State Pension is set to rise by 10.1 percent in April 2023, with the backdrop of rising everyday costs. still leaves some pensioners only just covering expenses to get by on a day-to-day basis.
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, according to The Pensions and Lifetime Savings Association (PLSA), Leicestershire Live reports.
The PLSA states the cost of a 'minimum lifestyle' has increased from £10,900 in 2021 to £12,800 in 2022. That translates to around 18 percent for a single person or, for those in a couple, it has gone from £16,700 to £19,900, 19 percent.
The disproportionate increase in the cost of retirement means it is more important than ever the UK Government retains the triple-lock mechanism the PLSA argues.
Read more: UK State Pension Age one of the highest compared to the rest of Europe
State Pension increases by 2.5 percent each year, or by average earnings growth or inflation - whichever figure is the biggest. In 2023, it will rise with inflation after having been temporarily scrapped by former chancellor and current prime minster Rishi Sunak, from 2021 to 2022.
What is the minimum amount needed for comfortable retirement
At the moment, the new full State Pension is £185.15 per week. Despite this many won't qualify for the whole amount as it requires 35 National Insurance contribution years. 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 PLSA have 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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