Pension warning as Britons ‘need £37,300’ for ‘comfortable’ retirement
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Many people will be planning towards dreams and goals for retirement, but how achievable these are typically hinge on how much money a person has at their disposal. Thankfully, the state pension is made available to millions of people which could help with financial security in retirement.
Not everyone will receive it, but the full new state pension will be worth £10,600 per year from April 2023 onwards.
This could go a long way to funding the kind of retirement a person hopes for.
However, according to the Pensions and Lifetime Savings Association’s Retirement Living Standards, those who want a more comfortable later life will need more funds at their disposal.
A comfortable retirement is described as a lifestyle which allows Britons to be “spontaneous” with their money.
The lifestyle bracket offers more financial freedom, aside some luxuries, which is likely to be what many people are striving towards.
The comfortable retirement bracket allows retirees to have a subscription to a streaming service, regular beauty treatments, and two foreign holidays a year, for example.
According to the PLSA, about one in six employees are projected to have an income between moderate and comfortable.
When it comes to helping others, those in this bracket could offer £56 for each birthday present.
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They could replace their two year old car every five years.
For basic needs, £144 could be spent on food, including eating out.
The Retirement Living Standards are updated on a regular basis to reflect current circumstances, and the changes in the costs of goods and services.
The PLSA estimates about three quarters of employees will achieve at least the minimum standard of living in retirement.
This is laid out as £12,800 for single people and £19,900 a year for couples.
The bracket covers basic needs, with a small stipend left over for fun and social occasions.
Those in the minimum standard of living could holiday in the UK, but may not be able to go overseas.
In addition, they could eat out about once a month, and do affordable leisure activities about twice a week.
Conversely, around half of employees are projected to have an income between minimum and moderate – the next step up.
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For a moderate standard of living in retirement, the PLSA estimates some £23,300 will be needed by a single person, and £34,000 for couples at present.
This lifestyle offers slightly more flexibility, with one foreign holiday a year, and opportunities to eat out a few times a month.
At its core, the moderate standard of living offers Britons the opportunity to do more of what they would like to do.
The PLSA has said the living standards are designed to help people picture the kind of life they want in retirement.
The website explained: “By giving savers a general figure that they can understand, our hope is that savers can then start to develop their own personal targets based on their individual circumstances and aspirations.
“Like the ‘five a day’ or 5-a-day healthy eating maxim, the PLSA hopes the Standards will one day become a rule of thumb for retirement planning.”
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