Firstly, we mean at normal retirement age which is now around 67 years of age. Though these estimates will hold good for slightly younger retirees.
According to research carried out by Loughborough University and the Pensions and Lifetime Savings Association (PLSA), workers who only manage to save enough for a retirement income that provides them with £10,200 a year (£15,700 for couples) will achieve a minimum living standard, those who managed to save enough for £20,200 a year (£29,100 for couples) will be able to live a moderate lifestyle during retirement and those who are able to save enough for £33,000 a year (£47,500 for couples) will be able to enjoy a comfortable retirement.
The study took all aspects of people’s lifestyles into account when deciding what constituted as a minimum, moderate and comfortable retirement lifestyle. The report found that a minimum living standard will enable a single retiree to spend £38 per week on a food shop, have a one week holiday and a long weekend in the UK per year, will not be able to afford a car and will have £460 per year for clothing and footwear.
A single person able to afford a moderate retirement will be able to spend £46 on a food shop each week, enjoy two weeks in Europe and a long weekend in the UK each year, and will have £750 to spend on clothing and footwear each year.
Meanwhile, a single person enjoying a comfortable retirement will be able to spend £56 per week on their food shop, enjoy three weeks in Europe every year and spend £1,000-£1,500 on clothing and footwear each year.
With no other income a couple would require savings in excess of £1Million to have certainty of a fixed level income of £47,500 without dipping into the capital. However, you will have a state pension and if you are both born later than 6/4/1953 this could be over £18,000 for a couple presently. This would mean needing £641,000 in savings. You could get away with less if you dipped into the capital amount, but don't forget inflation is the biggest eroder of wealth.
There is a lot more to this with everyone's individual circumstances. If you would like to discuss your retirement and pension and make sure you are on course, please contact us and we will be pleased to help and advise.