A single-person household now needs just £13,400 per year to meet this basic threshold – the lowest of the three retirement living standards – representing a £1,000 drop from last year. For a two-person household, the figure has fallen by £800 to £21,600.
Developed by the Centre for Research in Social Policy at Loughborough University on behalf of the PLSA, the retirement living standards outline the annual income needed for three levels of retirement: minimum, moderate, and comfortable.
So, why has the minimum standard dropped – and what could it mean for your own retirement planning? Here, The i Paper breaks it down.
The retirement living standards are intended to help people visualise their future and plan in a way that suits their individual needs.
A minimum standard of living in retirement covers all your needs, with some left over for fun, such as £50 per week on groceries, a week-long UK holiday, and up to £630 for clothing each year. But no car.
And a comfortable standard of living gives you £70 per week on food, £20 per week on takeaways, a two-week-long four-star holiday in the Med with spending money and three long weekend breaks in the UK. As well as up to £1,500 for clothing and footwear each year.
Why has it fallen?
This year, discussion groups agreed that certain expenses – such as clothing, hairdressing, tech purchases, taxi use, and charitable giving – could be reduced to reflect a more realistic minimum standard of living.
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Meanwhile, the moderate and comfortable retirement standards have edged up slightly, broadly in line with April’s inflation rate of 3.5 per cent, the PLSA said.
How can you best prepare yourself?
Currently, in the UK, automatic enrolment sets pension contributions at 8 per cent, which Ms Alexander said is a “solid starting point”, especially if you begin early.
She explained: “While defaults may rise in the future, it’s important for savers to consider whether 8 per cent will be enough for their goals.
Mr Selby said starting as early as possible and taking advantage of incentives like employer contributions, tax relief and tax-free investment growth are great ways to boost your pot.
Professor Matt Padley, co-director of the Centre for Research in Social Policy at Loughborough University, said: “The consequences of the cost-of-living challenges over the past few years are still being felt, and we’ve seen some subtle changes in public consensus about minimum living standards in retirement, resulting in a small fall in the expenditure needed to reach this standard.
“In these uncertain times, planning in concrete ways for the future is ever more important, and the retirement living standards help people to think in more concrete ways about what they want their retirement to look like, and how much they will need to live at this level.”
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