Revealed: How much cash you need for a 'comfortable' retirement

17 October 2019, 10:23 | Updated: 17 October 2019, 18:16

A new set of "retirement living standards" has revealed how much money savers will need to have a "comfortable" retirement.

The guidance, set out by the Pensions and Lifetime Savings Association, also shows what kind of lifestyle a person can expect on a minimum or moderate retirement income.

The trade association has said it hopes the standards resonate in the same way being told to eat "five a day" has encouraged fruit and vegetable consumption.

The minimum standard suggests a single person would have an annual retirement income of around £10,200, while a couple would have around £15,700.

A single person would have around £20,200, while a couple would have nearly £30,000, on a moderate retirement income.

The benchmark for a comfortable annual retirement income is £33,000 per year for individuals and £47,500 for couples.

The standards were based on research from Loughborough University.

Someone on the minimum standard may typically expect to afford a £38 weekly food shop, rising to £46 for someone on a moderate income and £56 on a comfortable income.

Those on a minimum retirement income could expect a week-long holiday and a long weekend away in the UK every year.

Those on the moderate income could expect two weeks away in Europe and a long weekend in the UK each year, while someone in the "comfortable" range could have three weeks in Europe every year.

Someone living a comfortable retirement may be able to replace their car every five years, while someone on a moderate retirement income may have an older car which they can afford to replace every 10 years.

On a minimum retirement income, it may be hard to afford to run a car at all.

The PLSA said that even the minimum retirement income standards allowed enough money for some "fun", including a budget for social occasions.

It said the good news was that through a combination of the full state pension of £8,767.20 per year, and auto-enrolment in a workplace pension, this level should be achievable for most people.

The PLSA, which represents over 1,300 pension schemes, launched the standards at its annual conference in Manchester.

Nigel Peaple, director of policy and research at the trade association, said: "Goal-setting can help people plan, and a series of simple standards could transform pensions engagement.

"Nearly three-quarters (76%) of people believe that retirement living standards would help them to know if they were on track for the lifestyle they want in retirement."

Mr Peaple added: "We want the pensions industry and government to use these standards to help people save for their future.

"For example, some parts of industry plan to provide the information to their scheme members, some are building tools for savers to track their saving, and others are developing calculators to help support savers to build a personalised target based on the standards."

Guy Opperman, minister for pensions and financial inclusion, said: "We have transformed saving for retirement for millions of people and the next challenge is to make it easier for them to engage more with their pensions.

"It's great to see what the PLSA has developed which has the potential to help savers think about the future and plan for the retirement they want."