Why Labour's economy plan means you'll need even MORE to retire
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PENSIONERS will need to spend £15,000 a year more to have a comfortable retirement if Labour extends its stealth tax raid, analysis shows.
Income tax thresholds were frozen until 2028 by the Conservative government.
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Pensioners will need £15,000 more a year to afford a comfortable retirement
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Source: Pensions UK
But the prime minister has not yet ruled out extending the thresholds beyond this date as he attempts to fill a £22billion black hole in the public finances.
A single pensioner currently needs a disposable income of £43,900 a year to have a comfortable retirement, according to industry trade body Pensions UK.
But if the tax thresholds were frozen for two more years and higher living costs continue to rise then it would mean this figure would rise to £58,860 by 2030.
As a result, pensioners would need £14,960 more a year than they do now.
A comfortable retirement would allow you to spend £75 a week on food and £21 a week on takeaways, assuming that you own your own home and are mortgage free.
In comparison, in 2020-21 you needed just £32,800 for a comfortable retirement.
But the soaring cost of living has pushed up the amount you need each year to £43,900.
As the cost of energy, food, driving and holidays have risen, pensioners currently need a higher income each year to make ends meet.
If the amount of disposable income pensioners need continues to rise by the annual average of 6% each year and the income tax thresholds remain frozen then a pensioner would need £58,860 to live comfortably.
Frozen tax thresholds have dragged millions of people into higher tax bands through a concept known as 'fiscal drag'.
How to track down lost pensions worth £1,000s
Craig Rickman, personal finance expert at Interactive Investor, says: 'Fiscal drag is a sneaky tactic of raising the tax burden over time, as it freezes tax thresholds so that people pay more of their income as wages rise with inflation.
'While it's not as obvious as raising tax rates directly, it could have a bigger impact over long periods – particularly when you see the length of time that some of these rates have been frozen.'
He added that as tax thresholds are frozen for so long even lower earners will gradually pay tax on their income.
Meanwhile, u-turns over the winter fuel payment for pensioners and plans to cut disability benefits have left pensioners feeling uncertain about their finances.
How to save for retirement
Anyone planning their retirement needs to do some careful calculations about how much they will need to afford the lifestyle they want.
A good starting point is the government's state pension age calculator, which will tell you when you will receive your state pension.
Visit gov.uk/state-pension-age to find out more.
Pension calculators can also help you determine how much money you need to save to have the pension pot you want at retirement.
The earlier you start saving, the easier it is as your money grows longer.
And you're not on your own when saving for retirement.
Your workplace will almost certainly contribute some money to your pension pot, too, and you get tax relief from the government, which reduces the amount you have to pay yourself.
If you are struggling to make ends meet then don't worry, we have revealed how to legally pay less tax on your income.
Plus our guide explains how to give yourself a secret pay rise and get up to £240,000 extra in retirement.
Or if you are a grandparent then you could get a £6,600 boost for looking after children during the summer holidays.
When can I retire?
IF you're wondering when you can retire, it's best to speak to your pension providers.
Firstly, use the government's tool to check your state pension age.
Next check retirement ages on workplace pension schemes - this can massively impact your windfall once you enter your golden years.
For advice, you can contact The Pensions Advisory Service for free online or on 0800 011 3797.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
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