The cost of a moderate retirement in the UK has risen again, according to the latest Retirement Living Standards published by the Pensions and Lifetime Savings Association (PLSA).

The figures show that while the minimum standard has fallen slightly, a more comfortable or moderate lifestyle in later life will now require more savings than a year ago.

A single person now needs £31,700 per year to sustain a moderate retirement, up from £31,300 in 2024. Couples require £43,900, an increase of £800 from the previous estimate. For those aiming for a more comfortable lifestyle, the bar has risen further: a single person would need £43,900 annually, while a couple would need £60,600 – a rise of £1,600.

In contrast, the minimum retirement standard has decreased. A single-person household now needs £13,400 per year, down £1,000 from last year. For a two-person household, the minimum cost has dropped by £800 to £21,600.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said the increases, though smaller than in previous years, still reflect mounting pressure on retirement income. “The cost of a minimum and comfortable retirement lifestyle continues to increase – albeit at a slower rate than it did previously,” she said.

Morrissey noted that even a moderate lifestyle – covering essentials along with limited discretionary spending such as a fortnight in Europe and car ownership – demands substantial pension savings beyond the state pension, which currently pays £11,975 a year. “This is hardly going to buy you a luxury lifestyle,” she added.

Hargreaves Lansdown’s own research, via its Savings and Resilience Barometer, puts the costs slightly lower. It estimates a moderate retirement at £26,129 per year for a single person, while a comfortable retirement is pegged at £41,829. Nonetheless, the findings from both sources emphasise a similar message: the state pension alone is not sufficient to secure financial security in retirement.

COUPLES BENEFIT

The analysis also reinforces the financial advantage of retiring as part of a couple. Dual receipt of the full state pension and shared household costs make achieving a comfortable standard significantly easier. Single retirees face a higher burden, both in saving and in meeting ongoing costs.

One group facing particular challenges are renters, whose housing costs are not included in the PLSA’s calculations. “Renters will struggle,” Morrissey said. “The latest data from HL’s Savings and Resilience Barometer shows only 15.5% of renting households are on track for a moderate retirement income. This compares to 47% of households that own their home outright.”

The findings underline the critical importance of workplace pensions and individual savings. Morrissey encouraged savers to use online tools to assess their progress and make adjustments where necessary. “Making small actions such as increasing your contributions every time you get a pay rise or maximising your employer contribution can make an enormous difference,” she said.

The PLSA’s Retirement Living Standards are intended to offer a clear benchmark for savers, but Morrissey cautioned against over-reliance on generalised targets. “The key thing is to think about what retirement means for you,” she said. “Once you’ve got an idea of what you want then you can start to put a figure on what that might cost.”