When it comes to thinking ahead to retirement plans, these days living a more luxurious and stress-free lifestyle once you've finished work may be the last thing on your mind. Despite the state pension being set to rise by 10.1 per cent in April, the cost of living crisis is leaving many feeling especially anxious about the future.
Reports suggest that, despite the rise, millions of pensioners will be left only just able to cover expenses to achieve what is being called 'a minimum quality of life'. Leicestershire Live reports that the annual income people will need for a minimum standard of living in retirement has jumped by almost a fifth in the space of a year, according to the Pensions & Lifetime Savings Association (PLSA).
The PLSA's most recent inflation update stated that the cost of a 'minimum lifestyle' has risen from £10,900 in 2021 to £12,800 in 2022 (18%) for a single person. For couples, it has increased from £16.700 to £19.900 (19%).
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Contributing factors include rising fuel and food prices, according to the PLSA and it argues that the 'disproportionate increase' in the cost of retirement has made it evermore important for the UK government to retain the triple-lock mechanism. The system sees the state pension increase by either 2.5%, average earnings growth or inflation - whichever is biggest -and this year it will rise with inflation after having been temporarily scrapped from 2021 to 2022 by the former chancellor and current Prime Minister, Rishi Sunak.
So just how much is needed for a 'comfortable' retirement?
The new full state pension currently sits at £185.15 per week, however many won't actually qualify for the entire amount as it requires 35 National Insurance contribution years. And according to the PLSA, even the full new state pension wouldn't be enough to achieve a comfortable standard of retirement living for a couple.
Example incomes by the PLSA and outlines of how they place in the three retirement living categories - minimum, moderate and comfortable - reveal the following:
Minimum
You would have £96 per week to spend on food and £12 on alcohol, no car and £460 per person annually for clothing and footwear. You would have a week's holiday and long weekend in the UK every year.
Moderate
This would give £127 per week to spend on food and £20 on alcohol, a three-year-old car replaced every 10 years and £791 for clothing and footwear per person annually. You would have a two week holiday in Europe and a long weekend in the UK annually.
Comfortable
You would have £238 per week to spend on food and £26 on alcohol, two cars which would be replaced every five years and up to £1,300 per person for clothing and footwear annually. You would have a three week holiday in Europe annually.
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