Exactly how much money you now need for 'comfortable' retirement

The cost of a comfortable retirement for a couple has skyrocketed to an astonishing £60,600 per annum. This figure, which pertains to income after tax deductions, has increased by £1,600

from the previous year, according to fresh research from the Pensions and Lifetime Savings Association (PLSA). For those targeting a moderate lifestyle, the annual cost post-tax has climbed

by £800 to £43,900. Conversely, the minimum standard of living has seen a decrease of £800, reducing it to £21,600 annually for couples. The PLSA's Retirement Living Standards (RLS),

developed in partnership with Loughborough University's Centre for Research in Social Policy, offer a benchmark for the yearly income needed to attain different standards of living in

retirement. These figures are based on comprehensive discussions with members of the public across the UK about their expected lifestyle in retirement. From these findings, the following

definitions for a couple have been established: COMFORTABLE STANDARD OF LIVING * Annual income: £60,600 (couple) * Greater financial freedom * Includes regular overseas holidays, generous

home improvements, and extensive social/leisure activities MODERATE STANDARD OF LIVING * Annual income: £43,900 (couple) * More financial security and flexibility * Includes a car, a few

holidays a year, and more frequent leisure activities MINIMUM STANDARD OF LIVING * Annual income: £21,600 (couple) * Covers basic needs with a bit left for occasional indulgences * Includes

a week-long UK holiday, a monthly meal out * Lacks budget for a car; dependent on public transport The fall in the minimum standard is mainly due to a considerable drop in energy bills and

shifts in public perception. Zoe Alexander, Director of Policy and Advocacy at the PLSA, said: “We’re not just seeing changes in costs, we’re seeing changes in how retirees live. Retirement

isn’t a one-size-fits-all experience. The Standards recognise that retirees can share costs, often with a partner, and that can make a huge difference to affordability in later life.” The

findings emphasise the importance of the State Pension, particularly for those at the minimum level. A two-person household receiving the full new State Pension (worth £11,973 per person, or

£23,946 combined in 2025/26) would be able to meet the costs of the minimum standard. The PLSA encourages individuals to use its research as a planning tool, tailoring them to their

lifestyle and combining aspects from different levels. Significantly, its figures suggest that each member of a couple would need to have a private retirement nest egg of £300,000-£460,000.

This would be used to buy an annuity - income for life - needed to top up the State Pension and reach a joint annual income after tax of £60,600. Each member of a couple expecting a moderate

lifestyle would need a private retirement nest egg of £165,000-£250,000 to buy an annuity retirement income to top up the State Pension. Professor Matt Padley, Co-director of the Centre for

Research in Social Policy at Loughborough University, said: “Our research on what the public agree is needed in retirement at these three different levels continues to track changes in

expectations, shaped by the broader economic, social and political context. "The consequences of the cost-of-living challenges over the past few years are still being felt, and we’ve

seen some subtle changes in public consensus about minimum living standards in retirement, resulting in a small fall in the expenditure needed to reach this standard.” Zoe Alexander added:

“For many, retirement is about maintaining the life they already have, not living more extravagantly or cutting back to the bare essentials. The Standards are designed to help people picture

that future and plan in a way that works for them.” Tom Selby, Director of Public Policy at investment experts AJ Bell, said the size of the private pension pots people need "might

feel intimidating". But he said: “The key is to focus on saving as much as you can afford from as early as possible, taking advantage of incentives like employer contributions, tax

relief and tax-free investment growth." Currently, minimum pension contributions are set at 8% of incomes, but this is well below the figure needed, he said. "The big danger here

is that, without a scaling up of minimum contributions, millions of people will sleepwalk into a retirement shock and be forced to choose between working longer or living on less money in

their later years," he said.