New Retirement Living Standards launched – how will your retirement look?

The Pensions and Lifetime Savings Association has published a new set of retirement living standards to help demonstrate the cost of living in retirement and what needs to be saved in order to meet certain standards of living.

The aim of releasing the standards is to provide a relatable element to retirement planning and to encourage people to save what is necessary. The standards are in today’s terms and relate to living costs in the UK therefore considerations for inflation and local costs must be made.

The PLSA states that in today’s terms:

• The minimum living standard of meeting all necessities requires ￡10,200 p.a. for a single person and ￡15,700 for a couple.
• A moderate living standard which provides more financial security and flexibility requires ￡20,200 p.a. for a single person and ￡29,100 for a couple.
• A comfortable lifestyle that allows financial freedom and some luxuries when required will cost approximately ￡33,000 p.a. for a single person and ￡47,500 for a couple.

How much should I be saving?

• A 35-year-old man will reach their UK state pension age at 68.
• If inflation is assumed to be 2.5% per annum between these dates, the minimum standard of living cost of ￡20,200 becomes ￡45,628 at age 68.
• From age 68 to 90 there are 22 years of retirement that needs to be funded.
• Without considering further inflation, meeting the moderate retirement living standard for a single man would cost approximately ￡1,003,833.
• In order to save this amount between age 35 and 68, the single man would need to save approximately ￡2,500 per month if his savings weren’t invested.
• In order to save this amount between age 35 and 68 whilst achieving investment growth of 5% p.a., the single man would need to save approximately ￡1,000 per month.

Far too often, people choose to turn a blind eye to the costs of retirement and then get caught out in their later life. For those of us who work hard every week, a comfortable retirement is what we deserve. Don’t let ignorance simply take this away from you.

Contact me today if you want to get to grips with your retirement and solidify your financial future.