The cost of retirement in 2024

Every year since 2019, the PLSA (Pensions and Lifetime Savings Association) has been sharing research into the retirement costs for couples and single people.

Their findings are presented in three categories of living standards, which include:

• Minimum – covers basic needs with a little disposable income.
• Moderate – provides more security and flexibility with finances.
• Comfortable – offers greater financial freedom and luxuries.

Their latest figures show what life might look like for retirees at each level going into 2024, and the necessary expenditure for reaching certain living standards.

Here is a guide to the rebased figures for retirement living standards, and what this could mean for your future if you are approaching or currently saving for retirement.

Retirement Living Standards

The PLSA Retirement Living Standards include the cost of several primary categories, covering house maintenance, transport, food and drink, holidays and leisure, clothing and footwear, and gifts or helping others.

For a more detailed idea of what these standards imply, here is a breakdown of the ‘food and drink’ and ‘holidays and leisure’ categories. This table shows the average cost and level of affordable comforts per couple:

Increased expenditure requirements

For the first time since the start of these reports, the ‘Moderate’ and ‘Comfortable’ groups have been adjusted to account for changes in spending patterns.

For example, from 2022 to 2023, ‘Comfortable’ retirees have one car instead of two, and ‘Moderate’ retirees now spend as much as ‘Comfortable’ retirees on clothes.

Reflecting more than inflation, the rebasing shows a significant jump of 34% in the single income requirement for achieving ‘Moderate’ living standards.

Take a look at the graph below to see the bottom-line annual costs for single people and couples to achieve the retirement living standards in each group:

These figures are not gross but net income requirements (after tax), displaying the increasing annual expenditure required to achieve each set of living standards – albeit without taking any rental costs into consideration.

As of 2023, a single person will need £14,400 a year to meet the minimum living standards for retirement. With the new State Pension being £11,502 a year from April 2024, individuals without their own savings may find covering costs a struggle.

Financial planning for retirement

By providing benchmark figures that savers can easily understand, the PLSA hopes to encourage people to develop personal savings targets for their own retirement.

While many people will expect their private pension and State Pension to be enough to meet at least the minimum living standards, there may be other costs to consider that the PLSA doesn’t include – such as mortgage, rent, social care, or tax payments.

With more than half of survey participants expressing concerns that they won’t have enough money in retirement, and some people considering State Pension deferral to keep working and saving for longer, it’s important to start planning as early as possible.

If you need expert help with assessing your financial circumstances, calculating your retirement income, and following a savings plan, why not come to gbac?

Our Barnsley accountants offer a range of professional accounting and financial planning services that could help you to maximise your retirement savings, so get in touch by calling 01226 298 298 or emailing info@gbac.co.uk to find out more.