular car, has almost doubled in the last decade, from £9,795 to £19,330. That’s more than any of the other milestones on this list.
On top of this, the estimated time it would take to buy a Fiesta also increased, by over a year, from 2 years, 10 months to 4 years, 3 months.
Despite its popularity, the Fiesta is set to be discontinued in the next twelve months, as Ford moves towards electrification.
2. First home deposit (86%)
2012 price: £21,741
2022 price: £40,424
Estimated years to save (2012): 6 years, 4 months
Estimated years to save (2022): 8 years, 10 months
As well as being the second-most expensive milestone today, putting down a house deposit also has the second-greatest increase in cost.
The average deposit cost (again based on a 15% deposit) has gone up by 86% between 2012 and 2022.
When considered alongside wage increases, the average time it would take to afford a deposit has increased by more than two years, from 6 years, 4 months to 8 years, and 10 months.
With the average person buying their first home at the age of 32, this means that you would need to start saving not long after turning 23.
3. Retirement (53%)
2012 price: £156,090
2022 price: £238,146
The cost of retirement has gone up by just over half in the last ten years, from £156,090 in 2012 to £238,146 today.
This has partially been affected by the life expectancy increasing from 79 to 81 in that time, meaning people have slightly longer to save for in retirement.
Set your goal clearly - To begin with you need to know precisely what it is you want to save for so you can plan how you will achieve this. For example, are you looking to save for a house deposit or a new car? Each of these goals will require a different saving strategy. For example, when saving for a house it can be useful to use a Lifetime ISA to help boost savings.
Set a deadline - Following this, you should set a deadline so you know the exact time frame you have to save your desired savings goal. Each goal will have different deadlines depending on what they are, so it's important to allow yourself enough time to save without cutting yourself too short.
Create a saving plan - Set out exactly how you intend to reach your goal. This can include how much you want to save each week, month, and year till you reach your goal. This should be something that is flexible if your circumstances change, the amount you set aside can be increased or decreased depending on your situation throughout the saving time frame.
Set up a new savings account - Think about creating a dedicated savings account for the savings goal. This will allow you to keep any money you save completely separate from any other funds. It will also allow you to earn interest on the money you do save. Savings accounts where you can't access your money until a certain time will have higher interest rates as money can’t be moved in and out regularly. You can compare savings accounts here.
Track your goals - Keep track of your progress and be sure to celebrate and continue to motivate yourself to keep working towards your goal. Also, it is important to regularly compare savings accounts to make sure your current saving plan is best for your current circumstances.
Break the goal down - Striving towards a large saving goal may be overwhelming. Therefore, try breaking it down into smaller, more manageable chunks to make it easier for you to process and make sure you celebrate reaching each small milestone. This will make reaching the saving finishing line more realistic for you.
The right savings account for you will depend on what you need it for. For example, if you’re saving to build an emergency fund, then you need to have a savings account that allows you to easily access funds. In these instances, an instant or easy-access account is the best option.
Alternatively, if you would like to put away money regularly but without a savings goal in mind, then you should look at regular savings accounts like a cash ISA.
These savings accounts allow you to save up to £20,000 a year, without paying tax on the interest.
But if you’re saving for a particular milestone such as those above, then an option to consider is a notice savings account.
These savings accounts only allow you to access the money if you really need to, so you have to wait between 30 and 120 days to withdraw. The benefit of these savings accounts is that you’ll usually get higher interest rates.
Saving for your dream can be tough; our savings guides will help you determine the fastest route to your savings target by maximising the potential of your nest egg along the way.
A Help to Buy ISA is a government savings account that helps you to get onto the property ladder with your first house.
Unfortunately, you can no longer open a Help to Buy ISA. However, if you already have one open, you can pay up to £200 into it each month.
The Government will then put in an extra 25% (up to £3,000) when you buy your first home. If you’re buying with someone else who also has a Help to Buy ISA, you’ll both get the bonus, meaning you can get up to £6,000.
You can pay into a Help to Buy ISA up until November 2029 and can redeem the bonus amount until November 2030.
Some children’s savings account rates can be as good as, or even better than those of adult saving accounts.
However, the rates in other savings accounts compare very poorly, so it’s important that you find a good one.
The best savings account for your child will be one that is easy to access and manage, with good savings interest rates.
The correct savings account for you and your child will depend on your personal circumstances, but you can learn more about them in this guide.
As of 2021, the average cost of a wedding in the United Kingdom was £17,300. However, this was likely affected considerably by the coronavirus pandemic and the fact that many ceremonies were stripped back.
We can see this further in the average cost for 2020, which was just £9,100. To get a better idea of the true cost of a wedding in the UK, we should look at 2019, where the average cost was £31,974.
If you’re currently saving for a wedding, be sure to compare wedding saving accounts well in advance.
If you’re saving to buy a house you need to try and cut your outgoings wherever possible. The biggest of these will likely be paying rent, so consider flat-sharing or subletting a spare room.
While living alone allows you to be more independent, moving in with friends or even back with your family can save a lot of money.
You should also look into government schemes and grants such as shared ownership or a Lifetime ISA which can help you to save.
Other than this, it’s important to look for any opportunities to save that you can and make a plan of your usual outgoings, to help budget.
The average age of each milestone
First child: the average age of mothers’ having their first child according to the Office for National Statistics’ births by parents’ characteristics dataset (England & Wales only).
First home: Sourced from UK FInance’s mortgage trends data.
Marriage: The median age of marriage according to the Office for National Statistics’ marriages in England & Wales dataset, taking an average of both men and women, across both opposite and same-sex marriages.
Retirement: The state pension age for someone born today.
Funeral: The average life expectancy according to Statista.
The average cost of each milestone
Buying a car: The cost of the cheapest available model of the UK’s most popular car the Ford Fiesta, sourced from Ford.
Wedding: Sourced from Statista, using 2019 data, due to 2020 and 2021 prices being affected by COVID.
First home: The average amount required for a house deposit, based on the average house price from the Land Registry’s UK House Price Index and an average deposit amount of 15% (based on estimates by Bankrate). The average house cost in future years was estimated by using the TREND function in Google Sheets with the January house price for every year that is available in the UK HPI. The amount owed in Stamp Duty was also taken into account, based on the average house price of someone buying alone.
Renovations: The average cost of a house extension according to the HomeOwners Alliance (taking the highest estimate).
Having a child: The cost of the first year of looking after a first child, according to the Child Poverty Action Group’s Cost of a Child in 2021 report.
Retirement: For this, the number of years between retirement (based on a retirement age of 68, the State Pension age for anyone born since April 6th, 1978) and the average life expectancy in the UK (according to the Office for National Statistics’ national life tables – life expectancy in the UK: 2018 to 2020) was calculated. This was multiplied by the average income in the UK, before taking two-thirds of this figure as being the estimated amount required for retirement.
Funeral: The average cost of a burial funeral according to Money Helper.
Estimated time & age to save
The average income in the UK was sourced from the Office for National Statistics’ earnings and hours worked, age group: ASHE Table 6.
The estimated post-tax income was calculated using ListenToTaxman.com, using the default tax code of a person under the age of 65.
This figure was then used to estimate how long it would take to save for these events, and thus what age you should start saving at.
This assumes that 20% of earnings are saved, in line with the 50/30/20 savings rule, and doesn’t take into account interest rates or income rising during the period. This also assumes that just one of the above events is being saved for at a time.
To show how the cost of some of the milestones has changed over the last 10 years, estimated costs for 2012 were sourced from the following:
Buying a car:Wayback Machine was used to find the cost of a Ford Fiesta (the UK’s most popular car).
Wedding: The average cost of a wedding according to Statista.
First home: Sourced from HM Land Registry’s UK House Price Index using the same methodology as above.
Having a child: The cost of the first year of looking after a first child is sourced from the Child Poverty Action Group’s Cost of a Child report.
The same methodology was then used to estimate the time to save for these events and when people would have had to start saving, using 2012 income data.
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As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.