More money for eating out, a higher personal grooming budget, and the inclusion of a Netflix subscription have now been included within the Pensions and Lifetime Savings Association’s retirement living standards.
These living standards were designed to help people budget and understand the pension income they might need in retirement. The PLSA sets three levels — a minimum, moderate and comfortable retirement living standard — and these are regularly reviewed and maintained by the Centre for Research in Social Policy at Loughborough University.
This latest update reflects changes to consumer expectations caused by the recent lockdowns as well as increased council tax costs and price inflation in the leisure goods and services sector.
The PLSA commissioned the Centre for Research in Social Policy to report on ‘The impact of Covid-19 on thinking about and planning for retirement’. Many participants said the loss of freedoms due to the pandemic had highlighted the value of travelling and reinforced the importance of having economic security.
The research found that the pandemic has prompted people to think about their retirement and whether or not they are likely to have the resources necessary to provide the living standard they want, and the updates to these different living standards offer a starting point, says PLSA.
According to the PLSA people need to budget for at least £10,900 (or £16,700 for a couple) to ensure a minimum standard of living in retirement. This includes a week’s holiday in the UK, eating out once a month, some affordable leisure activities twice a week. It also now includes an increase in the budget for hairdressing, and the inclusion of Netflix.
To enjoy a ‘moderate’ standard of living in retirement, people should be looking at a budget of at least £20,800 a year (or £30,600 for a couple). This higher budget allows for more more financial security and flexibility, such as going on a two-week holiday in Europe and eating out a few times a month.
Savers need an annual budget of £33,600 (or £49.700 for a couple) to enjoy a comfortable standard of living in retirement. This includes regular beauty treatments, theatre trips and three weeks holiday in Europe a year.
PLSA director of policy and advocacy Nigel Peaple says: “It is important that the Retirement Living Standards remain relevant by reflecting real world price changes and real world expectations about lifestyles in retirement. We hope the updated standards will encourage people to think about whether they are saving enough for the retirement they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.
“The lockdowns caused by the pandemic have given many workers a foretaste of being retired and made people think about the activities and experiences they truly value. The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement.
“With barbers and hairdressers closed during lockdowns and many of us taking scissors to our own hair for the first time, it is little surprise that the research groups agreed the budget for personal grooming should be increased across the three standards. The addition of Netflix also gives an insight into what many of us expect to be doing when we finish work.”