The minimum amount you’ll need each year to get by in retirement

Saltus conducted a survey to gauge how accurately Britons are estimating the amount they will need for retirement. Michael Stimpson, Partner at Saltus said their findings highlighted a “a clear misunderstanding surrounding how much money is needed for a comfortable retirement”.

Overall, 92 percent of respondents underestimated the size of pension pot they would need for a comfortable retirement. Younger people and those with a lower net worth had the most unrealistic expectations.

However, even high-net-worth-individuals in the UK are significantly underestimating how much money they need for the retirement they want, with the average respondent misjudging by almost half.

Mr Stimpson said: “If anything, the perception gap between expectations of what will be needed and what is actually needed could get bigger as life expectancy continues to grow – living to 100 could become commonplace, and the impact that will have on retirement planning could be huge.

“Rising life expectancy is going to impact millennials the most, and this is the group, according to our research, that are the least realistic about what they will need in retirement.

“This not only highlights the importance of having a robust financial plan in place, but also, that it is never too early to start investing in your future.”

READ MORE: 50p coin ‘sells for £21,000’ with 10 million in circulation: what to check your wallet for

To help people understand what their retirement lifestyle will be like with various levels of income, the Pensions and Lifetime Savings Association (PLSA) published their Retirement Living Standards.

To calculate the cost of retirement at a ‘minimum’, ‘moderate’ and ‘comfortable’ retirement lifestyle, the PLSA examined how much the average pensioner would need to spend on essentials such as housing, food and drink and transport, and subsequently how much money would be left for things like holidays & leisure, clothing & personal and helping others.

A ‘minimum’ lifestyle, as the name suggests, covers the essentials and provides a small amount of money left over for pleasure and social events.

Single pensioners would need £10,900 each year to achieve a ‘minimum’ retirement, while a couple would need £16,700. It is expected that around three quarters of employees will achieve this minimum standard of retirement living.

This amount of income would provide a £41 weekly food shop (or £67 for a couple), £410 for clothing and footwear per person every year, and it would also pay for the costs of DIY home maintenance and allow for the decoration of one room per year.

State pension update: Triple lock decision ‘certain’ to be overturned by Rishi Sunak [REACTION]
State pension age? You may be able to get £25 boost – eligibility rules [INSIGHT]
State pension amount is rising – online tool shows how much you could get each year [GUIDE]

People living a ‘minimum’ retirement lifestyle would also be able to afford a week’s holiday in the UK, as well as a long weekend each year, and they would be able to give £10 to friends and family on their birthday.

However, this level of retirement income is not enough to support the running of a vehicle, and pensioners would therefore need to rely on their free bus pass or other public transport.

Pensioners who have the minimum retirement income would be able to eat out around once a month and also enjoy some activities a couple of times per week.

To afford a ‘moderate’ retirement lifestyle, a single pensioner would need £20,800 while a couple would need £30,600. Around half of British workers are expected to have an income between minimum and moderate.

A moderate lifestyle means having a bit more to spend on essentials, such as a £47 weekly food shop, or £74 for a couple, as well as £730 for clothing and footwear per person.

It also allows for some more help with maintenance and decorating each year and would mean pensioners could afford a three-year-old car and be able to replace it every ten years.

Holidays could also become more extravagant at this level of income, with Britons being able to have two weeks on holiday in Europe every year, in addition to a long weekend in the UK.

More money would be available for birthdays, with £30 for each occasion, and people living a ‘moderate’ lifestyle would also be able to eat out a few times each month.

The top level of the three tiers is the ‘comfortable’ retirement lifestyle, with around one in six UK employees expected to achieve an income somewhere between moderate and comfortable.

Around £33,600 would be needed for a single pensioner to live comfortably, compared to £49,700 for couples. Once again, this would mean more funds for day-to-day expenses, like a £59 weekly food shop, or £94 for couples.

The amount available for clothing each year would rise to £1,200 per person, and pensioners would also be able to run a two-year-old car and replace it every five years.

More flexibility would be provided for home improvements, as people could afford to replace their kitchen and bathroom every 10 to 15 years.

Pensioners would be able to spend three weeks in Europe each year if they have a ‘comfortable’ level of income, and spend £50 for family and friends’ birthday presents.

In addition, they could afford even more luxuries such as streaming service subscriptions and regular beauty treatments.

Whilst the state pension will go some way to helping people in retirement, it is not enough alone to meet any of the three levels described above. This only emphasises the need for Britons to ensure they know how much they will need to retire with.

Stay connected with us on social media platform for instant update click here to join our  Twitter, & Facebook

We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.

For all the latest Business News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! TechAzi is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More