A significant report reveals that the cost of maintaining a basic retirement standard of living has decreased due to lower energy prices.
However, the Pensions and Lifetime Savings Association (PLSA) highlights that achieving a more comfortable retirement now requires a higher income than previously.
The PLSA annually assesses the income necessary for minimum, moderate, and comfortable retirement lifestyles.
Their findings indicate a £1,000 annual reduction in the minimum cost for a single-person household, now estimated at £13,400. This is independently calculated by Loughborough University’s Centre for Research in Social Policy and serves as a retirement planning guide.
Reduced domestic energy costs are primarily responsible for this decrease, partially offset by increased rail fares. A two-person household’s minimum requirement has fallen to £21,600 annually.
This minimum standard encompasses essential expenses, including groceries, a UK holiday, occasional dining out, and leisure activities.
Conversely, costs for higher living standards have increased. A “moderate” lifestyle now requires £31,700 annually for a single person and £43,900 for a couple.
This includes expenses like a small car, European and UK holidays. The “comfortable” retirement standard, encompassing luxuries such as regular beauty treatments and theatre visits, now necessitates £43,900 for a single person and £60,600 for a couple.
Importantly, housing costs are excluded, reflecting that many pensioners own their homes outright, while renters often receive benefits assistance.
Zoe Alexander, PLSA’s director of policy and advocacy, emphasizes that retirement is about maintaining one’s existing lifestyle, not necessarily drastic changes. She highlights the significant impact of shared costs, particularly for couples.
Experts praise the report for its value in retirement planning. Paula Llewellyn from L&G notes the importance of addressing the longevity of retirement funds.
Helen Morrissey of Hargreaves Lansdown adds that understanding desired spending allows for cost estimation and pension adequacy checks using online tools.
The research also reveals generational differences in homeownership. Older generations are significantly more likely to own their homes outright compared to younger generations, with a substantial portion of younger adults anticipating renting in retirement.
UK Finance recently reported that first-time buyers are now taking out mortgages averaging 31 years, up from 28 years a decade ago.
Childcare support varies significantly across the UK.
High costs are driving young people away from some areas, according to a Guernsey Community Foundation study.
Mortgage lengths remain above 30 years, despite recent interest rate reductions.
Increased NHS and defense funding necessitates cuts elsewhere, a think tank suggests.
Cash Access UK seeks to repurpose an underutilized office space.