Retirement is a time to relax and enjoy the fruits of your labor, but it’s also important to make sure you have enough money to live comfortably. In the UK, the cost of living has been rising steadily, which means that pensioners need to have a good amount of savings to maintain their standard of living.
How Much Do Pensioners Need?
The amount of money a pensioner needs to live on will vary depending on their individual circumstances, such as their lifestyle, health, and housing costs. However, there are some general guidelines that can be followed.
According to the Pensions and Lifetime Savings Association (PLSA), a single person needs a minimum of £12,800 a year to live comfortably in retirement. This figure assumes that the person lives in their own home and has no outstanding debts.
For a couple, the minimum income needed is £19,900 a year. This figure assumes that the couple lives in their own home and has no outstanding debts.
Of course, these are just minimum figures. If you want to enjoy a more comfortable retirement, you will need to have a higher income. The PLSA suggests that a single person needs £23,300 a year for a moderate lifestyle and £37,300 a year for a comfortable lifestyle. For a couple, the figures are £34,000 a year for a moderate lifestyle and £54,500 a year for a comfortable lifestyle.
How Can Pensioners Increase Their Income?
There are a number of ways that pensioners can increase their income. One option is to continue working part-time after retirement. This can help to boost your income and keep you active and engaged.
Another option is to downsize your home. This can free up some capital that you can use to invest or to supplement your income.
You can also consider claiming benefits. The government offers a number of benefits to pensioners, such as the state pension and pension credit. These benefits can help to top up your income and make sure that you have enough money to live on.
How Much Do Pensioners Actually Have?
The average UK retirement income is £18,148 per year. This figure includes income from all sources, such as the state pension, private pensions, and investments.
However, there is a wide variation in retirement incomes. Some pensioners have very little income, while others have a comfortable income. The amount of income you have in retirement will depend on a number of factors, such as your earnings during your working life, your savings, and your investments.
How Can Pensioners Make Sure They Have Enough Money?
The best way to make sure you have enough money in retirement is to start saving early. The earlier you start saving, the more time your money has to grow. You should also consider contributing to a workplace pension scheme. This is a tax-efficient way to save for retirement.
It is also important to review your retirement plans regularly. As your circumstances change, you may need to adjust your plans. For example, if you have a child who is going to university, you may need to save more money to help them with their tuition fees.
Conclusion
The cost of living is rising in the UK, which means that pensioners need to have a good amount of savings to maintain their standard of living. The amount of money you need in retirement will vary depending on your individual circumstances, but there are some general guidelines that you can follow. If you are concerned about whether you will have enough money in retirement, you should speak to a financial advisor. They can help you to create a retirement plan that meets your needs.
Can I live comfortably on the average retirement income?
The comparison above indicates that, in terms of disposable income, the average retired person’s income may not differ significantly from the average wage earner’s.
Though many wage earners still view themselves as “just getting by,” this does not always imply that such an income offers a comfortable or desired standard of living.
So what makes a ‘comfortable’ retirement income?
In the end, everything relies on your plans for your retirement.
According to research by the Pensions and Lifetime Savings Association (PLSA), a single person would need to have £37,300 in annual income, while a couple in the UK would need a combined annual income of £54,500 to have few or no financial concerns in retirement.
This estimate assumes a lifestyle that includes:
- Three weeks’ holiday in Europe every year
- Spending £144 per week on food
- £1,500 worth of clothes and footwear per person annually
These assumptions aren’t extravagant, but they aren’t penny-pinching either.
So if you see yourself living more modestly – e. g. With fewer new clothes purchases, shorter vacations in the UK, and cheaper grocery stores, you could live on far less.
A frugal retirement is suggested by research to require an annual income of £12,800 per person; however, a lower amount may require significant sacrifices.
A £100,000 pension pot would provide you with an annual income of between £4,000 and £5,000 in addition to a lump sum of £25,000 in tax-free cash, so you can see how much you would need to save.
Although it may not seem like much, the annual total (including the tax-free lump sum) could be anywhere from £14,600 to £15,600 if you are also receiving the full new state pension.
Remember that in the future, the state pension age will increase.
These numbers make it very evident that you should aim for a pension pot that is at least £100,000, if not more.
Fortunately, this is realistically achievable, as shown here.
What is the average retirement income in the UK?
According to the government’s most recent data (as of 2022), pensioners make an average weekly income of £349 after deducting housing costs and direct taxes. This works out at around £18,148 per year.
Regions also influence the average retirement income in the United Kingdom.
You probably make less money in retirement than the average person if you live in London. However, you’ll probably have more money to spend on average if you’re based in Scotland or the Northeast.
Usually, the disparity is caused by a difference in housing and living expenses.
As of 2020–2022, 271 percent of pensioners got their money from private pensions.
Although the percentage from private pensions has increased recently, investments, state pension benefits, and occupational pension plans are still important sources of income for retirees in the UK.
Use our pension calculator to find out how much retirement income you might receive from your private pension and how to increase it.
How much money do I need for a comfortable retirement in the UK?
FAQ
How much pension do you need to live comfortably in the UK?
What is the average income for pensioners in the UK?
What is a comfortable retirement income in the UK?
Can I retire with 500k in UK at 60?
Do you need a state pension?
Most people get a State Pension from the government, which covers your basic needs. To give you a decent standard of living, it’s a good idea to save some extra money in a pension fund. Your retirement may last from 20 to 30 years, so you may have to live for quite a long time on your pension.
How much money do pensioners need?
Pensions commentators described the estimates as a wake-up call. The amount needed for a moderate income, according to the estimates, is similar to the median average gross annual earnings of a full-time employees, which official statistics show is £34,963.
How many years can you claim a state pension?
However, many people live much longer. Fortunately, there’s no limit to the number of years you can claim a State Pension. But at just over £10,600 a year, you’ll need to top this up with your personal pension if you want to cover more than essential costs.
When do you qualify for a state pension?
You’ll qualify for payments when you reach 66, but this is scheduled to rise to 67 between 2026 and 2028. In 2023-24, the full level of new state pension (for people who reach state pension age on or after 6 April 2016) is £203.85 a week (£10,600 a year), but not everyone gets that much.