How Much You Really Need To Retire

How Much You Really Need To Retire – A COUPLE who want a comfortable retirement will need to have an income of £50,00 a year between them, a pensions trade body has warned.

The Pensions & Lifetime Savings Association (PLSA) has calculated exactly how much money you need to afford the pension you want.

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The so-called Retirement Living Standards is a guide that helps savers calculate how much money they will need when they stop working.

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Each scenario contains a basket of goods that PLSA tracks the price of, to help people understand how much they will need in retirement. They cover everything from household bills, food and drink to holidays, clothing and social activities.

But PLSA has had to update the baskets after the Covid pandemic to reflect our changing priorities.

More money to eat out, a decent budget for personal care and a Netflix subscription are all top priorities for many retirees.

The minimum standard covers all of a retiree’s basic needs as well as having a little money left over for fun.

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It includes a week’s stay each year, outdoor dining once a month and some affordable leisure activities twice a week – but no car.

The PLSA says that to afford this pension you would need an annual budget of £10,900 as a single person and £16,700 as a couple.

It may sound scary but it is important to remember that the state pension will form part of that income.

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The new full state pension will pay £179.60 a week in the 2021/22 tax year, which is £9,339 a year.

The amount needed for this minimum standard has increased by £700 for individuals and £1,000 for couples since the PLSA introduced the guide in 2019.

It said rising public transport costs had driven much of this increase, as had people wanting to spend more on haircuts and TV streaming subscriptions.

Nigel Peaple, head of policy and advocacy at PLSA, said: “With hairdressers and hairdressers closed during lockdowns and many of us taking scissors to our own hair for the first time, it’s no surprise that the research groups agreed that the personal care budget should be increased.

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“The addition of Netflix also provides insight into what many of us expect to do when we finish work.”

For a slightly more extravagant retirement, an individual will need an income of £20,800 a year or £30,600 for a couple.

The moderate retirement standard of living includes a two-week vacation in Europe each year and eating out a few times a month.

About half of single workers are estimated to be on track to achieve a minimum or moderate retirement, with couples more likely to be at the upper end of this range.

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And for the top tier, the comfortable retirement living standard, PLSA said an individual would need an income of £33,600 a year and a couple would need £49,700 between them.

The PLSA said it was likely that only one in six single people would be able to achieve this, but it would be easier for a couple as they could share the costs.

The comfortable retirement includes three weeks of vacation, lots of money to spend on clothes, and more money to spend on social activities like birthdays.

Anyone planning their retirement needs to make some careful calculations about how much they will need to afford the lifestyle they want.

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A good starting point is the State’s state pension age calculator, which tells you at what age you receive your state pension.

Pension calculators can also help you work out how much money you need to save to get the pension pot you want in retirement.

And you’re not alone when it comes to saving for retirement. Your workplace will most likely contribute some money to your pension pot too, and you’ll get tax credits from the government which will reduce the amount you have to pay in yourself.

Tom Selby, head of pensions policy at AJ Bell, said: “For those aspiring to more, higher levels of retirement savings will almost certainly be necessary.

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“But whatever your retirement ambitions, it’s worth looking at how much you’re saving and where you’re saving it.

“If having a moderate or comfortable standard of living in retirement is an important goal, you may want to think about saving a little more in your retirement if you can afford it.” A COUPLE hoping to retire and take up to three European holidays each year must have a joint income of £54,500.

Single pensioners have to pocket more than half that, with £37,300 a year needed to achieve the same standard of living.

The Pensions & Lifetime Savings Association regularly looks at how much you would need to come in each year to afford different levels of comfort after you retire.

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They count all household bills, food and dining, travel expenses and car ownership, vacations, TV subscriptions like Netflix, clothes, beauty treatments and even money spent on giving birthday presents.

And with the skyrocketing cost of living, the amount of money needed to fund retirement has increased.

In 2019 when PLSA posts began, a single pensioner spent around £620 a week to cover basic needs plus ‘nice to haves’.

That included all household costs, three weeks away in Europe every year, £144 a week to spend on food and meals out and the money to replace a two-year-old car every five years.

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For couples wanting to live by the same standard, it took an income of £54,500 last year, compared with around £47,500 three years earlier.

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The PLSA calculated that you would have needed £328,000 saved for your pension by 2022 to have any hope of affording a comfortable retirement.

Becky O’Connor, public affairs director at Pensionbee, said: “The cost of living crisis has pushed the bar even higher on the size of pensioners’ needs to achieve an acceptable standard of living in retirement.

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“But they’re setting a benchmark for living standards in retirement now, not for what today’s younger workers will need in the future, after decades of more inflation.”

PLSA updates its Pension Living Standards every year to take into account the rising cost of living.

They don’t count mortgage payments or rent or any financial support you give your children or other dependents.

If you think you’ll still have these expenses to cover when you retire, you’ll need to increase your savings significantly.

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PLSA’s minimum retirement living standard covers all of a retiree’s basic needs as well as having a little money left over for fun.

It includes a week’s stay each year, outdoor dining once a month and some affordable leisure activities twice a week – but no car.

The PLSA says that to afford this pension you would need an annual budget of £12,800 as a single person and £19,900 as a couple.

It may sound scary but it is important to remember that the state pension will form part of that income.

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Pensioners can start claiming the State Pension at 66, but if you retire after 2026 you will almost certainly see the minimum age rise.

Those claiming the full state pension now receive £203.85 a week, equivalent to £10,600 a year.

If you have any gaps in your career, you may have paid less National Insurance and would receive a smaller state pension to reflect that.

For a slightly more extravagant retirement, an individual will need an income of £23,300 a year or £34,000 for a couple.

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The moderate retirement standard of living includes a two-week vacation in Europe each year and dining out a few times a month.

About half of single workers are estimated to be on track to achieve a minimum or moderate retirement, with couples more likely to be at the upper end of this range.

To live comfortably in retirement, the PLSA said an individual would need an income of £37,300 a year and a couple would need £54,500 between them.

This includes three weeks of vacation, lots of money to spend on clothes, and more money to spend on social activities like birthdays.

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The State Pension is almost £2,000 less than you need a year, so it’s a good idea to top up your contributions to your workplace scheme.

Alice Guy, personal finance editor at Interactive Investor, said: “To achieve a comfortable retirement, a couple needs to supplement the state pension with a private pension pot worth £328,000 each.

“This seems like a huge amount but it’s important to remember how much common amounts add up over time.

“Someone would need to save around £215 a month for 40 years to achieve a pension pot worth £328,000.

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“If they invested through a workplace pension, this contribution would only cost them £107 a month after tax, as it would be topped up with tax relief of £27 and an employer contribution of £81.”

Anyone planning their retirement must make some careful calculations about how

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