The Pensions and Lifetime Savings Association’s (PLSA) latest update to its Retirement Living Standards suggests higher outgoings were required in retirement across all three standards.
The requirements for a “minimum”, “moderate” and “comfortable” standard of living in retirement were outlined. The moderate standard has seen the biggest increase, requiring an extra £8,000 annually for a single person to reach this level of retirement living.
Meanwhile, the predicted standard of living for DC savers in retirement appears to have stagnated over the past three years, as seen by the Aon UK DC Pension Tracker’s return to 2020 levels.
Aon partner and head of UK retirement policy Matthew Arends says: “The latest updates to the Retirement Living Standards not only allow for price inflation but also ‘expectation inflation’ where there is an increase in the expectations of what is required in retirement at each standard of living.
“This expectation inflation was particularly apparent in the increase of the moderate living standard which increased by nearly 35 per cent and is now around 75 per cent of the comfortable living standard.
“While everyone’s expectations of what constitutes an acceptable standard of living in retirement will differ, this trend will inevitably require an increase in retirement savings. Savers should ensure they pay close attention to their pensions savings and consider whether additional savings may be required to achieve the living standard they want in retirement.”
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