Lower energy costs make retirement less expensive

Lower energy costs make retirement less expensive

Kevin Peachey, Cost of living correspondent, reported that a major study has revealed that lower energy prices have led to a decrease in the amount of money required to sustain a basic standard of living in retirement. Despite this positive development, the Pensions and Lifetime Savings Association (PLSA) has highlighted the need for a higher income to achieve a comfortable retirement than ever before. The PLSA annually determines the income levels necessary for a minimum, moderate, or comfortable standard of living for retirees.

The cost of a minimum retirement living standard for a single individual household has reduced by £1,000 to £13,400 per year, according to the PLSA’s calculations. The Centre for Research in Social Policy at Loughborough University independently develops and maintains these figures as a tool for individuals planning their retirement savings. Lower domestic energy costs, particularly gas and electricity bills, have contributed to the decrease in expenses for retirees seeking a basic standard of living.

For individuals aiming for a moderate lifestyle in retirement, the PLSA indicates that a single person would necessitate £31,700 annually, which is an increase of £400 from the previous value. Those looking to have a comfortable retirement would require even higher incomes. Retirees seeking a “comfortable” lifestyle, which includes indulgences such as beauty treatments, theatre outings, and vacations in Europe, would need £43,900 for a single person or £60,600 for a two-person household per year. Notably, none of these calculations involve housing costs, as many retirees have already paid off their mortgages.

Zoe Alexander, director of policy and advocacy at the Pensions and Lifetime Savings Association, emphasized that retirement planning should focus on sustaining one’s existing lifestyle rather than extravagance or austerity. As retirees have diverse needs and circumstances, sharing costs with a partner can significantly impact affordability in later life. Overall, the PLSA’s report serves as a valuable resource for individuals navigating retirement planning, according to experts like Paula Llewellyn from insurance company L&G and Helen Morrissey from investment platform Hargreaves Lansdown

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