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Big increase in the income needed for a comfortable retirement

Big increase in the income needed for a comfortable retirement

Written by Retirement Line Updated: 12th March 2024

The annual cost of enjoying a minimum, moderate or comfortable retirement have all risen, latest research reveals. 

Increases to the cost of living and higher expectations for retirement have seen the minimum retirement living standard rise from £12,800 to £14,400 for a single person in the last year alone. A couple now needs £22,400 for a minimum standard of living, up from £19,900.

Since we last reported on the retirement living standards on 23 January, the figures have been recalculated by the Centre for Research in Social Policy at Loughborough University on behalf of the Pension Lifetime and Savings Association (PLSA).

These latest figures reflect the rising prices faced by UK households in recent years, particularly in food and energy use. They also indicate the level of importance now placed by retirees on spending time with loved ones outside of the home, following the pandemic.

Professor Matt Padley, co-director of the centre for research in social policy at Loughborough University said: "Following the COVID pandemic, this latest research highlights a pronounced need and enthusiasm among the public for shared experiences beyond the confines of their homes, including activities like eating out and holidays.”

The table below summarises how much income a person or couple is now said to need, in order to achieve a minimum, moderate or comfortable standard of retirement.

Retirement Living Standards

Type of retirement

Amount needed

What might you expect in retirement?

Minimum

£14,400 single / £22,400 couple

£50pp a week on groceries, £100 a year DIY home maintenance, £15 a fortnight on takeaways, one week long UK holiday, £630 a year on clothes/footwear, one TV streaming service, £20 budget for each birthday and Christmas present, no car, £100 a year on rail fares, £15 a week on taxis.

Moderate

£31,300 single / £43,100 couple

£55pp a week on groceries, £10 a week on takeaways, £30 a week eating out, £100 a month to take loved ones out for a meal. £500 a year for home maintenance and decorating, car replaced every 7 years, a fortnight 3-star all-inclusive holiday in the Med and a UK weekend break, up to £1,500 on clothing/footwear, £30 budget per present, two TV streaming services and £1,000 a year to support family members such as paying for grandchildren’s activities.

Comfortable

£43,100 single / £59,000 couple

£70pp a week on groceries, £20 a week on takeaways, £40 a week eating out, £100 a month to take loved ones out for a meal. £600 a year for home maintenance and decorating, car replaced every 5 years, a fortnight 4-star holiday in the Med with spending money plus three weekend breaks, up to £1,500 on clothing/footwear, £50 budget per present, extensive TV subscriptions and £1,000 a year to help family members.

Source: University of Loughborough Media Centre

The new figures reveal the income required to maintain a ‘minimum’ living standard in retirement is now £14,400 for a single person. That’s £1,600 more income to find than was needed last year.

According to the PLSA’s Retirement Living Standards, this is enough to afford all the basics, eat out once a month and enjoy a one-week holiday in the UK every year.

With the full new State Pension rising on 6 April 2024 to £11,502 a year, it leaves around £2,900 for a single person to raise each year to achieve a minimum standard of living.

There’s some good news for couples though. Those receiving the full new State Pension will soon be receiving just over £23,000 (2 x £11,502). This not only provides a substantial foundational income, it entirely covers the £22,400 income said to be needed to enjoy a ‘minimum’ standard of living in retirement.

Notably, the minimum living standard doesn’t include the cost of running a car but rather allows for travel by train and taxi. However, that doesn’t mean car ownership is impossible with that level of income. 

£8,000 a year MORE needed for a moderate living standard

Say you have bigger plans for your golden years, though. For greater financial security and flexibility, the Retirement Living Standards suggest a single person’s income of around £31,300 would be ideal for a moderate living standard in retirement. That’s an £8,000 increase on the £23,300 moderate income recommended last year. 

The PLSA says that this is enough to afford £55 each a week on food, a fortnight away in the Med each year, eating out a few times a month and £1,500 a year on clothes and shoes.

To enjoy a few more luxuries, the same research recommends an income of £43,100 for a comfortable living standard in retirement, or £59,000 for a couple. 

This would allow for a two-week holiday in the Med and three long weekend breaks in the UK each year, £70 each per week on groceries and £1,000 a year to help loved ones out financially, such as paying for your grandchildren’s dance or football fees.

Everyone’s income needs are different

It is important to stress that there is no ‘one size fits all’ figure for a minimum, moderate or comfortable retirement. Not only does everybody have different priorities for their standard of living, but prices differ significantly depending on where a person lives.

For instance, someone living in London will typically need a higher retirement income than someone living in the north of England to achieve the same standard of living.

Wherever you live, the State Pension provides a substantial proportion of the income required for a minimum standard of living. Also, remember that even a modest personal or private pension on top of the State Pension can make a difference to your income. For example, if you have one or more defined contribution pension schemes then shopping around for an annuity or arranging a drawdown scheme can boost your income.

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