The "moderate" standard of living in retirement has increased by £8,000!

The Pensions and Lifetime saving Association (PLSA) has reported a significant increase in the annual cost of enjoying a moderate standard of living in retirement. According to their findings, the yearly expense for a retirement income considered “moderate” for a single person has risen to £31,300 for 2023-2024, Up from £23,300 previously.

This surge is attributed to the escalating cost of living, including high food inflation and energy bills, coupled with heightened expectations about retirement lifestyle. The pandemic has fueled an increased desire for socialising expenditure among pensioners, highlighting a need for shared experiences beyond home confinement.

What does a “moderate” level of retirement look like?

Please note these figures are just a guide and no exact

Single	Minimum	Moderate	Comfortable
What standard of living could you have?	It covers all you needs with some leftovers for fun	More financial security and flexibility	More financial freedom and some luxuries
House	DIY £100 year to maintain the condition of your property	Some help with maintenance and decorating each year.	Replace kitchen and bathroom every 10/15 years.
Food	Around £50 a week on groceries, £25 a month on food out of the home, £15 per fortnight on takeaways.	Around £55 a week on groceries, £30 a week on food out of the home, £10 a week on takeaways, £100 a month to take others out for a monthly meal.	Around £70 a week on food, £40 a week on food out of the home, £20 a week on takeaways, £100 a month to take others out for a monthly meal.
Transport	No car, £10 per week on taxis, £100 per year on rail fares.	3-year-old small car, replaced every 7 years, £20 a month on taxis, £100 per year on rail fares.	3-year-old small car, replaced every 5 years, £20 a month on taxis, £200 per year on rail fares.
Holiday & Leisure	A week-long UK holiday. Basic TV and broadband plus a streaming service.	A fortnight 3* all-inclusive holiday in the Med and a long weekend break in the UK. Basic TV and broadband plus two streaming services.	A fortnight 4* holiday in the Med with spending money and 3 long weekend breaks in the UK. Extensive bundled broadband and TV subscriptions.
Clothing & Personal	Up to £630 for clothing and footwear each year.	Up to £1,500 for clothing and footwear each year.	Up to £1,500 for clothing and footwear each year.
Helping Others	£20 for each birthday and Xmas present. £50 a year charity donation.	£30 for each birthday and Xmas present, £200 a year charity donation, £1,000 for supporting family members e.g. paying for grandchildren's activities.	£50 for each birthday and Xmas present, £25 per month charity donation, £1,000 family support.

While costs have also risen for a “comfortable” retirement, the increase is less steep due to adjustments in lifestyle expectations. For Instance, research suggests that a couple may need only one small second-hand car instead of two, as previously assumed for retirement comfort.

Professor Matt Padley, co-director of the Center for Research in Social Policy at Loughborough University, notes the pronounced enthusiasm for activities like dining out and holidays post-COVID.

Moreover, a “minimum” retirement standard, as determined by the research, necessitates a single person to save an average of £14,400 annually, up from “12,800 previously. This standard includes essentials like groceries, UK holidays, occasional dining out, and affordable leisure activities.

For couples aspiring to achieve a “moderate” retirement, the required annual savings have increased to £43,100, up from £34,000 the previous year. This standard entails weekly groceries, dining out, a small second-hand car, and holidaying both in Europe and the UK.

Those aiming for a “comfortable” retirement, which includes additional luxuries like beauty treatments and theatre trips, need to set aside £43,100 annually for a single person (up from 37,300) or £59,000 for a couple (up from £54,500).

The State pension remains a substantial foundation of retirement income, with the forthcoming 8.5% increase expected to provide a boost. This increase, slated for April, will bring the state pension to just over £11,500 per year, aiding median average earners in achieving aspects of the moderate retirement level.

If you're seeking guidance with retirement planning or have uncertainties regarding your pension, don't hesitate to reach out to us today. Our team of highly skilled advisers is here to provide expert assistance tailored to your specific needs.

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*The above is for information only and does not constitute to financial advice.

**The retirement living standards are calculated by the Centre for Research in Social Policy at Loughborough University on behalf of the PLSA.

***The figures included are just a guide the exact amount needed to retire will depend on individual circumstances.