Latest news with #PLSA
Metro
a day ago
- Business
- Metro
Cost of comfortable retirement revealed - here's how much you need yearly
The high cost of living is also hitting pensioners as more money is needed for a comfortable retirement. Pensioners need more money in the bank if they want to be comfortable and afford more than just the basic necessities, pension experts revealed. A couple will need to budget for around £60,600 a year to live comfortably, the Pensions and Lifetime Savings Association said. This is £1,600 more than last year. While around 70% of pensioners retire as a couple, the brunt of expenditure can be particularly hard for single people on one income. A single person is estimated to need £43,900 a year, which is up by £800 on the previous year. The PLSA created three different lifestyle groups – minimum, moderate and comfortable – to estimate how much each would cost for people now. Here is a breakdown of how much you will need to afford each lifestyle. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The estimated £13,400 a year would cover all basic needs and leave some for fun, with around £55 a week spent on food shops, £30 a month at a restaurant plus £12 per month on takeaways £200 a year to maintain a property This option would not be enough for a car, but cover £30 a month for taxis and around £180 a year to cover three train journeys, while a bus pass will be free One week-long holiday in the UK, TV license and streaming services with ads, plus £20 for affordable activities. Around £450 for clothing and shoes a year, and £20 per person spent on birthday and Christmas presents £31,700 a year would cover £500 a year to maintain your home Around £56 a week on groceries, £32 a week at restaurants, £11 a week on takeaways, and £106 a month to treat others to a meal out Enough to cover a three-year-old small car, £22 a month on taxis, and £104 a year on rail tickets A two-week all-inclusive holiday at a three-star hotel in the Mediterranean, and a long weekend off-peak season trip in the UK TV license and broadband, plus streaming services £43 a week for activities Up to £1,548 for clothing and footwear annually £30 gifts, and extra £1,000 for supporting loved ones The estimated £43,900 is set to bring more financial freedom and luxury options Around £600 to maintain a property annually Food shop could be £75 a week, £42 on food outside the home, £21 a week on takeaways, and £106 a month to take others out On this budget, your car could be a small, three-year-old car, £22 a month on taxis, and £208 a year on train tickets Two-week Mediterranean holiday at a four-star hotel, some spending money, three long weekend breaks in the UK, with £400 spending money per break, extensive broadband and streaming services, plus £45 a week for activities Up to £1,548 for clothing and shoes Presents can cost £50 each, plus an extra £1,000 for family support Housing, especially for those renting, can be costly. The estimates leave out housing costs, so people are likely to need to factor in extra costs depending on their situation. More Trending Many pensioners have enjoyed mortgage-free living, but that could change in the next decades due to the rise of 40-year mortgages. Experts fear young home buyers with 40-year mortgages might not be able to pay into their pensions, which could have a knock-on effect on their later life, according to the bankers' trade body, the UK Finance. Zoe Alexander, the director of policy and advocacy at the PLSA, said: 'For many, retirement is about maintaining the life they already have, not living more extravagantly or cutting back to the bare essentials. View More » 'The standards are designed to help people picture that future and plan in a way that works for them.' Get in touch with our news team by emailing us at webnews@ For more stories like this, check our news page. MORE: Octopus Energy gives away free energy for three hours today – here's how to claim MORE: Here's how you can find out if you're owed money from your state pension MORE: Schools should teach money management after teens turn to AI for help, parents say Your free newsletter guide to the best London has on offer, from drinks deals to restaurant reviews.
Daily Mirror
a day ago
- Business
- Daily Mirror
Couples on State Pension given £1,600 warning over retirement risk
The Pensions and Lifetime Savings Association (PLSA) has put the annual cost of a comfortable retirement for a couple at £60,600 The cost of a comfortable retirement for a couple has rocketed to an astonishing £60,600 a year. This post-tax income number has gone up by £1,600 from the previous year, reveals new research by the Pensions and Lifetime Savings Association (PLSA). For a more modest lifestyle after retirement, couples now face an annual post-tax increase of £800, with costs hitting £43,900. Conversely, those aiming for just the basics in later life will find themselves spending £800 less, as figures drop to £21,600 per annum for couples. In an effort to set clear expectations for retirement spending, the PLSA's Retirement Living Standards (RLS) were formed together with Loughborough University's Centre for Research in Social Policy, based on thorough conversations with Britons about their anticipated retirement lifestyles, reports the Express. Through this study, they've laid out their guidelines for living comfortably after work ends: Comfortable Standard of Living Annual income: £60,600 (couple) Greater financial freedom Includes regular overseas holidays, generous home improvements, and extensive social/leisure activities Moderate Standard of Living Annual income: £43,900 (couple) More financial security and flexibility Includes a car, a few holidays a year, and more frequent leisure activities Minimum Standard of Living Annual income: £21,600 (couple) Covers basic needs with some leftover for occasional treats Includes a week-long UK holiday, dining out once a month No budget for a car; relies on public transport Zoe Alexander, PLSA's Director of Policy and Advocacy, noted: "We're not just seeing changes in costs, we're seeing changes in how retirees live." She added: "Retirement isn't a one-size-fits-all experience. The Standards recognise that retirees can share costs, often with a partner, and that can make a huge difference to affordability in later life." The latest research underscores the critical role of the State Pension, particularly for those on the minimum level. By 2025/26, a couple receiving the full new State Pension, which amounts to £11,973 per person or £23,946 combined, would be able to cover the costs associated with the minimum standard of living. The Pensions and Lifetime Savings Association (PLSA) is urging people to utilise its findings as a guide for future planning, adapting the information to fit personal lifestyles and mixing elements from various living standards. Notably, the data indicates that to achieve a comfortable joint annual income after tax of £60,600, supplementing the State Pension, each partner in a couple would need a private pension pot ranging between £300,000 and £460,000 to purchase an annuity – a lifetime income. For a moderate lifestyle in retirement, it's estimated that each individual would require a private pension savings of £165,000 to £250,000 to secure an annuity that would top up their State Pension. Professor Matt Padley, Co-director of the Centre for Research in Social Policy at Loughborough University, commented: "Our research on what the public agree is needed in retirement at these three different levels continues to track changes in expectations, shaped by the broader economic, social and political context." He also noted: "The consequences of the cost-of-living challenges over the past few years are still being felt, and we've seen some subtle changes in public consensus about minimum living standards in retirement, resulting in a small fall in the expenditure needed to reach this standard." Zoe Alexander stated: "For many, retirement is about maintaining the life they already have, not living more extravagantly or cutting back to the bare essentials. The Standards are designed to help people picture that future and plan in a way that works for them." Tom Selby, AJ Bell's Director of Public Policy, noted that the required size of private pension pots "might feel intimidating". He advised: "The key is to focus on saving as much as you can afford from as early as possible, taking advantage of incentives like employer contributions, tax relief and tax-free investment growth." At present, the minimum pension contributions are 8% of incomes; however, this falls short of the necessary amount, he warned. "The big danger here is that, without a scaling up of minimum contributions, millions of people will sleepwalk into a retirement shock and be forced to choose between working longer or living on less money in their later years," he said.
BBC News
2 days ago
- Business
- BBC News
Lower energy costs make retirement less expensive
Lower energy prices mean the amount of money needed to meet a basic standard of living in retirement has fallen, a major report has those wanting a better retirement will need a higher income than ever before, the Pensions and Lifetime Savings Association (PLSA) has year, the trade body estimates the level of income needed to have a minimum, moderate or comfortable standard of living as a suggested the cost of a minimum retirement living standard for a one-person household has decreased by £1,000 a year to £13,400. The calculations are developed and maintained independently by the Centre for Research in Social Policy at Loughborough University. They are intended as a guide for those planning their retirement savings. Varying lifestyles Lower domestic gas and electricity bills, compared with a recent peak, are the main reason costs are lower than a year ago for those wanting a basic retirement. Some of this has been offset by higher rail fares.A two-person household now needs an annual income of £21,600, down from £22,400 a year previously, according to the minimum standard is calculated to include money for a couple's weekly groceries, a week's holiday in the UK, eating out about once a month and some affordable leisure activities about twice a for those wanting a better standard of living, the costs have what the PLSA calls a "moderate" lifestyle, a single person would need £31,700, up by £400 from £31,300 previously, while two people would need £43,900, up by £800 from £43,100 level includes money for running a small second-hand car, a week holidaying in Europe and a long weekend break in the PLSA also estimates what income is needed for a "comfortable" retirement, which includes luxuries such as regular beauty treatments, theatre trips and two weeks' holiday in Europe a this, a single person would need £43,900, up by £800 from £43,100 previously, and a two-person household would need £60,600 - a £1,600 annual increase from £59, of the categories include housing costs, because many pensioners have paid off a mortgage, while those who rent often have a benefit entitlement to help them Alexander, director of policy and advocacy at the Pensions and Lifetime Savings Association, said; "For many, retirement is about maintaining the life they already have not living more extravagantly or cutting back to the bare essentials."We're not just seeing changes in costs, we're seeing changes in how retirees live. Retirement isn't a one-size-fits-all experience. Retirees can share costs, often with a partner, and that can make a huge difference to affordability in later life." Do your homework Experts said the report was extremely useful to help with retirement Llewellyn, from insurance company L&G, said: "Planning how you'll spend your retirement years is often exciting, but working out how long your money will last can be overwhelming."Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, said: "Once you've got an idea of what you want then you can start to put a figure on what that might cost and you can then use online calculators to see if what you've got in your pension will get you where you need to be." The research does indicate that, while people approaching retirement age are confident about paying off their mortgage by the time they are pensioners, that is far less of the case among younger 56% of those aged between 35 and 54 expected to own outright by retirement age, compared with 68% among those aged 65 and younger generation said they were more likely to be renting from a private landlord, with one in 10 expecting to do so in Monday, banking trade body UK Finance said first-time buyers were borrowing through mortgages that lasted an average of 31 years, compared with 28 years a decade ago.
Daily Record
2 days ago
- Business
- Daily Record
Exact amount of retirement money people need for a minimum, moderate or comfortable lifestyle
Workplace pensions could give people a better chance of the kind of lifestyle they want in retirement. The minimum amount of money people need in retirement has dropped, amid lower energy prices and people's changing expectations, according to the latest calculations. The Pensions and Lifetime Savings Association (PLSA) sets three different retirement lifestyles - minimum, moderate, and comfortable - to give people a general indication of the kind of lifestyle they may be on track for in retirement. The cash amounts for each standard are regularly updated by the PLSA. This year, the cost of a minimum retirement living standard for a one-person household has decreased by £1,000 per year to £13,400, while for a two-person household, it is £21,600, down from £22,400 a year previously. The changes are mainly due to a substantial reduction in energy costs and some small spending adjustments made to the living standard by research participants, the PLSA said. The minimum standard covers people's basic costs, with some money left over for other expenses including holidays, clothing, cars, dining out. Research discussion groups for the minimum standard reported some small changes in what they need for a minimum standard of living, clothing, hairdressing, technology purchases, taxi use, and charitable giving, although participants agreed that the budget for rail travel would need to rise, the PLSA said. The report said the amounts needed for moderate and comfortable standards have increased slightly, reflecting the impact of inflation across many spending categories being offset by decreases in energy costs. Moderate lifestyle in retirement For a moderate lifestyle, a single person would need £31,700, up by £400 from £31,300 previously, while two people would need £43,900, up by £800 from £43,100 previously. Comfortable lifestyle in retirement For a comfortable retirement, a single person would need £43,900, up by £800 from £43,100 previously, and a two-person household would need £60,600 - a £1,600 annual increase from £59,000. The retirement living standard amounts for 2024/25 were calculated by the Centre for Research in Social Policy at Loughborough University on behalf of the PLSA. Across all retirement living standards, weekly domestic fuel budgets had fallen significantly since the previous 2023/2024 update. The standards are a guide to the costs of living in retirement and not fixed savings targets. Zoe Alexander, director of policy and advocacy at the PLSA, said: 'For many, retirement is about maintaining the life they already have, not living more extravagantly or cutting back to the bare essentials. 'The standards are designed to help people picture that future and plan in a way that works for them.' She said that for many people, saving more than the minimum contributions required in their workplace pension could help to give them a better chance of the kind of retirement they want. The PLSA said the role of the State Pension also remains vital, particularly for those at the minimum level. With many people carrying mortgages into later life, the research also underlined the tension between paying off a mortgage and retirement for some households. More than half (58%) of people said they expect to be mortgage-free homeowners by the time they retire, but 17 per cent expect to be homeowners with a mortgage or loan and 8% expect to be renting from a private landlord. Meanwhile, 7 per cent expect to be renting from the council and 8 per cent anticipate that they will be renting from a housing association. And 1 per cent expect to be living 'rent free' in retirement - meaning they anticipate they will be living in someone else's home and not paying formal rent. Professor Matt Padley, co-director of the Centre for Research in Social Policy at Loughborough University, said: 'The consequences of the cost of living challenges over the past few years are still being felt, and we've seen some subtle changes in public consensus about minimum living standards in retirement, resulting in a small fall in the expenditure needed to reach this standard. 'In these uncertain times, planning in concrete ways for the future is ever more important, and the RLS (retirement living standards) help people to think in more concrete ways about what they want their retirement to look like, and how much they will need to live at this level.' PLSA breakdown of people who expect to own their home outright when they retire, without a mortgage: Scotland - 61% Wales - 56% Northern Ireland - 68% North East - 58% North West - 60% Yorkshire and the Humber - 54% West Midlands - 61% East Midlands - 58% Eastern England - 66% London - 53% South East - 56% South West - 56% More than 1,500 people were surveyed across the UK by Yonder in May for the consumer research.
Telegraph
2 days ago
- Business
- Telegraph
Cost of comfortable retirement surpasses £60k a year
A comfortable retirement in Britain now costs more than £60,000 a year for couples and £43,000 for singles, new research suggests. The annual Retirement Living Standards, released by the Pensions and Lifetime Savings Association (PLSA), show that the cost of all but the most basic retirement has increased over the past year. Two retirees running one small car, eating out weekly and taking a four-star foreign holiday each year would need an income of almost £35,000 each before tax to retire comfortably in 2025, rising to £52,000 if they live alone. Meanwhile, anyone living alone on the state pension would even fall short of a basic retirement of £13,400, as millions anxiously wait to see whether Labour will reinstate their winter fuel payment. The PLSA released its annual benchmarks on the cost of retirement based on interviews with members of the public. They outlined the income required for a comfortable, moderate and minimum retirement after tax, but without any housing costs. The cost of a comfortable retirement has increased from £59,000 to £60,600 a year for couples and includes a weekly restaurant meal, a generous clothing budget and a two-week holiday in the Mediterranean. It also provides money for birthday gifts, running a car and maintaining a property. Two retirees will need to earn £22,750 each before tax on top of the full state pension, which requires a pension pot of up to £460,000. The moderate retirement, which costs £43,900 for couples and £31,700 for singles, includes the same elements on a lower budget. Two people on the full state pension would both need £12,300 more a year before tax and a pension pot of up £250,000, rising to £24,500 and £490,000 for a single person. The minimum retirement costs just £21,600 for two people or £13,400 for someone living alone, a fall of £1,000 compared to last year after a reduction in energy bills. However, it only provides a basic clothing budget, one week-long UK holiday, no car and a monthly restaurant meal. A full state pension of £11,973 would cover the cost for couples, with an extra pre-tax income of £1,600 needed for singles. Zoe Alexander, of the PLSA, said: 'These standards aren't supposed to be targets, they're real life examples of needs in retirement. They're designed to help you think about the kind of lifestyle you want in retirement and tailor what you save to that. 'We think the majority of people of working age are, at 8pc under auto enrolment rules, under-saving for retirement and there's a significant risk that many won't reach the standard of living they expect.' However, the standards do not include housing costs. Experts have consistently warned that many people are not saving enough for retirement and will still be renting when they get there. According to Scottish Widows, 15.3 million people currently save into a defined contribution pension and 20pc of them are heading towards poverty in retirement. It also found that around 3.5 million current pension savers will face housing costs in retirement of £10,600 a year on average – potentially doubling the country's housing benefits bill. Helen Morrissey, of wealth manager Hargreaves Lansdown, said: 'These standards are a useful rule of thumb, but retirement is different for different people. Some are going to want to travel and be out and about quite a lot, while others will want something a bit more modest. 'They are quite useful in the context that it makes you think about what you want your retirement to look like and how much that might cost. 'However, they don't include things like rental costs and this is really difficult because we're going to see more and more people approaching retirement with rental costs. Many people also aren't saving enough and they risk getting a nasty shock if they don't check their pension throughout their working life.' Labour announced last July that the winter fuel payment would be removed from around 10 million pensioners. However, the Government was forced into a U-turn last month and is now expected to confirm which pensioners will have the benefit reinstated.
