Latest news with #PensionsandLifetimeSavingsAssociation
Daily Record
15-07-2025
- Business
- Daily Record
People need an annual income of £44,000 in retirement for 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.
Yahoo
12-07-2025
- Business
- Yahoo
How much do you need to invest in the stock market to quit work and live off dividends?
Like most investors, I'm saving cash each month for the sole purpose of investing in the stock market, with the goal of eventually reaching financial freedom. After all, who doesn't love the idea of just quitting work and living off dividends from an ISA for the rest of their life? But is this realistic? And how much money would someone need to invest to make this happen? To know how large a portfolio needs to grow, it's crucial to know how much passive income is needed. And that ultimately depends on the desired lifestyle. But for those looking to simply live comfortably, the Pensions and Lifetime Savings Association estimates individuals need to earn around £44k a year. Using the average stock market dividend yield of 4%, to earn this level of income, an investment portfolio would need to be worth around £1.1m. While there may be a lucky few with this already in the bank, most people don't have that kind of money lying around. The good news is, combining patience with consistency can lead even modest investors to steadily build towards a seven-figure portfolio over time. For those keeping things simple with an index fund, that means the journey could take as little as 21 years, assuming UK shares continue to deliver an 8% annualised return (which they may not, of course). Monthly Contribution £250 £500 £1,000 £1,667 (Max ISA) Time to reach £1.1m 43 Years 35 Years 27 Years 21 Years Instead of passively relying on index funds, investors can take a more active approach with stock picking. There's no denying the approach to investing carries significantly more risk. But when executed correctly, it can unlock phenomenal returns that drastically accelerate the wealth-building timeline. Games Workshop (LSE:GAW) is an example of this to consider. The niche Warhammer miniature manufacturer has gone through some rough patches over the years. But by developing a rich, immersive world and addictive hobby, the company has slowly nurtured immense pricing power over the last 20 years. The result? Consistent double-digit revenue growth and expanding operating profit margins that now stand at a staggering 40%. And with the company now exploring new high-margin opportunities through licensing its intellectual property (IP), profitability and growth look set to continue for many years to come. Consequently, shareholders have enjoyed a staggered average annualised return of 20.6%. And at this rate, the journey to £1.1m is shortened drastically. Monthly Contribution £250 £500 £1,000 £1,667 (Max ISA) Time to reach £1.1m 22 Years 18 Years 15 Years 13 Years As exciting as the outlook seems for Games Workshop, maintaining this level of returns moving forward seems unlikely. After all, it's now a far larger enterprise. And with the risk of tabletop gaming losing cultural relevance or 3D printing technology undercutting pricing power, the company could find itself under increasing pressure. At the same time, there have been plenty of other promising UK shares that haven't come close to this level of stock market outperformance. In other words, picking individual stocks doesn't always work out. But by taking a disciplined and measured approach, risks can be managed. And given the potential rewards, it's an endeavour worth pursuing on the journey towards financial freedom. At least, that's what I think. The post How much do you need to invest in the stock market to quit work and live off dividends? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Games Workshop Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
Daily Record
24-06-2025
- Business
- Daily Record
Expert provides five finance tips which could add £367,000 to your pension pot
Brits are losing money from their pension pots because of simple mistakes like failing to apply for government credits and low-performing pensions, however, essential tips from a finance expert explain how you can get your money in check. Recent data from the Pensions and Lifetime Savings Association (PLSA) shows that £43,900 is needed annually for a comfortable lifestyle in retirement, yet more than a fifth of Brits feel unprepared for their later years. The PLSA sets three different retirement lifestyles - minimum (£13,400), moderate (£31,700), and comfortable (£43,000) - to give people a general indication of the kind of lifestyle they may be on track for in retirement. To help prepare yourself for retirement, finance expert Antonia Medlicott, Managing Director of Investing Insiders, has shared five things you should do to give yourself a more comfortable lifestyle in later life. Some 41 per cent of employees are not currently contributing to a private or workplace pension, but Antonia's guidance shows there are simple changes that can provide huge gains in retirement pots. Apply for Specified Adult Childcare Credits When a parent gets child benefit, they also get national insurance credits, but if they're working and someone else is doing the childcare, like a grandparent, then those credits can be transferred, which increases your retirement income if you don't have enough national insurance contributions. This little-known UK Government scheme is called Specified Adult Childcare and each year of credit can be worth up to £330 in extra pension income. Over a 20-year retirement, that equates to £6,600. Even better, you can backdate credits to 2011 in the application. The scheme leaves parents worried and asking questions such as 'will this negatively impact my own pension entitlement?', but the great news is that it doesn't, as they are working, which provides them with the national insurance credit anyway. Check your workplace pension A staggering 55 per cent of workplace pensions underperform against industry standards, which could leave workers with an income shortfall when they retire. It's vital to take an active interest in a workplace pension to make sure it's on track for a comfortable retirement. This issue is particularly acute for women, as only 28 per cent know where their pension is invested compared to over half of men (51%). And recent government estimates show that women have 35 per cent less private pension wealth than men. Simply checking a pension regularly (at least once a year) will help workers identify any disappointing returns and take action if they need to change their investment strategy. Open a Self-Invested Personal Pension A Self-Invested Personal Pension (SIPP) allows you to have more control over how your money is invested and is popular due to its tax efficiency; all contributions are tax-deductible, and all growth is entirely tax-free. Making it an effective way to save for retirement. Around 10 per cent of the UK adult population currently hold a SIPP. Statistics over the last decade show that the average self-interest personal pension returns 5.2 per cent per year, compared to a standard default pension, which is between 3-4 per cent. There is a lot of flexibility when it comes to this pension; you can contribute as much or as little as you want. It is also very effective when it comes to estate planning. You can pass on your pension savings to nominated beneficiaries very easily, which gives good peace of mind to know that your money will end up with loved ones. Diversify income sources It's crucial that when you get to your retirement age, you diversify your income sources. Having this will help protect you from pension shortfalls and market volatility. This can be through state pensions, workplace pensions, investments, and personal savings. Each income source gives you an extra level of financial protection, as well as comfort during your retirement. If you combine this with being debt-free, then there's no reason you can't enjoy a stress-free and work-free later life. If you invest £200 a month from the age of 25, by 65 you could have a pot of over £459,000 at an average return rate of 7.5 per cent. But if you start at 35, that pot will be £223,000, and it will be just £98,600 if you start at 45. Debt-free living One of your main aims before retirement should be eradicating or minimising your debt. Particularly debt with high interest, as having to make regular payments on this could take a considerable amount out of your budget. It's also essential to think about your mortgage. If this is paid off before your retirement, then you won't have to worry about accommodation. On average, the UK population spends 35.7 per cent of its annual income on rent or mortgages alone. This will improve your financial flexibility, with that money instead going towards essentials like bills, food, and clothing. Whilst still having enough left over to treat yourself in your later years. Antonia said: 'We often don't want to think about ourselves reaching retirement age. However, assessing the situation now and making small changes, such as checking for childcare credits or how your workplace pension performs, will leave you better prepared when you approach the end of your working life. 'Deciding to start investing a small portion of your monthly income now could leave you with a lot more in your pension pot. That money will allow you to have a more comfortable retirement, or even let you retire earlier than planned.'
Yahoo
13-06-2025
- Business
- Yahoo
How far will your pension go as retirement costs soar?
The cost of retirement continues to creep up, with the Pensions and Lifetime Savings Association (PLSA) recently putting the cost of a moderate retirement at £31,700 per year for a single person and £43,900 per year for a couple. This includes the state pension, but shows how much heavy lifting our workplace or personal pensions need to do to fill the gap. This is hardly going to buy you a luxury lifestyle either – a moderate lifestyle covers all your basics, plus some nice extras such as two weeks in Europe a year and the ability to run a car. If you want something more luxurious, this data shows your pension is going to need to work much harder: a comfortable lifestyle is said to cost £43,900 per year for a single person and £60,600 for a couple. Read more: What is the Pension Investment Review? Before you throw your hands up in despair, it's fair to say that while these figures provide a useful rule of thumb, they aren't hard and fast. Our own data from the HL Savings and Resilience Barometer put the costs slightly lower. A moderate retirement for a single person was pegged at £26,129 per year and a comfortable retirement at £41,829. The key thing is to think about what retirement means for you – is it lots of travelling or something more sedate? You may find that what you need differs massively from these figures. Once you've got an idea of what you want, you can start to put a figure on what that might cost. It's important to factor in all costs. The PLSA data assumes you own your home in retirement, and this is no longer the case for many people. So, if this is you, you will also need to factor mortgage or rental costs into your plan. You can then use online calculators to see if what you've got in your pension will get you where you need to be. Putting your data in an online calculator can show you what you are on track for in retirement. This will either give you the confidence of knowing you've got enough, or the time to put a plan in place if you haven't. Read more: Should people keep working until later in life? They can even be used to model the impact of boosting your contributions over time, so you can see how much small changes can help you move towards your retirement goal. Boosting contributions every time you get a pay rise can also make a big difference and it's also worth checking to see if your employer is willing to increase their contributions if you increase yours. This is known as an employer match and can play a big part in boosting your pension. The data shows that coupled up retirees have a slightly easier time of things than their single friends. This is because they share a lot of costs and will have the benefit of two state pensions and two workplace or personal pensions. This is a big help, but it's important not to rely too heavily on a partner's pension to see you through retirement. Relationships may not last and there's a worry that you could find yourself approaching retirement with very little. It's always important to make your own provision – even if you stay together having your own income will give you more control over how you spend your money in retirement. Read more: How getting ahead on your tax return can help cut your tax bill Why it's important to plan for retirement with your partner How to plan for retirement and track your pension pot incomeSign in to access your portfolio
Yahoo
10-06-2025
- Business
- Yahoo
How far will your pension go as retirement costs go up
The cost of retirement continues to creep up, with the Pensions and Lifetime Savings Association (PLSA) recently putting the cost of a moderate retirement at £31,700 per year for a single person and £43,900 per year for a couple. This includes the state pension, but shows how much heavy lifting our workplace or personal pensions need to do to fill the gap. This is hardly going to buy you a luxury lifestyle either – a moderate lifestyle covers all your basics, plus some nice extras such as two weeks in Europe a year and the ability to run a car. If you want something more luxurious, this data shows your pension is going to need to work much harder: a comfortable lifestyle is said to cost £43,900 per year for a single person and £60,600 for a couple. Read more: What is the Pension Investment Review? Before you throw your hands up in despair, it's fair to say that while these figures provide a useful rule of thumb, they aren't hard and fast. Our own data from the HL Savings and Resilience Barometer put the costs slightly lower. A moderate retirement for a single person was pegged at £26,129 per year and a comfortable retirement at £41,829. The key thing is to think about what retirement means for you – is it lots of travelling or something more sedate? You may find that what you need differs massively from these figures. Once you've got an idea of what you want, you can start to put a figure on what that might cost. It's important to factor in all costs. The PLSA data assumes you own your home in retirement, and this is no longer the case for many people. So, if this is you, you will also need to factor mortgage or rental costs into your plan. You can then use online calculators to see if what you've got in your pension will get you where you need to be. Putting your data in an online calculator can show you what you are on track for in retirement. This will either give you the confidence of knowing you've got enough, or the time to put a plan in place if you haven't. Read more: Should people keep working until later in life? They can even be used to model the impact of boosting your contributions over time, so you can see how much small changes can help you move towards your retirement goal. Boosting contributions every time you get a pay rise can also make a big difference and it's also worth checking to see if your employer is willing to increase their contributions if you increase yours. This is known as an employer match and can play a big part in boosting your pension. The data shows that coupled up retirees have a slightly easier time of things than their single friends. This is because they share a lot of costs and will have the benefit of two state pensions and two workplace or personal pensions. This is a big help, but it's important not to rely too heavily on a partner's pension to see you through retirement. Relationships may not last and there's a worry that you could find yourself approaching retirement with very little. It's always important to make your own provision – even if you stay together having your own income will give you more control over how you spend your money in retirement. Read more: How getting ahead on your tax return can help cut your tax bill Why it's important to plan for retirement with your partner How to plan for retirement and track your pension pot income
