Financial experts warn that too few of us are saving enough money to fund a ‘moderate’ retirement and can look forward to counting the pennies just to pay the basic bills.
Even most high earners face a financial wake-up call, as only one in six savers will have enough cash to pay for a comfortable lifestyle after giving up work.
Table of contents
Studies based on data published by the Pensions and Lifetime Savings Association (PLSA) detail what singles and couples with different levels of savings and pensions can look forward to when they retire.
And for most, the outlook is shocking.
The study found half of us live for the moment and focus our spending on what we need now. Only one in four of us knows how much money we will need to maintain our lifestyle in retirement.
The research sets three standards:
- Minimum – A single person needs £12,900 a year and a couple £19,900 to provide enough income to cover basic needs with a little left over for fun. Uk holidays and eating out once a month are affordable. Roughly 75 per cent of workers will achieve this.
- Moderate – £23,300 for a single and £34,000 for a couple gives more financial security and flexibility. A European holiday and eating out regularly are affordable. About half of workers can achieve this level.
- Comfortable – For those who want financial freedom and a little more luxury. Singles need £37,300 a year and a couple £54,400. You can afford TV and music streaming services and two European holidays a year – but only one in six can afford this level of spending.
Only some of the cash needs to come from savings. For instance, the full State Pension provides £10,600 a year, and many will enhance the state pension with a works or private scheme.
However, it’s important to note that the standards do not include rent or other housing costs, such as a mortgage. The figures are also UK averages, so London and the South East retirees should expect to pay more than others.
What A Single Lifestyle Looks Like In Retirement
| MINIMUM | MODERATE | COMFORTABLE | |
| Annual Income | £12,800 a year | £23,300 a year | £37,300 a year |
| HOUSE | DIY maintenance and decorating one room each year | Some help with maintenance and decorating each year | Replace kitchen and bathroom every 10/15 years |
| FOOD | £54 a week on food, including eating out | £74 a week on food, including eating out | £144 a week on food, including eating out |
| TRANSPORT | No car | Buying a 3-year-old car replaced every 10 years | Buying a 2-year-old car replaced every 5 years |
| HOLIDAYS & LEISURE | A week and a long weekend away in the UK each year | 2 weeks in Europe and a long weekend in the UK away each year | 3 weeks away in Europe each year |
| CLOTHING & PERSONAL | Up to £580 for clothing and footwear each year | Up to £791 for clothing and footwear each year | Up to £1,500 for clothing and footwear each year |
| GIFTS | £20 for each birthday present | £34 for each birthday present | £56 for each birthday present |
What A Couple’s Lifestyle Looks Like In Retirement
| MINIMUM | MODERATE | COMFORTABLE | |
| ANNUAL INCOME | £19,900 a year | £34,000 a year | £54,500 a year |
| HOUSE | DIY maintenance and decorating one room a year | Some help with maintenance and decorating each year | Replace kitchen and bathroom every 10-15 years |
| FOOD | £96 a week on food, including eating out | £127 a week on food, including eating out | £238 a week on food, including eating out |
| TRANSPORT | No car | 3-year old car replaced every 10 years | Two cars, each replaced every five years |
| HOLIDAYS & LEISURE | A week and a long weekend in the UK every year | 2 weeks in Europe and a long weekend in the UK away each year | 3 weeks away in Europe each year |
| CLOTHING & PERSONAL | £460 per person for clothing and footwear each year | £791 per person for clothing and footwear each year | Up to £1,300 per person for clothing and footwear each year |
| GIFTS | £20 for each birthday present | £34 for each birthday present | £56 for each birthday present |
How big is the average UK pension pot?
Numbers published by the Office for National Statistics reveal the size of average pension pots grouped by age. Because the figures are averages, inevitably, some people have smaller or larger pots.
| 16-24 | £2,700 |
| 25-34 | £9,300 |
| 35-44 | £30,000 |
| 45-54 | £75,500 |
| 55-64 | £107,300 |
What You Can Afford In Retirement FAQ
Figures published by the government for the year ending April 5, 2022, show the average pension income for a single person was £239 a week.
Figures published by the government for the year ending April 5, 2022, show the average pension income for a couple was £515 a week.
With the government’s online State Pension Checker, expats can check how much state pension they will get and when the first payment is due.
An all-party parliamentary group of MPS has published a map showing where the expat state pension is frozen at the level of the first payment.
Related Information
Below is a list of related articles you may find of interest.
