The cost of retirement will vary from person to person, with some retiring mortgage free while others may have rent or loans to factor into their budget.
While the exact answer of how much a person needs to retire will vary, there could be some guidelines which help.
The Pension and Lifetime Savings Association’s (PLSA) Retirement Living Standards, based on independent research by Loughborough University, have been developed to help people picture what kind of lifestyle they could afford in retirement.
They’ve been divided into three levels – minimum, moderate and comfortable.
The minimum covers “all needs with some left over for fun”, including enough to enjoy a week and long weekend in the UK every year
The standards include a range of common goods and services, plus an estimated cost for each level.
Other costs such as a mortgage, rent, social care costs and any tax on pension income aren’t included, so it’s recommended a person seeks independent financial advice for their specific circumstances.
The amounts for different levels are the income level one needs, after paying tax on income.
The minimum covers “all needs with some left over for fun”, including enough to eat out about once a month and enjoy a week and long weekend in the UK every year.
For a single person, this is currently £12,800, or £14,300 if they live in London.
For couples, the amount is £19,900 and £22,400 in London.
The moderate level offers “more financial security and flexibility”.
With this income, retirees may be able to afford eat out several times a month, take one foreign holiday a year, and have a three-year-old car which is replaced every 10 years.