Understanding Retirement Living Standards
Determining the ideal income for a comfortable retirement is a common concern. Every year since 2019, the Pension and Lifetime Savings Association (PLSA), in collaboration with Loughborough University, publishes crucial insights into the annual net income required for minimum, moderate, and comfortable living standards in retirement. Their latest calculations, released in June, offer a valuable benchmark for your retirement planning.
PLSA’s Income Benchmarks
The table below outlines the PLSA’s projected annual net income figures for different living standards, applicable to individuals and couples residing outside London:
| Living standard | One-person | Two-person | ||
| 2023/24 (£) | 2024/25 (£) | 2023/24 (£) | 2024/25 (£) | |
| Minimum | 14,400 | 13,400 | 22,400 | 21,600 |
| Moderate | 31,300 | 31,700 | 43,100 | 43,900 |
| Comfortable | 43,100 | 43,900 | 59,000 | 60,600 |
Source: PLSA
It’s worth noting that these figures are for those living outside the capital. If you reside in London, you should typically add an extra £1,300 to £3,200 per year to these estimates.
The Unexpected Twist: Falling Minimum Costs
One interesting development from the 2023/24 figures is a noticeable drop in the minimum standard costs. This largely stems from the sharp decline in energy costs between April 2023 and April 2024, which influenced the PLSA’s April-dated calculations for 2024/25. However, it’s important to be aware that energy costs have since seen an increase, with the April 2025 Ofgem price cap being 9.4% higher than the previous year. This highlights the dynamic nature of living costs and the need for ongoing review.
Defining Your Retirement Lifestyle
While the “minimum” standard covers essential needs with a little left over for leisure, the “fun” is somewhat restricted. This standard assumes no car, a single week’s holiday within the UK, and just £30 per month per person for dining out. Most individuals would likely aspire to a “comfortable” standard, which includes a three-year-old small car, a two-week four-star half-board Mediterranean holiday, three long weekend breaks within the UK, and a more generous £42 per week per person for eating out.
Calculating Your Pre-Tax Pension Needs
Achieving a “comfortable” retirement, particularly for couples, requires a significant pension income. For the first time this year, the PLSA has provided clarity on the pre-tax pension income required to reach each standard. Table 2 illustrates these figures for a two-person household living outside London:
| Standard | Total Yearly expenditure (£) | State pension (per person) (£) | Private pre-tax pension (per person) (£) | Total pre-tax pension income (per person) (£) |
| Minimum | 21,600 | 11,975 | – | 11,975 |
| Moderate | 43,900 | 11,975 | 12,320 | 24,295 |
| Comfortable | 60,600 | 11,975 | 22,758 | 34,733 |
These figures demonstrate the substantial private pension provision needed to achieve a comfortable lifestyle. For example, two people in London aiming for the comfortable standard could require up to £5,225 per month after tax. For comprehensive advice tailored to your personal retirement goals and to discuss your pension planning, contact Chartwell Wealth Management today.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
