What will your retirement lifestyle look like?
Find out as we look at the new retirement fund levels from the Pension and Lifetime Savings Association (PLSA).
To make things easier and give everyone the chance to get a good retirement lifestyle the PLSA split these guidelines into three levels of everyday life costs including Minimum, Moderate and Comfortable, to show what you can expect to spend on things like running a car and taking your yearly holiday.
They hope these guidelines will help you understand what you need to fund the retirement you’d like and give you something to aim for if you’re not quite there yet.
But, it’s not just about you saving more, the PLSA say they want 90% of pension schemes to adopt the standards by 2025 and use them as tools to help pension savers by doing things like:
Giving information on the levels in annual statements
Showing personalised targets so planning for retirement is more straight-forward
This not only gives them a way to show you how your retirement savings compare to these levels but will show whether you’re on track or need to save a bit more.
And, when PLSA figures say that 77% of pension savers have no idea how much they’ll need in retirement and only 16% can give any kind of figure, it’s expected this information should help give a clearer picture of how much more you need to save to get the retirement lifestyle you want.
Think of it as…
Like the 5-a-day healthy eating initiative, the PLSA’s ambition is for the Retirement Living Standards to become a widely adopted industry standard.
The PLSA
How much will I need for a comfortable retirement in the uk?
If you’re a single person, the PLSA guidelines say your annual pension income for the three levels should be around:
Minimum = £10,200
Moderate = £20,000
Comfortable = £33,000
However, if you’re part of a couple your figures should be around:
Minimum = £15,700
Moderate = £30,000
Comfortable = £47,500
But, what’s even better is these figures are broken down into different amounts for different activities and include everything from food shopping, holidays, transport and more of the fun stuff like that holiday to the Lakes or a meal out with friends at your favourite restaurant.
If you are based in the UK wondering if you can retire near age 55 check this article out.
*(All these figures are based on research findings and are not financial advice.)
The Single Person retirement income standard of living chart
The Food Shop
If you’re on a minimum standard you can expect to spend £38 a week on your shopping. But, if you’re on a moderate pension income you can afford £46 and if you’re lucky enough to fit in the comfortable bracket you can spend £56 a week.
The Holiday
If you’re in the minimum bracket you can enjoy a week-long UK holiday and a long weekend holiday every year but, if you’re in the moderate income you can enjoy two-weeks away in Europe and a long weekend in the UK every year. However, if you’re lucky enough to fit in the comfortable bracket you can look forward to three weeks in Europe every year.
The Car
On the minimum income level you’d find it difficult to afford to run a car, so this isn’t included but if you’re on the moderate level you can get a new car every 10 years and on the comfortable level this goes down to every five years.
The Fun Stuff
The good news is that even on the minimum income level, there’s money costed for the ‘fun stuff’, so things like a few pints down the local, trips to the cinema and meals out now and then. This is great as even on the minimum level you’ve got things to look forward to in retirement.
The PLSA director of policy and research, Nigel Peaple, said:
“The Retirement Living Standards will support better saver engagement. They distil robust, in-depth research with the public into an easy to understand basket of goods that helps people picture the future – and relatable figures that can provide a powerful and practical tool for encouraging engagement with saving.”
*(All these figures are based on research findings and are not financial advice.)
The Couples retirement income standard of living chart
So, how do you stack up?
Are you looking at a holiday in the UK or three weeks in Europe each year?
Whatever retirement level you’re on, let’s see if we can help make sense of your pensions?
