10 January 2024 , 09:54
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The state pension is due to rise again from this April - but this money alone is unlikely to be enough money to afford you a comfortable lifestyle in retirement.
The full new state pension - you'll be on this if you reached state pension age before April 2016 - is currently worth £10,636.60 a year and will increase to £11,541.90 from April. This is the maximum amount you may be able to claim - some people will get less, as it all depends on your National Insurance record.
But how much do you actually need to retire comfortably? One of the main indexes used to judge how much money you need in retirement is the Retirement Living Standards which is calculated by the Pensions and Lifetime Savings Association (PLSA). Before we delve into the numbers, it is important to note that this doesn't take into account costs such as mortgage, rent, social care costs and any tax on pension income.
'Minimum' retirement lifestyle
It states that for a minimum level of retirement standard, a single person should have £12,800 in income each year, while a couple should have £19,900. The PLSA says this "covers all your needs, with some left over for fun and social occasions" but wouldn't be enough to holiday abroad.
It continues: "You could holiday in the UK, eat out about once a month and do some affordable leisure activities about twice a week." It assumes you'll be able to spend £54 a week on food if you're single, or £96 if you're in a couple, and up to £580 for clothing and footwear each year if you're single, £460 per person if you're in a couple, and £20 on each birthday present you want to gift.
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'Moderate' retirement lifestyle
For a moderate retirement lifestyle, a single person should have £23,300 in income each year, while a couple should have £34,000. This "provides more financial security and more flexibility" compared to someone with a minimum standard.
The PLSA said: "You could have one foreign holiday a year and eat out a few times a month. You’d have the opportunity to do more of the things you want to do." Someone with this income could afford £74 a week on food, or £127 for a couple, up to £791 for clothing and footwear each year, or the same amount per person if you're in a couple, and £34 on birthday presents.
'Comfortable' retirement lifestyle
If you want a comfortable retirement, you'd need to have £37,300 a year if you're single, or £54,500 for couples. This would allow you to "be more spontaneous with your money" and enjoy more of the things you like.
The PLSA said: "You could have a subscription to a streaming service, regular beauty treatments and two foreign holidays a year." It assumes this person could spend £144 a week on food, or £238 if you're in a couple, along with up to £1,500 for clothing and footwear each year, £1,300 per person if you're a couple, and £56 for birthday presents.