Pensioners need £8,000 more a year to retire comfortably

The annual cost of enjoying a moderate standard of living in retirement has risen by £8,000 in a year.

The Pensions and Lifetime Savings Association's (PLSA) latest Retirement Living Standards found the price of a moderate retirement for a single person was £31,300 for 2023 to 2024, up from £23,300.

For a couple the cost grew to £43,100, up from £34,000 the year prior.

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The increase is primarily the result of rising food and energy costs, researchers said.

The PLSA says a single person needs an income of £14,400, up from £12,800, a 12.5% rise, for the “minimum” living standard in retirement, according to the report.

This is more than the full new state pension, which will increase by 8.5% to just over £11,500 in April.

This living standard includes around £95 for a couple's weekly groceries, a week's holiday in the UK, eating out about once a month and some affordable leisure activities about twice a week.

It follows the publication of the state pension age and demographic change report saying the UK state pension age will have to rise to 71 for middle aged workers.

The PLSA headline figures are after tax, so more will be needed as pre-tax income.

The “comfortable” standard of living covers energy, food and clothing costs, as well as an annual two-week holiday in Europe and £50 per birthday or Christmas present.

Nigel Peaple, director of policy & advocacy at the PLSA, said that the cost of living has put “enormous pressure on household finances” over the last year and this is no different for retirees.

“It’s important for workers saving for retirement to remember the standards are not prescriptive targets, they are a tool to help you engage with the type of spending you think you will do in retirement and to help you plan for it,” he added.

The retirement living standards are calculated by the centre for research in social policy at Loughborough University.

Read more: State pension age needs to jump to 71, says think tank

"Following the COVID pandemic, this latest research highlights a pronounced need and enthusiasm among the public for shared experiences beyond the confines of their homes, including activities like eating out and holidays," said Professor Matt Padley, co-director of the centre for research in social policy at Loughborough University.

Alice Guy, head of pension and savings at Interactive Investor, said that the amount needed for a moderate retirement has "skyrocketed" during the past year.

“That’s partly due to the damaging impact of inflation, which hits those on a low income the hardest,” she said. “But it’s also partly due to changing expectations about retirement.

“With ongoing rising costs, older generations increasingly want to help out younger family members.”

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