Join the dots to retirement
The gradual progression can, for some people, include part-time work or even a complete career change in later life.
Review how much money you’ll need
If you are not sure how much money you’ll need in retirement, you’re not alone. Thankfully the Pensions and Lifetime Savings Association has researched how much money people might need to spend (a year) to have a minimum, moderate or comfortable standard of living. They are based on current prices; they were updated recently to reflect the high cost of living. To have the same spending power in future, you’ll need to add on an allowance for inflation.
According to the PLSA:
- The minimum standard of living (covering all basic needs plus a bit left over for fun) requires £14,400 for a single person and £22,400 for a couple
- The moderate standard of living (with more financial stability and flexibility) requires £31,300 for a single person and £43,100 for a couple
- The comfortable standard of living financial freedom and several luxuries) requires £43,100 for a single person and £60,600 for a couple.
Remember that your total retirement income is likely to include a State Pension as well as personal and/or workplace pensions, and what you receive from non-pensions savings, part-time employment etc. Nonetheless, there has been some criticism that the quoted figures are too high … and in particular that it is possible to have a comfortable retirement on much lower figures than the PLSA suggest.
Next steps
Everyone has different priorities in retirement ... and (with the PLSA assuming that people will replace their kitchens and bathrooms every 10 to 15 years) I totally ‘get’ why many commentators consider that the quoted figures are too high. To find out more, visit retirementlivingstandards.org.uk/.
Why not spend a few hours thinking about what YOU want to spend money on in retirement (and what you do not)?
All the best, Tim
(Tim Spriddell, Trustee Executive)