12 January 2023 , 15:22
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The hike in living costs has hit poorer pensioners far harder than those who are better off, new research shows.
To live what is classed as a "minimum" lifestyle as a retiree - where you have enough money to "live with dignity and not just survive" and enjoy some social events - you now need £12,800 a year for as a single person and £19,900 for a couple.
That's an 18% and 19% rise, respectively, in 12 months, according to research by the Pensions and Lifetime Savings Association.
The figures are part of its latest influential Retirement Living Standards report, which reveals what annual incomes people need for a "minimum", "moderate" or "comfortable" retirement.
They are based on different baskets of goods and services such as food and drink, transport, holidays, clothes and social outings.
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"Rising food and fuel prices contributed significantly to the increase in the minimum standard," says the PLSA.
"The update also saw the amount of food included within the budget increasing to bring it into line with the up-to-date nutritional research on a healthy diet."
Pensioners on low incomes spent a higher proportion of their budget on food and energy bills, which have shot up in price recently, the PSLA found.
The amount needed for a 'minimum' lifestyle has risen 18% over 12 months (Getty Images)It also looked at the amount younger people will need to have saved by the time they retire to enjoy a decent standard of living.
The state pension will rise 10.1% in April in line with the triple lock, bringing it £203.85 or £10,600 annually if you qualify for the full flat rate.
But the PSLA, a finance industry-backed body, says that falls £2,300 short of the annual income people need for a minimum standard of living as a pensioner.
It added, however, that higher interest rates will help savers as they can get more attractive rates on annuities for their retirement pots as well as better rates on savings accounts.
How much do you need for your retirement?
A 'minimum' lifestyle would cover a week's holiday in the UK plus a long weekend away (Getty Images)This is how much you would need if you're hoping for a minimum, moderate and comfortable lifestyle, according to the PLSA. The first figure is for a single person and the second for a couple.
Minimum lifestyle: £12,800 or £19,900 a year
A pensioner on a "minimum" lifestyle budget should be able to cover some DIY maintenance and enjoy a week's holiday plus a long weekend in the UK.
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The money would only cover public transport and not a car.
A single person would have around £54 to spend on food each week, including eating out and about £580 a year to spend on clothing and footwear.
A couple who each receive a full state pension of £10,600 a year from this April, would reach the amount needed for a "minimum" level, but a single person would have to supplement this with private pension savings of £36,500.
Those living a 'moderate' lifestyle would have around £74 a week to spend on food (Getty Images)Moderate lifestyle: £23,300 or £34,000 a year
The rise in annual income required for a "moderate" lifestyle is more in line with inflation, with an increase of 12 per cent to £23,300 for a single retiree and 11 per cent to £34,000 for a couple.
Pensioners on a 'moderate' lifestyle income should have enough to receive some help with home maintenance and decorating each year and to buy a three-year-old car and have it replaced every ten years.
A single person would have around £74 a week for food and £794 a year on clothes and footwear.
'Moderate' retirees should be able to go away for two weeks in Europe each year and one long weekend in the UK.
A couple both receiving a full new state pension would need to accumulate retirement pots of £121,000 each for a "moderate" lifestyle.
But a single person with only one state pension would have to save a much larger pot of £248,000.
A person or couple living a 'comfortable' life should be able to afford three weeks in Europe a year (Getty Images)Comfortable lifestyle: £37,300 or £54,500 a year
The rise in what's needed to live a "comfortable" retirement is similar to the rise for a 'moderate' lifestyle, at 11%.
'Comfortable' retirees should be able to afford a new kitchen and bathroom every 10 to 15 years, as well as three weeks holiday abroad, a two-year-old car replaced every five years and extra luxuries such as beauty treatments and theatre trips.
A single person would have around £144 a week to spend on food and £1,500 a year on clothes and footwear.
A couple both getting full new state pensions would also need retirement pots of £328,000 each, while a single person would need to have saved £530,000.