There is no right or wrong answer to this question as much depends upon individual lifestyle, where you live, whether single or a couple, whether you have dependants to support and health considerations.
In 2019 the Pensions and Lifetime Savings Association (PLSA) offered a guide to retirement savers by undertaking research, with Loughborough University, which considered the cost of living in retirement throughout the UK . The findings identified three standards of living:-
Allowing for inflation, we have set out below the current net of tax annual income required to meet these standards of living:
|Standard||Single Person (per annum)||Couple (per annum)|
Those living in London and the South East may expect to need between 15% and 25% more, reflecting higher living costs.
Everyone is different and the lifestyle enjoyed while working may determine individual expectations of retirement. While it can be hard to envisage what one’s older self will want out of retirement, planning for it is the best way to retain as much choice as possible.
250 retired people from all over the UK, interviewed as part of this research, emphasised the importance of peace of mind in retirement and not having to worry about money as a key requirement.
For many people the State pension will provide some income. The full state pension is now £9,339 per year. To get this from State pension age an individual needs 35 years of national insurance (NI) payments after 2016.
For those paying NI or earning credits before 2016, the State pension could be more, or less than the full state pension, depending on their personal NI record. Getting a forecast of your State pension is essential. https://www.gov.uk/check-state-pension
The State pension alone is unlikely to meet the minimum retirement living standard and it doesn’t start till age 66 (67 from 2028), private savings to bridge the income gap are essential.
How much to save?
Working out how much to save to provide the desired retirement lifestyle is not straightforward as several factors will influence this: -
All this can seem overwhelming and it is easy to give in to the temptation to put off saving for another day. The best way to avoid this trap is to break down the task into easy steps.
You can access our help with this as an individual, or through our Workplace Advice Service. We can take you through these steps to get your retirement planning underway and to provide an ongoing review.
To find out more about how we can help you achieve your retirement goals, please use the live chat facility, email firstname.lastname@example.org or call 0800 055 6585 or speak to your usual LEBC contact.
Public Policy Director
 Pension and Lifetime Savings Association – Retirement Living Standards https://www.retirementlivingstandards.org.uk/
The information contained in this article is based on the opinion of LEBC Group Ltd and does not constitute financial advice or a recommendation to any investment strategy, you should seek independent financial advice before embarking on any course of action.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.
When investing your capital is at risk.