November 29th 2024.
Retirement is something that everyone will eventually face, whether you are just starting your adult life, approaching your 30s, reaching middle age, or about to turn 60. While some may eagerly anticipate leaving behind the 6am Monday to Friday alarm, others may feel anxious about how they will manage financially without their regular salary.
In the UK, the current cost of living crisis has affected a large portion of the population. In fact, back in January 2024, Statista reported that more than half of households reported an increase in their cost of living compared to the previous year. This begs the question - what does this mean for those who are about to retire?
Researchers at Loughborough's Centre for Research in Social Policy have created a set of three retirement living standards to determine the amount of money needed to maintain a comfortable retirement. These standards include minimum, moderate, and comfortable, with the higher end being more financially secure.
But achieving these standards is not an easy feat. In fact, it is recommended to save as much as possible for as long as possible to secure a comfortable retirement. This can be done through various means such as savings accounts, private pensions, and investment portfolios.
Unfortunately, the figures for these retirement standards have increased significantly in just two years, meaning that future retirees will need to save even more to ensure a comfortable future. To give you an idea of where you may fit in these standards, we have broken them down and also included five tips on how to boost your savings for a more comfortable retirement.
However, it is important to note that the numbers given are based on individuals or couples who retire at the age of 66 and have a full state pension of £11,502 per year. Additionally, the study excluded London due to the higher cost of living in the capital.
The minimum retirement standard is considered a "dignified" existence, covering basic survival needs without the use of a car. This involves setting aside £95 per week for groceries, enough for a UK holiday, two affordable leisure activities per week, and one meal out per month. It is also worth mentioning that these numbers only apply to those who have paid off their mortgage, worked until 66, and have a full national insurance record. If any of these criteria are not met, retirement costs can be significantly higher.
On the other hand, the moderate standard offers more financial security, with an increase in costs from £23,300 to £31,300 per year for a single person and from £34,000 to £43,100 for a couple. This means that a single person with a full state pension would need to save a total of £296,970 for a 15-year retirement. With this level of comfort, retirees can afford to spend an additional £60 per week on eating out and can also own a small second-hand car, as well as take a UK mini break and a European holiday.
For those who want a truly comfortable retirement without any financial worries, the comfortable standard is the way to go. However, this comes with a hefty price tag of £43,100 per year for a single person and £59,000 for a couple. This means that a single person would need to save a total of £473,970 for a 15-year retirement. With this level of comfort, retirees can afford to spend £130 per week on groceries, £80 per week on meals out, and can also enjoy regular beauty treatments, two European holidays per year, and other expensive leisure activities like theatre trips.
Despite these standards, not everyone is able to achieve them. In fact, last year, Loughborough University researchers estimated that only 72% of the population were on track to reach the minimum retirement standard. Furthermore, only a fifth of the population would reach the moderate level, and only 8% would be able to meet the comfortable income level.
Do you have a story to share about your retirement experience? We would love to hear from you. Please get in touch by emailing us at email.
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