Retirement Living Standards help savers make pension saving plans

It can be hard to get to grips with saving for your retirement. It helps to picture the sort of lifestyle you want and what it might cost -- and new Retirement Living Standards from the Pensions and Lifetime Savings Association (PLSA) are a good starting point.

The standards are designed to get people thinking about their future retirement and how to achieve the living standard they expect.

With research showing that 51% of people focus on their current needs and wants at the expense of providing for the future and only 23% of people are confident they know how much they need to save, the new standards aim to help savers overcome this challenge and give them more confidence about their retirement saving.

Based on research by the Centre for Research in Social Policy at Loughborough University, the Retirement Living Standards describe three different standards of living with a basket of goods and associated costs for each -- all established by what the public considers realistic and relevant expectations. The basket of goods is made up of household bills, food and drink, transport, holidays and leisure, clothing and personal and helping others.

They can be summarised at 10k-20k-30k for individuals and 15k-30k-45k for couples.

The minimum living standard covers all your needs plus enough for some fun, such as UK holidays, eating out about once a month and affordable leisure activities about twice a week. This comes at a cost of around £10,200 per year for a single person and £15,700 for a couple. With a full state pension and auto-enrolment in a workplace pension, this level should be achievable for most people.

For a moderate lifestyle in retirement, savers will need an annual income of around £20,200 for singles and £29,100 for couples. This would bring more financial security and flexibility and the opportunity to do more -- such as eating out a few times a month and having a two-week holiday in Europe.

At the comfortable level (£33,000 a year for singles and £47,500 for couples), retirees could enjoy some luxuries like regular beauty treatments, theatre trips and three weeks in Europe a year.

Currently, most people do not have mortgage, rent or social care costs when they reach retirement. These and other costs such as tax on pension income may need to be added depending on individuals' circumstances, the PLSA noted.

Nigel Peaple, director of policy and research at the PLSA, said that the Retirement Living Standards will support better saver engagement.

"They distil robust, in-depth research with the public into an easy to understand basket of goods that helps people picture the future -- and relatable figures that can provide a powerful and practical tool for encouraging engagement with saving," he said.

Jackie Spencer, senior policy and propositions manager at the Money and Pensions Service, added: "Saving for something is easier to do when you can visualise what you're working towards, which is why people are often more motivated to save for short-term goals like holidays and new cars than they are for their retirement.

"The new Retirement Living Standards are a great way of offering savers some practical examples of what they can expect from their lives when they stop working."

At Fidelius, our experts can assist you in building up a retirement fund and balance the tax advantages of saving through pensions, against the flexibility of other options. We'll view the whole picture and can suggest strategies to access your wealth in stages, supporting those who prefer a gradual transition between full time work and full time retirement. When you do retire, we can help arrange a guaranteed income for life, or invest funds to provide a flexible and potentially growing income over the years.

Get in touch with us today to find out more!