How Much Retirement Income Do You Need ?

15/10/2021

Couples hoping for a comfortable retirement will need to find an extra £2,200 a year to maintain their standard of living post-pandemic, according to The Times Online.

Such a retirement, which includes some luxuries including regular beauty treatments, theatre trips and three weeks of holidays in Europe, now costs £49,700 a year — about 4.6 per cent more than in 2019.

Approximately £30,600 a year would give a couple a moderate living standard, allowing them to afford a two-week holiday in Europe and eat out a few times a month, whereas to cover a couple’s basic needs would cost £16,600.

Even the minimum living standard would leave a couple with enough cash for a week’s holiday in the UK a year, eating out about once a month and some affordable leisure activities about twice a week. It does not budget for running a car, however.

The moderate income amount is up by £1,500 from 2019, and the minimum standard of living now costs £600 more than two years ago.

A single retired person needs £10,900 a year for the minimum standard of living, £20,800 to live moderately and £33,600 a year for a comfortable retirement, according to an assessment by the Pensions and Lifetime Savings Association (PLSA).

The income requirements have increased because more money is needed to cover eating out, the personal grooming budget has risen and a Netflix subscription has been added. The PLSA said that the changes reflected altered attitudes towards retirement lifestyles after the pandemic.

The cost of the annual maintenance and servicing of a burglar alarm was included in the comfortable standard for the first time.

Rises in council tax added £161 a year on average for a single retired person and £214 for a couple, and inflation across leisure goods and services added £7.20 a week for one person and £11.94 a week for a couple. The cost of public transport also increased by about 10 per cent between 2019 and 2021.

A typical comfortable budget for a couple includes a £94 weekly shop, two cars replaced every five years, up to £1,500 per person for clothing and footwear and £50 for each birthday present, according to the PLSA’s analysis.

Nigel Peaple, director of policy and advocacy at the PLSA, said: “We hope the updated standards will encourage people to think about whether they are saving enough for the retirement lifestyle they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.”

If you would like to see what retirement income you are currently on target for, please contact your consultant or info@mantlefp.com.

 

Written by Colin Caulfield | Director

Colin is a Chartered Financial Planner & Pension Adviser Of the Year Read more >>

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