PLSA comment from Sarah Pennells, Consumer Finance Specialist

Responding to the Pensions and Lifetime Savings Association’s (PLSA) updated cost of a Minimum Retirement Living Standard, Sarah Pennells, Consumer Finance Specialist at Royal London, comments:

"This update from the PLSA reflects sentiment we’re seeing in our own research into pensions, savings, and the Cost of Living. Our insights show that people think they’ll need £1,279 a month to live on in retirement, which works out at £15,348 a year – only £1,000 more than the £14,400 that the Retirement Living Standards suggest would pay for a minimum standard of living.

"The reality of living on this kind of income – potentially for 20 or more years – is very few treats, such as nights out, or holidays, and for some having to watch every penny. That’s unlikely to be the kind of existence most people would like as a reward for a lifetime of working.

"But there’s bad news for those who want to be able to spend a bit more on things like food and drink and taking a holiday abroad. For a moderate standard of living, as defined by the Retirement Living Standards, there’s an £8,000 a year increase in how much income someone would need every year. Saving enough to generate an extra £8,000 a year will be difficult for many, and impossible for those closer to retirement.

"Importantly, our research also shows that three in ten people expect to be paying either rent or mortgage when they retire, but the Retirement Living Standards don’t take housing costs into account. So, someone who has a mortgage or rent to pay could need several thousand pounds more a year in order to pay everyday bills.

"The cost of living crisis has, understandably, put a focus on people struggling to pay day-to-day bills, but the challenge of having enough to live on in retirement hasn’t gone away. In fact, it’s just got bigger."