Whether retirement is years away or you are currently on countdown, working out just how much you'll need to enjoy a comfortable one is no easy task - this is especially true at the moment as the cost of living continues to soar. So just how much do you need for a comfortable life in later years?
Even though the state pension is set to rise by 10.1% in April, reports indicate that millions of pensioners will still be left only just covering their expenses. In fact, according to the Pensions and Lifetime Savings Association (PLSA), the annual income people will need for a minimum standard of living in retirement has jumped by nearly a fifth in the space of a year.
Rising costs for everyday items such as fuel and food have contributed significantly to the increase in the amount retirees need for a minimum standard of living, according to the PLSA, while Nottinghamshire Live sister publication Leicestershire Live discovered that the latest inflation update produced by the PLSA found the cost of a 'minimum lifestyle' had increased from £10,900 in 2021 to £12,800 in 2022 – or 18% – for a single person. For those in a couple, it has gone from £16,700 to £19,900, 19%.
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The finding led PLSA to champion the need to retain the triple-lock mechanism, saying that the disproportionate increase in the cost of retirement means it is more important than ever the UK Government retains this mechanism. The triple lock promises an increase in the state pension by whichever is highest – earnings growth, consumer price inflation growth, or 2.5% a year. This year, it will rise with inflation after having been temporarily scrapped by former Chancellor and current Prime Minster Rishi Sunak from 2021 to 2022.
How much you'll need for a comfortable retirement - the figures
Currently, the new full state pension is £185.15 per week. However, you'll only qualify for the whole amount if you have built up 35 years worth of National Insurance contribution years. You can check your National Insurance record on the Government website, which is linked here. Before you start, many sure you have your Government Gateway user ID and password to hand. If you don't have a user ID, you can set one up on the site.
However, according to PLSA, even the full new state pension would not be enough to achieve a comfortable standard of retirement living for a couple. The association outlined example incomes for couples and how they place in the three retirement living categories of minimum, moderate, and comfortable:
Minimum – £96 per week to spend on food and £12 on alcohol. No car. A week’s holiday and a long weekend in the UK every year. £460 per person annually for clothing and footwear.
Moderate – £127 per week to spend on food and £20 on alcohol. A three-year-old car replaced every 10 years. Two weeks' holiday in Europe and a long weekend in the UK annually. £791 for clothing and footwear per person annually.
Comfortable – £238 per week to spend on food per week and £26 on alcohol. Two cars, replaced every five years. Three weeks' holiday in Europe annually. Up to £1,300 per person for clothing and footwear annually.
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