Recent studies have revealed unexpected figures regarding the income required for retirement.
Since 2019, the Pensions and Lifetime Savings Association (PLSA) has been dedicated to determining the cost of retirement for both couples and single retirees. This involves examining three different Retirement Living Standards which can be summarised as:
- Minimum: covers all your needs with some disposable income.
- Moderate: more financial security and flexibility.
- Comfortable: more financial freedom and some luxuries.
To give a more granular idea of what the different standards imply, these are how two sub-categories break down for food and drink, holidays and leisure:
| Minimum | Moderate | Comfortable | |
|---|---|---|---|
| Food and drink | • Around £95 a week on groceries. • £50 a month per couple on food outside of the home. • £30 a month per couple on takeaways. | • Around £100 a week on groceries. • £60 a week per couple on food outside of the home. • £20 a week per couple on takeaways. • £100 a month to take others out for a monthly meal. | • Around £130 a week on food. • £80 a week per couple on food outside of the home. • £30 a week per couple on takeaways. • £100 a month to take others out for a monthly meal. |
| Holidays and leisure | • A week-long UK holiday. • Basic TV and broadband plus a streaming service. | • A fortnight three-star, all-inclusive holiday in the Mediterranean and a long weekend break in the UK. • Basic TV and broadband plus two streaming services. | •A fortnight four-star holiday in the Mediterranean with spending money and three long weekend breaks in the UK. •Extensive bundled broadband and TV subscription. |
For the first time since 2019, the Moderate and Comfortable standards have been ‘rebased’ to allow for changed spending patterns. For example, out went two cars for the Comfortable standard and in came much higher spending on clothes in the Moderate standard. The rebasing means the gap between the 2023- and 2022-income requirements reflects more than just inflation – leading to the 34% jump for the Moderate single income requirement.
The bottom-line costs shown in the graph below are net (after-tax) income requirements and take no account of any rental expenditure. As a reminder, from April 2024 the new State pension will be £11,502 a year.
For more information, please contact us at info@smh.group or give us a call on 01142 664 432.
Source: PLSA
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