A decent retirement is further out of reach than most realise

Telegraph

15-05-2025

When it comes to retirement, most people are familiar with the figures from the Pension and Lifetime Savings Association (PLSA). They suggest there are three levels of expenditure to help people understand how much money they'll need in retirement.
For a minimum retirement lifestyle, the recommendation is an annual income of £14,400 for a single person, and £22,400 for a couple. For a moderate retirement, a single person needs a £31,300 income – a couple £43,100. To be comfortable, £43,100 is needed for a single person, and £59,000 for a couple.
But, and it's a big but, these figures do not take into account the cost of housing, because 'the standards assume people are mortgage- and rent-free, because this is still what most of the population close to retirement will achieve in the next few years'.
Maybe before the housing crisis and the spike in rental prices, this was an achievable position, but given the average weekly rent in England (excluding London) jumped 47pc between 2009 and 2024, and by 32pc in London in the past five years alone, I wonder where people are finding the surplus cash to retire?
The old line of thinking used to be buy a property, spend 25 years paying it off, then once that debt is clear, you're free to enjoy life (well, at least free from a mortgage).
But given the age of first-time buyers has been rising (the average age is now 33 years), and given mortgages are getting longer (data from Quilter shows there has been a significant increase in people taking out mortgages with terms of 35 years or more), what hope is there for any of these people to have paid off their mortgages before retirement?
The Government may have increased the age at which you can claim the state pension, but for many, even the thought of retiring at 68 years old (for those born on or after April 5 1977), this idea will be a fantasy if they still have a mortgage.
What is also a worry, when it comes to retirement income, is the ever-increasing cost of living in a property. Whether you rent or own, the cost of council tax is now akin to a second mortgage, and with those in leasehold properties, the ever-present danger of sky-high shocking service charge bills is a very real threat to the bank balance.
This is all before you've even factored in the runaway price increases for labour, materials and general building maintenance. Where previously, when you got older, you may have considered either moving or improving your property to suit your changing needs, now the costs have become prohibitively expensive, with even the most basic modifications running into the thousands.
As a late Gen X-er, I'm keen to know the score, but as I delved closer into the PLSA figures, I found myself feeling increasingly uncomfortable. You see, even the target for a comfortable lifestyle (£59,000 for a couple) only allows £600 a year to maintain the condition of your property, and £300 for a contingency fund.
This means that by the time you've had your windows regularly cleaned, the gutters cleared out every year and a spot of occasional gardening help, you won't have much left for the annual boiler service, let alone a roof tile slipping.
And what if the boiler needs replacing? Or what about when you want to upgrade the kitchen or bathroom, change the carpets or floor tiles?
I won't deny that when I'm 76 years old (if I make it that long), maybe I won't care about the choices I made in my 40s or 50s, but what if I do?
I thoroughly agree with having 'rules of thumb' for retirement savings, and maybe I've got myself worked up over how I'll get the money together to fund a conservatory when I'm older so I can while away the hours looking at the garden. But as I sit here now, planning how much extra I need to stuff into my Sipp to cover that eventuality, I wonder how common my worries are?
Every day there's some story in the news about somebody who decided a pension 'wasn't worth it', or somebody else who 'couldn't afford it', or another who wasn't going to do anything because of some reason or other.
I understand that saving for retirement is tough when you're scrabbling about trying to make ends meet today, but I can't help worrying that not enough people who are young enough to do something about their future aren't doing anything.
If retirement for younger generations isn't to become a thing of the past, people need to keep the dream alive by planning – and paying – for tomorrow, today.