Head of DC, Master Trusts & Lifetime Savings, PLSA
When under a quarter (23%) of savers surveyed previously told us they are confident they know how much they need to save for retirement, it didn’t make for good bedtime reading.
We launched the Retirement Living Standards scheme last year, and now over 14 million savers have access to them. It is made possible because pension schemes, and some 53 organisations, are using the Standards to help people plan their savings.
Understanding how much you need for retirement
There are three Retirement Living Standards – minimum, moderate and comfortable. They were developed in partnership with independent researchers at Loughborough University. Loughborough examined and developed, with the general public, detailed baskets of goods and services – and then calculated the annual costs for each living standard.
The good news here is that, due to most people achieving the full state pension of just over £9k per annum, achieving the minimum lifestyle will happen without too much effort. But for those wanting to be a bit more comfortable in their retirements that is where extra attention needs to take place.
Saving and planning for retirement is a challenging business, particularly now. But, the Standards provide a practical benchmark for all.
The Standards themselves include household bills and maintenance, clothing, transport and a whole lot more.
A ‘minimum’ lifestyle would be £10k for singles and £15k for couples. This would cover all your needs, with some left over for fun and social occasions. You could holiday in the UK, eat out about once a month, cover DIY maintenance and decorate one room a year and do some affordable leisure activities about twice a week.
A ‘moderate’ lifestyle – £20k for singles, £30k for couples – would provide more financial security and flexibility. You could have a foreign holiday, eat out a few times a month, have help with decorating and run a car.
A ‘comfortable’ lifestyle – £30k for singles, £45k for couples – will allow allow you to be more spontaneous with your money. You could have a subscription to a streaming service, regular beauty treatments, replace bathroom or kitchen every 10 to 15 years and two foreign holidays a year.
Helping savers make decisions for the future
Saving and planning for retirement is a challenging business, particularly now. But, the Standards provide a practical benchmark for all. Picturing and quantifying the outcome you want from your pension saving is key to informing financial decisions savers need to make now.
Speak to your pension provider or financial adviser about how they can help you to use these Standards to plan you pension saving.