Exact amount you need to retire - and it might be good news for many

The minimum amount required for in the UK has fallen due to lower prices and shifting expectations, according to recent calculations. The Pensions and Lifetime Savings Association (PLSA) sets three different retirement lifestyles - minimum, moderate, and comfortable, providing a general idea of the lifestyle one might expect in retirement.

The monetary amounts for each standard are regularly updated. This year, the cost of a minimum retirement living standard for a single-person household has dropped by £1,000 annually to £13,400, while for a two-person household, it stands at £21,600, down from £22,400 the previous year. The changes are primarily attributed to a significant decrease in energy costs and minor spending adjustments made to the living standard by research participants, the PLSA explained.

The minimum standard covers basic expenses, with some leftover funds for leisure activities.

Research discussion groups for the minimum standard reported minor changes in what they need for a minimum standard of living, including clothing, hairdressing, technology purchases, taxi use, and charitable donations. However, participants agreed that the budget for rail travel would need to increase, the PLSA noted.

The amounts needed for moderate and comfortable standards have risen slightly, reflecting the impact of inflation across many spending categories being offset by decreases in energy costs, the report stated.

For a moderate lifestyle, a single person would now require £31,700, which is a £400 increase from the previous figure of £31,300. For a couple, the amount has risen by £800 to £43,900 from £43,100.

To enjoy a comfortable retirement, an individual needs around £43,900, up by £800 from £43,100 previously, while a two-person household requires £60,600, showing an annual uptick of £1,600 from the former £59,000.

The updated retirement living standard figures for 2024/25 were calculated by the Centre for Research in Social Policy at Loughborough University on behalf of the PLSA.

In an interesting trend, weekly domestic fuel budgets have seen a notable decrease across all retirement living standards, compared to the preceding 2023/2024 numbers.

It's important to note that these standards serve more as benchmarks for the expenses associated with retirement and do not represent rigid savings objectives.

Zoe Alexander, the PLSA's director of policy and advocacy, said: "For many, retirement is about maintaining the life they already have, not living more extravagantly or cutting back to the bare essentials."

She emphasised the importance of envisioning one's future retirement lifestyle, suggesting that "The standards are designed to help people picture that future and plan in a way that works for them."

Ms Alexander also mentioned the possible benefit of saving above the minimum pension contributions at work, indicating it might enhance the likelihood of achieving the desired retirement lifestyle.

The PLSA said the state pension continues to play an essential role, particularly for those aiming at the minimum standard.

The study has highlighted the growing trend of individuals carrying mortgage burdens into later life, revealing a stark balance between clearing mortgage debts and enjoying retirement.

A significant 58% of respondents envision themselves as mortgage-free homeowners upon retiring, yet 17% foresee still having a mortgage or loan, with 8% expecting to rent privately.

Meanwhile, 7% predict they will be council tenants, while another 8% anticipate living in housing association properties.

A mere 1% are optimistic about a "rent free" retirement, implying they plan to reside in someone else's property without paying rent.

Professor Matt Padley from Loughborough University said: "The consequences of the cost-of-living challenges over the past few years are still being felt, and we've seen some subtle changes in public consensus about minimum living standards in retirement, resulting in a small fall in the expenditure needed to reach this standard."

He stressed the importance of concrete financial planning for the future, especially given the current uncertainties: "In these uncertain times, planning in concrete ways for the future is ever more important, and the RLS (retirement living standards) help people to think in more concrete ways about what they want their retirement to look like, and how much they will need to live at this level."

Yonder conducted the survey in May, polling over 1,500 UK residents for this consumer research.

Here are the percentages of individuals who anticipate owning their home outright upon retirement, mortgage-free, as per the PLSA:.

• Scotland, 61%.
• North East, 58%.
• North West, 60%.
• Yorkshire and the Humber, 54%.
• West Midlands, 61%.
• East Midlands, 58%.
• Wales, 56%.
• Eastern England, 66%.
• London, 53%.
• South East, 56%.
• South West, 56%
• Northern Ireland, 68%.

The PLSA's different retirement living standards include the following examples:

Minimum lifestyle (Sufficient for a sense of financial security and participation in daily life)

Single person

• A yearly budget of £200 for DIY; approximately £55 weekly for groceries, £30 monthly for dining out, £12 monthly for takeaways; no car, but a bus pass and £30 monthly for two taxi trips and £180 annually for three train journeys. Enough funds for an annual week-long UK holiday, a TV licence and broadband plus a streaming service with ads and £20 weekly for activities.
• Up to £450 for clothing and footwear, and £20 for each birthday and Christmas gift.

Two people

• A yearly budget of £200 for home decoration and maintenance. Around £109 weekly for groceries, £60 monthly per couple for dining out, and £24 monthly per couple for takeaways.
• No car, but a bus pass, £30 monthly for two taxi trips, £180 annually per person for three train fares.
• A budget for a week-long UK holiday. TV licence, broadband and an ad-supported streaming service.
• £20 per person weekly for activities.
• An allowance of up to £450 per person for clothing and shoes. A budget of £20 each for birthday and Christmas gifts.

Moderate lifestyle (Greater financial security and flexibility):

Single person

• An annual budget of £500 for property maintenance and a £300 contingency fund.
• Approximately £56 weekly for groceries, £32 weekly for dining out, £11 weekly for takeaways, and £106 monthly for treating others to a meal.
• A three-year-old small car replaced every seven years, £22 monthly for taxis, and £104 annually on train fares.
• Budget for a two-week all-inclusive holiday in the Mediterranean at a three-star resort and a long weekend break in the UK off-peak. TV licence, broadband, plus two streaming services and £43 weekly for activities.
• Up to £1,548 for clothing and footwear, £30 each for birthday and Christmas presents, £200 annually for charity donations, and £1,000 for supporting family members.

Two people

• A yearly budget of £500 for property upkeep, with a £300 contingency. Around £103 weekly for groceries, £63 weekly per couple for dining out, £21 weekly per couple for takeaways, and £106 monthly for treating others to a meal.
• A three-year-old small car is replaced every seven years, £22 monthly on taxis per household, and £104 annually on train fares per person.
• A fortnight's all-inclusive three-star holiday in the Mediterranean, coupled with a long weekend break in the UK during off-peak season, including £321 spending money. A TV licence and broadband subscription, along with two streaming services, and a weekly budget of £43 per person for activities.
• An annual budget of up to £1,548 per person for clothing and footwear. Birthday and Christmas gifts budgeted at £30 each, plus an annual household contribution of £200 towards charitable causes.
• An allocation of £1,000 for supporting family members.

Comfortable lifestyle (Greater financial freedom and some luxuries)

Single person

• An annual budget of £600 for property maintenance, with a contingency fund of £300.
• A weekly food budget of around £75, £42 set aside for dining out, £21 for takeaways, and £106 monthly for treating others to a meal.
• Ownership of a three-year-old small car, replaced every five years, a monthly taxi budget of £22, and an annual rail fare budget of £208.
• A two-week four-star half-board holiday in the Mediterranean, with a daily spending allowance of around £100 per person, and three long weekend breaks in the UK, each with £400 spending money. Comprehensive bundled broadband, streaming and TV entertainment subscriptions, plus a weekly activities budget of £54.
• An annual budget of up to £1,548 for clothing and footwear.
• A gift budget of £50 for each birthday and Christmas present, an annual charity donation of £300, and £1,000 allocated for family support.

Two people

• An annual budget of £600 for maintaining the property, with a contingency fund of £300.
• Approximately £134 a week is allocated for groceries, with couples spending about £85 weekly on dining out and £32 on takeaways. There's also a budget of £105 monthly for treating others to a meal.
• A small car, around three years old, is replaced every five years. Households spend about £22 monthly on taxi fares, with individuals shelling out £208 annually on train tickets.
• Holiday plans include a two-week, four-star, half-board getaway in the Mediterranean, with a daily allowance of roughly £100 per person, as well as three long weekend breaks within the UK, each with a £400 spending budget. Broadband, movie streaming and TV entertainment subscriptions are bundled extensively, with an additional £54 set aside weekly per person for various activities.
• Clothing and footwear expenses can reach up to £1,548 per person annually. A sum of £50 is reserved for each birthday and Christmas gift, while charity donations amount to £300 per person monthly.
• Lastly, there's a provision of £1,000 for supporting family members.