Dreaming about the retirement you want is one thing, but it can be difficult to understand what funds you’ll need to finance these dreams and how this compares to the income you can expect to receive from your pensions and investments. It’s even harder to keep track when the cost of living is spiralling.
The Pensions and Lifetime Savings Association (PLSA) developed its Retirement Living Standards1 to help people envisage different lifestyles in retirement, based on the costs of common goods and services.
The cost of a Minimum lifestyle for a single person increased from £10,900 in 2021 to £12,800 in 2022, a rise of 18%. For a couple, income of £16,700 required in 2021 rose to £19,900 (19% increase). Costs factored into this lifestyle include – £96 for a couple’s weekly food shop, eating out about once a month, a one-week annual holiday in the UK and some leisure activities. But there is no budget to run a car.
Dreaming of more than the minimum?
At the Comfortable Retirement Living Standard, retirees can expect more luxuries like regular beauty treatments, three weeks holiday in Europe each year and theatre trips. The weekly food shop for a couple in this lifestyle amounts to £238 per week.
What savings do I need?
For a comfortable retirement PLSA estimate that a couple who are both in receipt of the full new State Pension would need to accumulate a retirement pot of £328,000 each, based on an annuity rate of £6,200 per £100,000.
Your retirement, your choice
If you’re concerned about how to fund the retirement you want, we can help you prepare financially. Retirement planning involves visualising your key goals for your retirement years and setting up a plan to help you achieve those goals through financial planning.
1) PLSA, 2023