A “moderate” retirement lifestyle now costs £32,700 a year for a one-person household, according to Pensions UK’s latest retirement income standards.
The figures show that a minimum retirement lifestyle costs £13,900 a year for a one-person household and £22,500 for a two-person household.
A moderate lifestyle costs £32,700 for one person and £45,400 for two, while a comfortable lifestyle costs £45,400 and £62,700 respectively.
The standards are intended as a guide to help people consider how much they may need in retirement. They do not include housing costs.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “These retirement living standards are important in that they start the conversation around how much you need to live on in retirement. For some people, it will be less than the standards suggest, for others it will be more.
“The key is to make sure that people don’t get a nasty shock as they come to retirement and need to make significant cuts to their lifestyle. The HL Savings and Resilience Barometer uses target replacement rates to assess whether people are on track for an adequate retirement income, with the latest results showing 43% of households are on course to do that.
“It shows the importance of engaging with your pension early. The recent Pension Commission has highlighted that we are undersaving and Pension UK’s own figures estimate only 23% are on track to hit the moderate retirement income they have suggested.
“It’s clear more needs to be done to boost how much we are putting into our pensions.
“Getting people to think about what they want their retirement to look like is key to helping them work out how much they will need. Using tools such as online pension calculators can then help people work out what they are currently on track to receive and, if they have fallen behind, they can put a plan in place.
“Taking steps to increase your contribution with every payrise, or making the most of the employer contribution, could be a gamechanger in terms of boosting how much goes in.
“It’s also important to note that these living standards assume that people enter retirement as homeowners – however, we know that more people are entering their retirement years with a mortgage or rent still to pay, and this significantly hikes the amount they will need to save.
“In recent years, the wording around the standards has been tweaked so that it covers one and two person households rather than single and couples. This reflects the fact that not everyone will have a partner or be married in retirement but could live with others – be it friends, family members or lodgers.
“It’s a shift we could see more of as time goes on, as people go into retirement still paying housing costs or have loved ones living with them while they save for a deposit for their own home.”
