Pensioners are feeling the pressure of the rising cost of living – as a retired person who wants a moderate lifestlye needs an extra £8,000 a year to get by.
The cost of a moderate retirement has increased from £23,000 a year to £31,300 a year for a single person, while couples need £43,100, up from £34,000 last year, according to new data.
Even a single pensioner happy to have a minimum standard of living has seen their costs increase from £12,800 a year to £14,400 a year, according to updated figures from the Pensioner and Lifetime Savings Association. Couples have seen their costs go up from £19,900 to £22,400.
Nigel Peaple, director policy and advocacy at PLSA, said: “The cost of living has put enormous pressure on household finances over the last year and, as the research shows, this is no different for retirees.
“It’s important for workers saving for retirement to remember the standards are not prescriptive targets, they are a tool to help you engage with the type of spending you think you will do in retirement and to help you plan for it.
“It is also worth highlighting that a couple who each has a full entitlement to the state pension will achieve the minimum level, and if each is paid average earnings throughout their working life, they have a good chance of enjoying many aspects of the moderate living standard.”
For those who want a comfortable retirement, costs for a single person have gone up from £37,300 a year to £43,100, while couples have seen their costs increase from £54,500 to £59,000.
Pete Glancy, head of Pensions Policy at Scottish Widows, urged pension savers to think about the implications of the figures for their retirement.
He said: “Securing a guaranteed annual income of £23,300 for life would require a pension pot of about £500,000. However, securing an income of £31,300 requires a pension pot of over £750,000.
“The overall change in the forecast is largely due to an increase in people’s outgoings, including general cost of living pressures, the rise in the number of people carrying mortgages into or renting in retirement, and for those it’s the increased cost of renting due to the national shortage of housing.
“This highlights the urgency for the Government to establish a Retirement Commission, to look at all of the aspects of retirement planning in the round.”
State pension payments are increasing 8.5 percent in April, with the full new state pension going up from £203.85 a week to £221.20 a week.
The full basic state pension is going up from £156.20 a week to £169.50 a week. A person can check their entitlement using the state pension forecast tool on the Government website.
Professor Matt Padley, co-director of the Centre for Research in Social Policy at Loughborough University, said: “In this year’s findings, we see the strong effects of rising prices in what’s needed to meet the cost of food and energy.
“Following the Covid pandemic, this latest research highlights a pronounced need and enthusiasm among the public for shared experiences beyond the confines of their homes, including activities like eating out and holidays.”
For the latest personal finance news, follow us on Twitter at @ExpressMoney_.
