A single person will need £31,300 a year for a moderate income in retirement, according to a pensions industry body.
The rising cost of living and an expectation to offer financial support to grandchildren had pushed up the income required by £8,000, it said.

The Pensions and Lifetime Savings Association (PLSA) uses evidence from focus groups to make the estimates.
It is intended as a guide for those planning their retirement savings.

The rise is primarily the result of rising food and energy costs, researchers said.

The calculations are pitched at three different levels - minimum, moderate and comfortable - and are developed and maintained independently by the Centre for Research in Social Policy at Loughborough University.

They estimated that a single person needed:

  • £14,400 a year for a minimum income
  • £43,100 a year for a comfortable retirement

Couples required a joint income:

  • £22,400 at the minimum level,
  • £43,100 at a moderate level 
  • £59,000 at a comfortable level.

How much do you need to save?

The amount someone needs to save during their working life to reach these levels of retirement income is a complicated and highly speculative calculation. That is because of changes over such a long time, the variety of pensions options, and lots of variables.

In very simple terms:

  • Someone with a defined benefit pension will be paid an income at retirement. Each year, as they save, they receive an update on how much pension they are forecast to receive.
  • If a single person buys an annuity (a retirement income) when they stop work, they would need to have saved £40,000 to £70,000 to reach the minimum standard, according to the PLSA, or £300,000 to £500,000 for a moderate standard, or £490,000 to £790,000 for a comfortable standard.
  • Many people now drawdown a pension from their invested pot. Under this option, a single person needs savings of £70,000 for the minimum standard, £490,000 for a moderate standard, and £790,000 for a comfortable level, according to investment platform AJ Bell

If you wish to discuss your pension, please contact one of our independent financial advisers.

Please note: All the above incorporates people also receiving the full state pension.

The calculations are based on current prices and make a host of other assumptions. For example, annuity rates change, so experts stress this can only be an illustration.

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