The amount of money needed for a basic retirement lifestyle has decreased, according to a report from the Pensions and Lifetime Savings Association (PLSA). A single person now requires £13,400 annually, down from £14,400, while a couple needs £21,600, down from £22,400. Lower energy prices are the main reason for this decrease.
However, the financial requirements for moderate or comfortable retirements have increased. For a moderate lifestyle, a single person needs £31,700 annually, up from £31,300, while a couple needs £43,900, up from £43,100. This includes one holiday abroad, eating out once a week, and a budget for weekly activities.
For a comfortable lifestyle, a single person needs £43,900, up from £43,100, and a couple needs £60,600, up from £59,000.
Lower energy prices cut expenses
This includes frequent holidays, beauty treatments, and multiple leisure activities.
Zoe Alexander, director of policy and advocacy at the PLSA, said, “For many, retirement is about maintaining the life they already have, not living more extravagantly or cutting back to the bare essentials. We’re not just seeing changes in costs, we’re seeing changes in how retirees live. Retirement isn’t a one-size-fits-all experience.”
Experts say the report is useful for retirement planning.
Paula Llewellyn, from insurance company L&G, said, “Planning how you’ll spend your retirement years is often exciting, but working out how long your money will last can be overwhelming.”
Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, added, “Once you’ve got an idea of what you want, then you can start to put a figure on what that might cost and use online calculators to see if what you’ve got in your pension will get you where you need to be.”
The research also indicates that younger generations are less confident about paying off their mortgage by retirement age compared to older generations. About 56% of those aged between 35 and 54 expect to own outright by retirement age, compared with 68% among those aged 65 and over. Younger people are more likely to be renting from a private landlord, with one in 10 expecting to do so in retirement.
On Monday, banking trade body UK Finance said first-time buyers are borrowing through mortgages that typically last 31 years, compared with 28 years a decade ago.
