Pitched at three different levels – minimum, moderate and comfortable – the Retirement Living Standards are designed to help people picture the lifestyle they want when they retire, and understand the cost.
Developed and maintained independently by the Centre for Research in Social Policy at Loughborough University, they describe the cost of three different baskets of goods and services, established by what the public considers realistic and relevant expectations for retirement living. These baskets comprise household bills, food and drink, transport, holidays and leisure, clothing and social and cultural participation.
Like the Consumer Price Index (CPI) measure of inflation, the Retirement Living Standards are regularly reviewed to ensure they keep up with changes in spending habits as well as changes to prices on the shelves to remain relevant to real world retirement spending.
Researchers from Loughborough University held 13 discussion groups with members of the public from across the UK including both retirees and those approaching retirement (55+) to determine changes to the baskets of goods.
The Minimum Retirement Living Standard is now £10,900 for a single person or £16,700 for a couple; for the 'Moderate' standard it is £20,800 for a single person or £30,600 for a couple; and for the 'Comfortable' standard - which would include several holidays a year - retirees would need £33,600 for one person or £49,700 for a couple.
Nigel Peaple, Director of Policy and Advocacy, PLSA said:
“It is important that the Retirement Living Standards remain relevant by reflecting real world price changes and real world expectations about lifestyles in retirement. We hope the updated standards will encourage people to think about whether they are saving enough for the retirement lifestyle they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.
“The lockdowns caused by the pandemic have given many workers a foretaste of being retired and made people think about the activities and experiences they truly value. The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement. With barbers and hairdressers closed during lockdowns and many of us taking scissors to our own hair for the first time, it is little surprise that the research groups agreed the budget for personal grooming should be increased across the three standards. The addition of Netflix also gives an insight into what many of us expect to be doing when we finish work.”
Emma Byron, CEO of Legal & General Retirement Solutions commented:
“In the wake of Covid-19, the cost of living continues to rise, and gives an increased urgency to the need for people to think about how they’ll fund their retirement. The PLSA ‘Retirement Living Standards’ provide a useful rule of thumb and helps savers understand how much money they might need to live a desired retirement lifestyle. But, it’s important to remember that no two people will experience retirement in quite the same way, and these broad-brush income levels won’t cater for everyone’s circumstances. For example, some people will still have mortgage commitments in retirement, whilst others might need to cover expenses for long-term care. Others might decide to transition into retirement through part-time or other work, as we are seeing an increasing number of people doing. We are living longer, and the reality of that is that we will need to plan for an income well into our 90s."
