If you are using the PLSA’s excellent Retirement Living Standards benchmarks in your guidance to DC savers, be ready to make immediate changes. Today they have published updated figures and as usual we owe it Jo Cumbo to be first with the news!
Basic needs cost 10% more this year
The annual cost of a “basic” retirement income for a single person in Britain rose by around 10% to £14,400 according to the PLSA. Increases in energy and food costs and pressuring retirement incomes at the “basic” level.
— Josephine Cumbo (@JosephineCumbo) February 7, 2024
The squeezed middle feel even more pain
Meanwhile the annual cost of having a moderate income in retirement jumped by nearly 40% to £31,300 amid rising living costs and expectations that grandparents will be playing a role in supporting other family members, according to the Pensions and Lifetime Savings Association
— Josephine Cumbo (@JosephineCumbo) February 7, 2024
Here is a table setting out what the PLSA counts as a basic, moderate and comfortable retirement. Those in the “moderate” bracket have faced the biggest financial squeeze on their retirement income according to the PLSA. pic.twitter.com/0fWqVjPC5z
— Josephine Cumbo (@JosephineCumbo) February 7, 2024
Meanwhile the annual cost of having a moderate income in retirement jumped by nearly 40% to £31,300 amid rising living costs and expectations that grandparents will be playing a role in supporting other family members, according to the Pensions and Lifetime Savings Association
— Josephine Cumbo (@JosephineCumbo) February 7, 2024
The cost of comfort is over three quarters of a million pounds.
Securing a guaranteed annual income of £31,300 requires a pension pot of over £750,000, according to Scottish Widows. https://t.co/QH25otttgl
— Josephine Cumbo (@JosephineCumbo) February 7, 2024
Get ahead of the game
Jo seems to have got so far ahead of the game that she’s even beaten the PLSA , who have the old standards up on their website
Be the first on the block to have the new standards embedded into your guidance by sharing this article with your marketing and support teams!
Two reminders
Thanks to Dave Brooks for reminding us that these target income figures are net of tax- that means that if you are planning on paying tax in retirement, you will need to gross up your income by your marginal rate of tax.
The target income figures take into account some of the housing costs you might encounter in retirement, but don’t take into account all costs – especially if you have a mortgage in later life.
Revised numbers for 2023 are here
Previous numbers for comparison are here
