Income needed to retire jumps as family costs rise

A single person will need £31,300 a year for a moderate income in retirement, according to a pensions industry body.

The rising cost of living and an expectation to offer financial support to grandchildren had pushed up the income required by £8,000, it said.

The Pensions and Lifetime Savings Association (PLSA) uses evidence from focus groups to make the estimates.

It is intended as a guide for those planning their retirement savings.

The calculations are pitched at three different levels - minimum, moderate and comfortable - and are developed and maintained independently by the Centre for Research in Social Policy at Loughborough University.

They estimated that a single person needed £14,400 a year for a minimum income, and £43,100 a year for a comfortable retirement.

Couples required a joint £22,400 at the minimum level, £43,100 at a moderate level, and £59,000 at a comfortable level.

Nigel Peaple, director policy and advocacy at the PLSA, said: "The cost of living has put enormous pressure on household finances over the last year and, as the research shows, this is no different for retirees."

Professor Matt Padley, from Loughborough University, said the research highlighted the increasing importance people placed on spending time with family and friends out of the home, as priorities had changed following the pandemic.

For example, in-depth discussion groups considered that at the moderate level of retirement, people should be able to have a monthly meal out with their loved ones and help their family members financially with a budget of £1,000, such as helping with grandchildren's activities.

The triple-lock, which is used to uprate the state pension, acted as a crucial safeguard against rising retirement living costs, researchers said. It will rise by 8.5% in April to just over £11,500 a year.

Pensions commentators described the estimates as a wake-up call.

A separate report by provider Now Pensions and the Pensions Policy Institute has suggested that, typically, women face needing to work for an extra 19 years to retire with the same pension savings as men.

Women retire on average with pension savings of £69,000, compared with £205,000 for men. Options from these savings include keeping them invested and partially drawn as an income, or used to buy an annuity which provides an annual pension income.