Regardless of age, knowing how much you’ll need in retirement is important. The response can assist you in planning, determining whether you’re ready for retirement, and even estimating how much you might need to save. We’ll update you with the most recent data so you can find the answer to that crucial question.
Planning for retirement is a complex and multifaceted process, and one of the most important questions you’ll need to answer is: how much money will I need to live comfortably in retirement? This question can be daunting, but there are several resources available to help you get a good estimate.
In this article, we’ll delve into the latest figures on average retirement income in the UK, explore different retirement living standards, and provide you with tools and resources to help you determine what a good retirement income might look like for you.
Understanding Average Retirement Income in the UK
The average UK retirement income is currently £18,148 per year, or £349 per week after taxes and housing costs. However, this figure can vary significantly depending on factors such as location, lifestyle, and whether you have a private pension.
Here’s a breakdown of average retirement income by region:
- London: £15,840 per year
- South East: £18,360 per year
- East of England: £18,240 per year
- South West: £17,880 per year
- East Midlands: £17,520 per year
- West Midlands: £17,400 per year
- Yorkshire and the Humber: £17,280 per year
- North West: £17,160 per year
- North East: £17,040 per year
- Wales: £16,920 per year
- Scotland: £16,800 per year
- Northern Ireland: £16,680 per year
It’s important to note that these figures are averages, and your individual retirement income may be higher or lower.
Retirement Living Standards: Defining Your Needs
To get a better understanding of how much money you might need in retirement, consider the Retirement Living Standards developed by the Pensions and Lifetime Savings Association (PLSA). These standards outline three different levels of retirement income:
- Minimum: This standard covers your basic needs, such as food, housing, and essential bills. It requires an annual income of £14,400 for single people and £21,000 for couples.
- Moderate: This standard provides you with more financial security and flexibility than the minimum standard. It allows for some discretionary spending and leisure activities. It requires an annual income of £31,300 for single people and £44,100 for couples.
- Comfortable: This standard offers you a high degree of financial freedom and allows you to enjoy a comfortable lifestyle with luxuries and travel. It requires an annual income of £43,100 for single people and £59,000 for couples.
These standards can serve as a helpful guide to determine what a good retirement income might look like for you, based on your desired lifestyle and spending habits.
Tools and Resources to Help You Plan
Several tools and resources can help you estimate your retirement income and determine if you’re on track to meet your goals:
- Pension calculator: This tool allows you to input your current pension savings, contributions, and estimated retirement age to get a projection of your potential retirement income.
- Retirement budget planner: This tool helps you create a detailed budget for your retirement years, taking into account your expected expenses and income sources.
- Financial Health Check Tool: This tool assesses your overall financial health and provides personalized recommendations to improve your financial well-being.
- Retirement guides: These resources offer valuable information and insights on various aspects of retirement planning, such as pension options, investment strategies, and estate planning.
By utilizing these tools and resources, you can gain a clearer understanding of your financial situation and make informed decisions about your retirement planning.
Ultimately, the ideal retirement income is unique to each individual and depends on several factors, including lifestyle, location, and financial goals. By understanding the average retirement income in the UK, exploring different retirement living standards, and utilizing available tools and resources, you can create a personalized retirement plan that ensures you have a comfortable and financially secure future.
What are the Retirement Living Standards?
Based on research from Loughborough University, the Pensions and Lifetime Savings Association has recommended three Retirement Living Standards: minimum, moderate, and comfortable. These standards essentially serve as a guide to help you determine how much you might require annually based on the type of retirement lifestyle you desire.
- Minimum: You have enough money to cover your essentials and some extra for non-essentials.
- Moderate: Compared to the minimum standard, you have greater financial security and flexibility.
- Comfortable: You can afford some luxuries and have greater financial freedom.
For each standard, the price of “baskets” of goods and services is included. These are products and services, with price adjustments made over time, in part to account for inflation. The guidelines outline the possible expenses for housekeeping, clothing, food and drink, transportation, vacations and leisure, and helping others. They allow you to see how much you might require annually for both a couple and a single person.
First, how do you picture your retirement?
You should ask yourself these kinds of questions because knowing what you’ll need to pay for when you stop working can help you decide how much money you’ll need to save. Do you plan to travel or take up new hobbies? Will you want to redecorate your house or get a new car at any point? Or do you see yourself living a more quiet, modest life after decades of hard work? You can use it to graph your needs in relation to the Retirement Living Standards as well.
How much money do I need for a comfortable retirement in the UK?
FAQ
What is the average retirement income in the UK?
How much pension do you need to live comfortably in the UK?
What is an acceptable retirement income?
What is a comfortable retirement income for a couple in the UK?
What is the average pension income in the UK?
Getting started is easy, fast and free. What is the average retirement income in the UK? The government’s most recent data (as of 2022) shows the average weekly income for pensioners to be £349 – that’s after you’ve taken away direct taxes and housing costs. This works out at around £18,148 per year.
Are private pensions a good source of income for UK retirees?
The proportion generated from private pensions has increased in recent years, but state pension benefits, occupational pension schemes and investments are also major sources of income for UK retirees. Find out how much retirement income you might receive from your private pension and how to boost it by using our pension calculator.
What is the average pension income in the UK 2021/2022?
According to Pensions Age, a leading pensions magazine, the average retirement income in the UK, after accounting for housing costs, rose to £349 per week in 2021/2022. The figure represents a decrease of £27 per week over the previous year.