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Wednesday, October 13, 2021

Pensions - Minimum of £10,900 Needed

The Pensions and Lifetime Savings Association (PLSA) have stated that a single person will need post-tax annual income of £10,900 for a minimum standard of living in retirement.

That spending budget increases to £16,700 for a couple.

Here is the assessment link.

Nigel Peaple, director of policy and advocacy at the PLSA is quoted by the BBC:

"The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement.

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."

The calculations for retirement living standards are pitched at three different levels - minimum, moderate and comfortable - and are developed and maintained independently by the Centre for Research in Social Policy at Loughborough University.

The assessment is intended as a guide for those planning their retirement savings. Housing costs are not included on the assumption that most pensioners have paid off mortgages, although the PLSA said that decision would be kept under review.

The minimum retirement living standard covers a typical retiree's basic needs plus enough for some social activities, such as a week of holiday in the UK, eating out once a month, but not including running a car.

The estimate of an annual budget for the minimum standard has risen since 2019 by £700 for a single person, and by £1,000 for a couple.

The total requirement would generally be made up of a full state pension of £9,339 per year, as well as some workplace pension savings.

The moderate retirement living standard includes a two-week holiday in Europe and more frequent eating out.

This was assessed to require a budget of £20,800 for a single person, £600 higher than two years ago, and £30,600 for a couple, up £1,500.

The annual budget needed for a comfortable retirement living standard has increased since 2019 by £600 to £33,600 for one person and £2,200 to £49,700 for a couple.

This covered items such as regular beauty treatments, theatre trips, and annual maintenance and servicing of a burglar alarm. 

The figures may seem reasonable. However, they ignore that fact taht as you get older your lifestyle changes. Those in their 80's are less likely to be changing their cars every so often, upgrading their kitchens or going out quite so much. They will, though, be more likely to spend money on care.

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