Credit, Collections & Insolvency News
Latest data from Hargreaves Lansdown’s (HL) savings and resilience barometer has put the cost of a moderate retirement income at £25,000 per year for a single person and £36,480 for a couple.
The research suggests that 38% of households are on track for a moderate retirement income. It is thought that retirement costs have soared by 34.3% per year for a single person and 26.8% for a couple.
Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown said “If you are wondering how much you need to live on in retirement then the latest HL Savings and Resilience Barometer data suggests you will need around £25,000 per year if you are single and £36,480 combined if you are in a couple.
“Developing pounds and pence estimates for what you need in retirement is a hugely useful tool in helping people work out what they need and how close they are to achieving it. It’s a conversation started by the development of the Pensions and Lifetime Savings Association Retirement Income Standards.
“For the purposes of this edition of the Barometer we’ve increased the figures the PLSA used for a moderate retirement in 2023 by headline inflation – 7.3%. This is a direct reflection of increases in costs to goods and services during that period. This offers an alternative to the current PLSA approach where more aspirational areas such as the desire to spend more time with family post-pandemic were added in. This led to their retirement costs soaring to £31,300 per year for a single person and £43,000 for a couple.
“These things will be important to many, but not all people, and many live well in retirement on far less. This diversity in approaches needs to be considered. Working out how to handle the inflation shock presents an opportunity for the PLSA and industry to engage on what is the best way to help people measure their retirement income needs.
“Even adopting a smaller increase exposes the huge challenges people face in planning for retirement. Only 38% of households on track for a moderate income in retirement – there is clearly much work still to be done to improve pension adequacy.
“HL research shows the answer for many people could reside within our very own savings accounts and ISAs. Recent Barometer data shows that 12.2 million households don’t have the pension savings required to retire with a moderate living standard. However, within this group, almost 7 million are not behind with debt repayments or bills and have the excess cash or investments that could be used to boost their pensions or SIPPs.
“It’s a simple shift that could see 1.8m households passing the threshold for a moderate retirement income and securing their financial future, while the outlook for the remaining households would be significantly improved.”
