Latest news with #PensionsandLifetimeSavingsAssociation
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.
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.
Scotsman
3 days ago
- Business
- Scotsman
Manage your finances to sail serenely into retirement
Sailing into retirement | Flamingo Images - From 7 April this year, the full State Pension was boosted by an inflation-busting 4.1 per cent to £230.25 per week. That's £11,973 per annum at age 66 for those who qualify. Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The increase is appreciated, but this level of income may not be adequate to fund a decent standard of living in retirement. And yet, according to 2024 research conducted by Aegon, more than 95 per cent of UK retirees claim to rely heavily on their State Pension income – a sobering thought. HOW MUCH RETIREMENT INCOME WILL YOU NEED? The answer is clearly much more than the State Pension, but how much more? The good news is that we are near the start of the financial tax year, which means annual investment tax relief allowances are available again. Especially those designed to boost your retirement pot, where you can invest up to £60,000 this tax year and claim tax relief at your highest marginal rate. So this is the perfect time to ask yourself that crucial retirement income question, but can you provide an accurate answer? According to research by the Pensions and Lifetime Savings Association only 23 per cent of people in the UK are confident that they know how much they need to save to provide them with the retirement lifestyle they desire. If your financial planner has invested in a cash flow modelling system, then this isn't a problem as they can provide you with all the guidance you need. This modelling can help you accurately calculate the cost of funding your chosen retirement income. This calculation is vital. It helps you create a detailed and accurate financial plan which allows you to best use your current income and growing wealth both now and well into your retirement future. Such a system can also alert you to when remedial action needs to be taken to keep your plans on track. According to the Office for National Statistics, the average value of a private pension fund in the UK today is £81,000. Using the conservative 4.6 per cent yield that Aegon used in their 2024 research, that would add just £3,726 to the State Pension raising the annual retirement income to £15,699. That is just 36 per cent of the £43,100 level which is described as 'comfortable ' by the Pensions and Lifetime Savings Association. Its definition of a comfortable retirement lifestyle is one where your annual holidays would consist of one two-week Mediterranean trip plus three long UK weekend breaks, and the ability to afford to replace a car every five years. It would represent a retirement income that is just £5,670 a year more than the 2024 UK average salary of £37, you will need to get your sums right now to better that level. But, without access to a cash flow model, how can you accurately calculate the pension pot size you will need to achieve your retirement income objectives? Why not keep your retirement income target simple and aim for, say, double the Pension and Lifetime Savings Association's comfortable lifestyle level?That would equate to an annual retirement income of £86,200, including your full State Pension. It would immediately take you high into the top 10 per cent of income earners in the UK, and would certainly fund a more 'luxurious' lifestyle in retirement. Sean Lowson | Supplied BUT CAN YOU AFFORD IT? According to the same 2024 Aegon research, a pension pot of about £250,000 would be needed to provide you with just the same level of income as the State Pension for that year, £11,500 (based on an annuity escalating with inflation). An annuity may not be the best solution for everyone, and you should certainly discuss all your alternative retirement options with your financial planner before making any said, this is still a useful rule of thumb to provide you with a simplified formula to help you estimate the fund value you might need. Assuming receipt of the full State Pension provision of £11,973, you would need an additional retirement pot of around £1.6 million to reach a retirement income of £86,200 per annum, rising with inflation. This formula is obviously a very much simplified calculation, but without such ball-park estimates you cannot gauge whether your current retirement dreams are fact or fiction. As global trade tariff uncertainty and conflicts rage on, further investment fluctuation is inevitable. There is also the possibility that future budgets may see Chancellor Rachel Reeves tinkering with some of the significant tax relief benefits your pension currently enjoys. So, it is clearly vital to get your retirement plan on a realistic track now, and a financial planner providing you with access to cash flow modelling would certainly make your task much easier.
Yahoo
22-05-2025
- Business
- Yahoo
State pension boost: check eligibility and top up your NI
As a guaranteed income that rises every year, the state pension is a staple part of most retirees' budgets. Around 12.6 million people now receive it and many depend on the money to see them through their golden years. The Pensions and Lifetime Savings Association puts the cost of a 'minimum' no-frills retirement at £14,400 for a single person and £22,400 for a couple. If you're single, this year's full new state pension will get you 80pc of the way there, and if you're a couple and both claim, you'll pass the threshold comfortably. Only around half of people receive the full new state pension, and for the old state pension, the proportion is only 74pc. Luckily, it's just become easier to 'top up' what you receive. Here, Telegraph Money runs you through how to boost your state pension payments, and how much it will cost you. This guide will cover: How to top up your state pension through voluntary contributions Can you get a top up on your state pension? What are voluntary National Insurance contributions? Who is eligible? How much does it cost? How much will you get? When should you consider a state pension top up? Here's how to top up your pension step-by-step. Check your National Insurance record. The easiest way to do this is online, but you can ask for a statement by phone or by post. This will allow you to identify any gaps. Check your state pension forecast to see how much you're currently on track to get, and when you'll get it. The Future Pension Centre can also help you work out whether making voluntary payments will increase your state pension – because sometimes it doesn't. For example, if you contracted out the additional state pension or 'Serps' scheme, there will be a point where no extra contributions can be made, as you'll already have reached the 'flat rate' of pay available. Check if you're eligible for National Insurance credits before making any payments. You may be able to top up years without making a payment, particularly if you weren't working due to being a carer or were looking after children. If you've worked out that you do have gaps and decide it's worth making a voluntary contribution, you'll need to make the payment. If you're a worker, you can now do this online or via the HMRC app using the 'Check your State Pension forecast' service – note that you'll need to login using a government gateway account. You can also use this service from abroad, but only for years you were resident in the UK. If you're self-employed, already receive the state pension or live abroad and want to make payments for those other years, you will still need to call HMRC. The deadline to top up your state pension to 2006 has now passed. Since April 2025, you are only able to top up your state pension for the previous six years. The amount of state pension you receive depends on a few factors, including when you reach or reached state pension age and, chiefly, how many full years of National Insurance contributions (NICs) you've made by the time you reach it. The new state pension is for men born on or after April 6 1951 and women born on or after April 6 1953. To qualify for any payment at all you will need at least 10 years of NICs and to get the full amount, you need 35 years of NI payments. Although most people work for at least 35 years, many don't. There are various reasons why you might not get 35 qualifying years. For example, you might have been: a low earner who did not pay NICs; out of work and not claiming benefits; self-employed with low profits; working part-time or living abroad. Any of these situations can create gaps in your National Insurance record – and could mean you get a lower state pension as a result. National Insurance pays for a number of different state benefits, including the state pension. The table below gives more details. Voluntary NICs are a payment from you to the Government to top up missing years of NICs. By adding enough to complete a year, you could add up to £342 to your annual state pension income. This will be paid as long as you live. To benefit from this, you need to top up your contributions to a full year – partial years don't get you anything. However, if you have already made partial payments during a given year, it wouldn't cost you a full year's contributions to top it up to a full year. The actual amount could be anything from one week's contribution to the full 52. You can also keep adding more completed years up to the maximum of 35, which would take you to the full state pension. However, there are limits, and topping up won't always increase your income. For instance, if you reach 35 years of contributions anyway, topping up any previous incomplete years won't make any difference. There are also pension credits to consider – more on that later. Whether you can top up, and how far you can go back to fill any gaps, depends on your circumstances, but you are able to top up any gaps from the last six years. You can't usually top up if you don't have any gaps during these years. There are also restrictions if you're a married woman or widow paying reduced rate National Insurance. The way you need to top up, and how much, also varies depending which class of NICs you pay. The different classes of NI are detailed in the table below. You can still top up your state pension even if you've reached state pension age and started claiming it. However, you're subject to the same limits of which years you can top up and the payment only starts from when you make a payment – you can't backdate it. If you live abroad, or you used to, you may be able to pay voluntary Class 2 or 3 contributions if you either previously lived in the UK for three years in a row or paid at least three years of NICs. You should contact HMRC if this applies to you. For the 2025-26 tax year, the cost per week is £3.50 for Class 2 contributions, and £17.75 for Class 3. For previous gaps in your record, the amount you'll pay depends on the year – as shown in the tables below. Each year completed will boost your state pension by £6.58 a week, or £342 a year. These top-ups could pay for themselves – assuming you live long enough. Sarah Pennells, of Royal London, said: 'Assuming a man would live for 17.3 years after he received his state pension at 66, based on the ONS longevity data and assuming no rise in the state pension in that time, he would receive over £5,600 extra in payments, whereas a woman would receive over £6,500 extra, assuming she lived for 19.8 years after state pension age.' This is likely to be even higher, given the state pension is protected by the triple lock guarantee, which means it rises by the highest of inflation, wages or 2.5pc. Deciding whether to pay for voluntary NICs is an important decision, particularly because there's no automatic right to a refund if you change your mind. It can also be a gamble because you might pay out more than you actually get back in extra state pension payments. One situation where it's usually worth it is when you're nearing state pension age and you know you're not going to get enough qualifying years. Rob Morgan, of wealth managers Charles Stanley, said: 'If you only have a few years to go, and you are not going to reach a full entitlement, then it makes sense to consider paying to fill in the blanks. Those that have already reached state pension age and have found they have missing years can also benefit. 'A modest outlay could boost a state pension income by hundreds, and in some cases thousands of pounds, a year. It potentially represents a far better rate of return than any other way of using savings.' In some cases, it could even be a very small amount to top up a particular year – as little as a single week. Mr Morgan continued: 'Look out for years where you have worked part-time or for only part of the year. In these circumstances you may have paid NI, but not quite enough to obtain a year's credit. 'Building your record for the state pension is binary, you either accrue a year or you don't, and where you have been close to attaining one for a particular year it may be possible to pay a very small amount of money to top that year up. 'There are several pitfalls though, not least because the state pension rules have changed over the years and led to a system that can be fiendishly complicated. Don't rely on information you have heard down the pub. Everyone's NI record is different and what applies to someone else might not necessarily apply to you.' If you are successful in boosting your state pension payments, you'll need to think about how the increased income affects your financial position. First of all, if you already pay tax on your income, you'll pay it on any state pension increase, too. The extra money may even push you into the next tax bracket, or mean you pay tax when you didn't before, which could affect your calculations. If topping up your NICs does increase your income, this could also affect your eligibility for pension credit if you claim it, along with other benefits you receive. You should factor this into your decision carefully, as it may end up costing you money overall. Another factor is your life expectancy. If you top up an entire year, you'd need to live for almost three after reaching state pension age to make back your money. Mr Morgan said: 'Whether it is worth paying for top-ups does hinge on life expectancy, but you don't have to live very long beyond state pension age for it to be highly beneficial. It is almost always worth considering if you're close to state pension age and you know you won't be able to get the qualifying years you need to get the full amount.' However, Ms Pennells added: 'If you have a health condition that's severely life-limiting, you may not live long enough to see a return on your investment.' Have you topped up your NI record and enjoyed a pension boost as a result? Let us know! Email money@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
