The Pension and Lifetime Savings Association (PLSA) recently updated their Retirement Living Standards benchmarks. The standards outline what the cost of living may be per year at retirement, across three different levels of lifestyle requirements.
They also show what the cost of a host of common expenses might be, ranging from basics like food and transport to holidays and household renovations.
Additionally, the standards break down the cost of living for both single-person households and two-person households. Most people (70%) retire as part of a two-person household, allowing them to share the costs of living.
Let’s explore the categories…
Minimum standard lifestyle
- Single-person household: £13,400 per year
- Two-person household: £21,600 per year
The Minimum standard lifestyle covers all your basic needs – with some left over for fun. That could include things like a self-catering or half-board holiday in the UK, dining out once a month, and some more affordable leisure activities 1-2 times a week.
Household bills are covered with around £200 annually for DIY, decor, and house maintenance.
For transport, you could afford around £180 a year for train journeys using a senior rail card. Plus, you could use a free bus pass for most journeys or spend around £30 per month on taxis.
With a minimum standard lifestyle, you could budget approximately £450 per year to spend on clothes and shoes. As well as £30 every eight weeks for hair appointments.
For most people, their private and State Pension (which is currently £11,973 per year) could go a long way to paying for expenses on a minimum standard of living.
Moderate standard lifestyle
- Single-person household: £31,700 per year
- Two-person household: £43,900 per year
A moderate standard lifestyle gives more flexibility than the minimum standard, allowing for things like an annual holiday abroad and a long weekend stay in the UK. Plus, a takeaway a week and eating out a couple times a month.
Household needs like boiler servicing are covered, plus budget for around £800 per year for decorating and maintenance.
Unlike the minimum standard, you could afford one car per household plus £22 per month for taxi journeys.
Basic tv and broadband are budgeted for in this category, plus two streaming services. As well as other weekly activities like visiting the cinema and swimming.
The clothing budget jumps up considerably in the moderate standard, allowing for around £1,550 per year and around £150 for hair and beauty appointments every six weeks.
Comfortable standard lifestyle
- Single-person household: £43,900 per year
- Two-person household: £60,600 per year
The comfortable standard allows for more spontaneity with extra-long weeks away in the UK, day trips, two weeks abroad and more allowance for dining out and socialising.
Boiler servicing is covered and there’s budget for £900 per year for decorating and household maintenance. You could also account for occasional professional help with gardening and deep cleaning.
Similarly to a moderate standard, you could afford one car per household plus £22 per month for taxi journeys. Plus, £1,550 per year and around £160 for hair and beauty appointments every six weeks.
Find what suits you best
Everyone has a different view of what the ‘ideal’ living standard is, as well as different financial circumstances. The standards are there to give a rough guide as to what your cost of living might look like at retirement, and how much you’ll need to set aside for it.
You may feel that your ‘ideal’ retirement includes a bit of everything from each standard – find what feels right for you and start working towards it.
The best time to start saving for retirement is right now. You could choose to use a personal pension, like the Moneybox Pension, alongside your workplace pension to get you closer to your ideal retirement.
With a Moneybox Pension, you can:
- Get a 25% bonus from the government on everything you add to your pension – for free!
- Find and combine your old workplace pensions into one easy-to-manage pension
- Choose where your money is invested
Start working towards your ideal retirement today.
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