Retirement Living Standards updated for 2025

11 June 2025

Good news for retirees: the cost of covering your basic needs in retirement has gone down - at least for now. According to the latest update to the Retirement Living Standards, the annual budget needed for a ‘minimum’ standard of retirement has fallen in the past year.

The fall in income required for the lowest of three lifestyle standards is largely thanks to a drop in domestic energy costs. However, basic living costs have eased, those aiming for a ‘moderate’ or ‘comfortable’ retirement lifestyle should note that the cost of those standards has continued to rise modestly.

What are the Retirement Living Standards?

The Retirement Living Standards (RLS) were first launched by the Pensions and Lifetime Savings Association (PLSA) in 2019. They were developed in partnership with the Centre for Research in Social Policy at Loughborough University.

The RLS aim to give consumers a realistic and relatable picture of what life in retirement might cost, broken down into three lifestyle tiers:

• Minimum – covering basic needs, with some social and leisure activities.

• Moderate – more financial security and flexibility, including holidays and home maintenance.

• Comfortable – a more luxurious lifestyle with frequent holidays, dining out and generous gift-giving.

These standards are based on detailed discussions with people from all walks of life across the UK. They are reviewed annually to reflect real changes in prices and expectations.

It’s important to note that the figures don’t take account of housing costs in retirement. In effect, they assume that retired people will own their own home and be mortgage-free. The reality is of course different for many people. As such, those renting or still clearing a mortgage in retirement would likely need income well above the RLS levels.

2025 sees a fall in ‘minimum’ retirement costs

This year’s standout headline is that the Minimum standard of retirement living is now more affordable than last year:

• One-person household: £13,400 per year – down £1,000.

• Two-person household: £21,600 per year – down £800.

The primary driver is energy bills. The PLSA say that domestic fuel costs have dropped sharply since last year. This year’s standards also see a decrease in less essential expenditure such as taxi use and technology upgrades, following discussions with consumers.

A slight increase in costs for ‘moderate’ and ‘comfortable’ lifestyles

In contrast, the other two lifestyle tiers saw the required income rise slightly in line with general inflation, despite similar energy savings.

Moderate lifestyle:

• One-person household: £31,700 per year – up £400.

• Two-person household: £43,900 – up £800.

Comfortable lifestyle:

• One-person household: £43,900 – up £800.

• Two-person household: £60,600 – up £1,600.

These increases reflect the general inflation-driven rise in costs in areas like rail travel, food, clothing and home maintenance. The standards set for the Moderate and Comfortable categories assume that people with these lifestyles spend more on these types of goods and services, hence the increase in income required for those aiming for these higher standards of living.

Retirement isn’t one-size-fits-all

For many retirees, the State Pension remains the bedrock of their income. In 2025/26, the full new State Pension is worth £11,973 per person, or £23,946 for two people. That’s enough to cover the Minimum standard for a two-person household, but falls well short of the amount needed by a one-person household.

However, it is important to remember that, although the three RLS categories prove useful in looking at the income retirees may require, everyone is different and has their own unique lifestyle. Depending on where you live and the way you choose to spend money, you may need less than the levels published this week to enjoy your retirement.

Despite this, the RLS provides valuable context: they help you estimate how much annual income you may need to achieve your desired lifestyle. You can use them as a starting point when looking at how much to save for retirement, or what to do with your pension pot if you are already at that stage.

Using the RLS as a practical tool 

Retirement Line’s Mark Ormston says: “Pensions and pension income can feel so intangible until the point of access. The work completed on the Retirement Living Standards truly brings things to life.

“As an example, the Minimum RLS is a useful baseline for people to use when setting up guaranteed income with an annuity throughout retirement. At present, the State Pension alone is falling short of this baseline. A single person set to receive the full New State Pension of just under £12,000 per year would need an additional £1,427 to reach the minimum income standard (outside of London). 

“At today’s standard annuity rates, they would need around £250,000 of pension savings to buy a lifetime annuity (escalating at 3% a year) that would make up the shortfall to guarantee the minimum RLS throughout their lifetime. 

“Everyone’s circumstances are different of course, and many people will want to lock-in more guaranteed income, but that’s a good example of how a benchmark like the RLS can inform decision making about income options.”

Talk to Retirement Line about your annuity options 

If you are considering an annuity for some or part of your retirement income, over and above the State Pension, our friendly specialists are here to help. They will explain your options and explore how much guaranteed income you could achieve from your pension fund.

You can speak to our team today by calling freephone 0800 652 1316 or request a call back. Alternatively, use our free online tools for an instant estimate of how much annuity income you might expect to achieve.