Today, the unofficial official estimates for how much you need in retirement have been updated, otherwise known as the Retirement Living Standards…
These are estimates for how much you would spend in retirement (so how much you need after tax on your income). They’re put together by the Lifetime Savings Association, together with Loughborough University.
Surprisingly, the minimum amount you need has been reduced by £1,000 to £13,400 per year.
The minimum you need covers the very basics, such as food and bills, and the energy bills estimate has been reduced, therefore reducing the overall figure. Although we’re still a bit skeptical, bills have dropped by that much.
It’s not good news for those wanting a better than minimum quality of life however. With both a moderate standard of living and a comfortable standard of living increasing, this is because everything else has got more expensive. Sigh.
For one person:
For two people:
Here’s the definitions for each standard:
Minimum: this is everything you need to live, such as food and energy bills, with a small bit left to spend on yourself. There’s no budget for a car or holiday abroad.
Moderate: this covers all your essentials but with a little bit extra, such as a holiday in Europe and more per year for clothes. You should be able to run an old small car.
Comfortable: this is the budget to live comfortably (but not the high life). There’s around £75 per week for food, and a bit more for maintenance around the home. There’s also a bit more to spend on yourself, such as a 4* holiday abroad.
By the way, this does not include any housing costs, so you’ll need to add those on too if you think you’ll have them (like a mortgage or rent).
You might have noticed that the minimum standard is higher than the State Pension (what you’ll get from the government in retirement if you’ve paid enough National Insurance contributions over the years (10 years for the minimum, and 35 years for the maximum). Which is £11,973 per year.
This highlights the need for your own pension alongside the State Pension, it’s super important, even just to get by, and especially for a moderate-to-comfortable retirement.
To get a more personalised estimate of how much you might earn in retirement based on your pension pot, and how much pension pot you might need, head over to our pension calculator.
And if you aren’t saving for your own pension yet, don’t delay. Here’s where to compare pension providers to set up one easily.
To learn more about the Retirement Living Standards, head over to the Retirement Living Standards website.
