It can be difficult to understand what funds you’ll need to finance the retirement you dream about and how this compares to your projected pension income, when planning for retirement. It’s even harder to keep track when the cost of living is spiralling.

Setting standards

The Pensions and Lifetime Savings Association (PLSA) developed its Retirement Living Standards 1 to help us picture what kind of lifestyle we could have when planning for retirement, at different levels and what a range of common goods and services would cost for each level.

The cost of a Minimum lifestyle for a single person has increased from £10,900 in 2021 to £12,800 in 2022, a rise of 18%. For a couple, an income of £16,700 required in 2021 rose to £19,900 (19% increase). Costs factored into this lifestyle include – £96 for a couple’s weekly food shop, eating out about once a month, a week’s annual holiday in the UK and some affordable leisure activities about twice a week. But there is no budget to run a car. These factors are important to consider when planning for retirement.

Want more than the minimum?

If you are planning for retirement and want more than the minimum it’s important to know that at the Comfortable Retirement Living Standard, retirees can expect more luxuries like regular beauty treatments, three weeks’ holiday in Europe each year and theatre trips. The weekly food shop for a couple in this lifestyle amounts to £238. At this level, the cost of living increased 11% to £37,300 for one person and 10% to £54,500 for a two-person household.

How much do I need to save?

When planning for retirement, it’s good to know that for a comfortable retirement PLSA estimates that a couple who are both in receipt of the full new State Pension would need to accumulate a retirement pot of £328,000 each, based on an annuity rate of £6,200 per £100,000.

Your lifestyle, your choice

If you’re concerned about planning for retirement, we can help you prepare for the lifestyle you want to enjoy. Planning for retirement involves visualising your goals for your retirement years and setting up a plan to help you achieve those goals through financial planning.

We are based in Eastbourne, East Sussex but work with clients all across the South East including Brighton, Lewes, Uckfield, Tunbridge Wells,  Newhaven, Seaford, Hastings, Bexhill, Crowborough and surrounding areas.

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¹ PLSA, 2023

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.

It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within the blog is for information purposes only and does not constitute financial advice.

The purpose of the blog is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.