A single person will need a post-tax annual income of £10,900 for a minimum standard of living in retirement, according to new estimates from academics. For a couple, the required budget rises to £16,700, the calculations for the Pensions and Lifetime Savings Association (PLSA) suggest.
For the first time, the assessment includes items such as Netflix subscriptions and haircuts. The PLSA said lockdowns gave workers a foretaste of retirement needs. Nigel Peaple, director of policy and advocacy at the PLSA, said: 'The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement.'
The calculations, developed by the Centre for Research in Social Policy at Loughborough University, are pitched at three levels: minimum, moderate and comfortable. The minimum standard covers basic needs plus some social activities, such as a week's UK holiday and eating out once a month, but not running a car. Housing costs are excluded on the assumption most pensioners have paid off mortgages.
The minimum annual budget has risen by £700 for a single person and £1,000 for a couple since 2019. The total requirement would generally be made up of the full state pension (£9,339 per year) and workplace pension savings. The moderate standard, including a two-week European holiday, requires £20,800 for a single person and £30,600 for a couple. The comfortable standard, covering regular beauty treatments and theatre trips, needs £33,600 for one person and £49,700 for a couple.
Tom Selby, head of retirement policy at AJ Bell, said: 'The pandemic has exposed gaping holes in the finances of millions of people... contribution levels into pension schemes remain low, particularly among self-employed workers.'
