The minimum amount someone needs in retirement has fallen, amid lower energy prices and people’s changing expectations, according to 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.
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 “fun”.
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 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, the report said. 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.
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% expect to be homeowners with a mortgage or loan and 8% expect to be renting from a private landlord.
Meanwhile, 7% expect to be renting from the council and 8% anticipate that they will be renting from a housing association. And 1% 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.”
More than 1,500 people were surveyed across the UK by Yonder in May for the consumer research. Here are the percentages of people who expect to own their home outright when they retire, without a mortgage, according to the PLSA:
- Scotland, 61%
- North East, 58%
- North West, 60%
- Yorkshire and the Humber, 54%
- West Midlands, 61%
- East Midlands, 58%
- Wales, 56%
- Eastern England, 66%
- London, 53%
- South East, 56%
- South West, 56%
- Northern Ireland, 68%
And here are some examples of what the PLSA’s different retirement living standards entail:
Minimum lifestyle (Enough for a feeling of financial security and to be able to take part in daily life):
Single person – A budget of £200 to spend on DIY per year; around £55 a week to spend on groceries, £30 a month to spend on food out of the home, £12 per month for takeaways; no car, but a bus pass and £30 per month for two taxi trips and £180 per year to cover three rail journeys. Enough money for a week-long UK holiday annually, a TV licence and broadband plus a streaming service with ads and £20 per week to spend on activities. Up to £450 for clothing and footwear and £20 for each birthday and Christmas present.
Two people – A £200-a-year budget to decorate and maintain the condition of your property. Around £109 a week to spend on groceries, £60 a month per couple on food out of the home, £24 a month per couple on takeaways.
No car, but a bus pass, £30 per month to cover two taxi trips, £180 per year per person to cover three rail fares.
Enough money for a week-long UK holiday. TV licence and broadband plus a streaming service with ads. £20 a week per person for activities.
Up to £450 for clothing and shoes per person. A budget of £20 per birthday and the same amount for Christmas presents.
Moderate lifestyle (More financial security and flexibility):
Single person – A budget of £500 a year to maintain condition of a property and a £300 contingency.
Around £56 a week to spend on groceries, £32 a week on food out of the home, £11 a week on takeaways, £106 a month to take others out for a monthly meal.
A three-year-old small car replaced every seven years, £22 a month for taxis, £104 per year on rail fares.
Enough money for a two-week three star all-inclusive holiday in the Mediterranean and a long weekend off peak break in the UK. TV licence and broadband plus two streaming services and £43 per week for activities. Up to £1,548 for clothing and footwear and £30 for each birthday and Christmas present, £200 a year to donate to charity, and £1,000 for supporting family members.
Two people – A £500 a year budget to maintain condition of your property, with a £300 contingency. Around £103 a week to spend on groceries, £63 a week per couple on food out of the home, £21 a week per couple on takeaways, £106 a month to take others out for a monthly meal.
A three-year-old small car replaced every seven years, £22 a month on taxis per household, £104 a year on rail fares per person.
A two-week three star all-inclusive holiday in the Mediterranean and a long weekend off-peak break in the UK with £321 spending money. TV licence and broadband plus two streaming services and £43 a week per person for activities.
Up to £1,548 for clothing and shoes per person. Gifts of £30 for each birthday and the same amount for Christmas presents, plus £200 per household a year for charity donations. £1,000 for supporting family members.
Comfortable lifestyle (More financial freedom and some luxuries):
Single person – A budget of £600 a year to maintain condition of your property, with a £300 contingency.
Around £75 a week to spend on food, £42 a week on food out of the home, £21 a week on takeaways, £106 a month to take others out for a monthly meal.
A three-year-old small car replaced every five years, £22 a month to spend on taxis, £208 per year on rail fares.
A two-week four star half board holiday in the Mediterranean with around £100 per person per day spending money and three long weekend breaks in the UK with £400 spending money per break. Extensive bundled broadband, streaming and TV entertainment subscription plus £54 a week for activities.
Up to £1,548 for clothing and footwear each year.
A budget of £50 for each birthday and Christmas gift, a £300 per year charity donation, £1,000 for family support.
Two people – A budget of £600 a year to maintain the condition of the property, with a £300 contingency.
Around £134 a week to spend on food, £85 a week per couple on food out of the home, £32 a week per couple on takeaways, £105 a month to take others out for a monthly meal.
A three-year-old small car replaced every five years, £22 a month on taxis per household, £208 a year on rail fares per person.
A two-week four star half board holiday in the Mediterranean with around £100 per person per day spending money and three long weekend breaks in the UK with £400 spending money per break. Extensive bundled broadband, movie streaming and TV entertainment subscription and £54 a week per person for activities.
Up to £1,548 per person for clothing and shoes each year. A budget of £50 for each birthday and the same amount for Christmas presents, £300 per person per month for charity donations. £1,000 for supporting family members.
