The True Costs of Retirement Lifestyle

The True Costs of Retirement Lifestyle

New research has put some surprising numbers on the income needed in retirement.

More money for eating out, a higher personal grooming budget and the inclusion of a Netflix subscription are among the changes to the Pensions & Lifetime Savings Association’s Retirement Living Standards in the first update of the rules of thumb for retirement spending since they were established two years ago.

The Pensions and Lifetime Savings Association (PLSA) has conducted its Pension Survey since 2019, intending to help people picture the lifestyle they want when they retire, and understand the cost.

The survey answers the question of how much retirement might actually cost for couples and single retirees. It considers three different Retirement Living Standards, which are summarised as:

  • Minimum:covers all your needs with some disposable income.
  • Moderate:more financial security and flexibility.
  • Comfortable: more financial freedom and some luxuries.

Your own situation may be very different

  • YOU: a powerful exercise would be for you to write your own column. Total the true cost of your own ideal retirement lifestyle from that. But please, do this once you’ve read our article – What’s Your Number.

Some Basic Changes:

For the first time since 2019, the Moderate and Comfortable standards have been ‘rebased’ to allow for changed spending patterns. For example, out went two cars for the Comfortable standard and in came much higher spending on clothes in the Moderate standard.

These are relatively modest norms, but do not forecast the exceptional.

The rebasing means the gap between the 2023- and 2022-income requirements reflects more than just inflation – leading to the 34% jump for the Moderate single income requirement.

The bottom-line costs shown in the graph below are net (after-tax) income requirements and take no account of any rental expenditure. As a reminder, from April 2024 the new State pension will be £11,502 a year.

Source: PLSA