Cloud Cuckoo Land

Cus

They could have written a report that says that a comfortable retirement is between £12,000 and £100,000 a year depending on your expenditure.
That would just make people ignore the article as meaningless.  At least this way it gets people thinking about how their spending compares with others, and therefore more thought on their provisions for retirement. A good thing overall 

warrenb

So the interviews were carried out in 11 groups in 11 locations for the excl london numbers,14 if including London with an even split by socio demographic split, so if they interviewed 135 people, it means for each demographic group in each location is 3. Not exactly statistically sound is it. These were also open discussion groups, which then agreed on a figure for each category.

Moonwolf

So we're all agreed then. 

It is a bit of a rubbish study driven by marketing.

However, it does its job making people think about their retirement savings and how much they actually will need in retirement.  Something that as a general rule, people visiting this board regularly do, but we all know other people don't.

Universidad

Moonwolf said:

probably no need to panic if you can't meet the PLSA targets. 

I should hope not, because the targets for a "moderate" retirement for a couple went up by 9000pa since last year.

For those of us with DB pensions, increasing your annual pension by 4500 in a year would healthily exceed the annual allowance, and almost anyone who could even contribute that much as added pension would be categorically demonstrating they could live below the moderate retirement level while doing so.

Ebeneezer9

If these figures truly reflect a moderate lifestyle how do working folk exist with children, mortgage/rent etc. ? Perhaps a knees up, Ibiza four times a year lifestyle is assumed in retirement.  Thank goodness we are all different, and thank goodness for DB pensions too. 

kimwp

Moonwolf said:

westv said:

Nothing wrong with saving more.

No, absolutely not, and the success stories pinned thread is all about saving.

However, probably no need to panic if you can't meet the PLSA targets. 

Worth noting that the BBC article seems to say income everywhere but I think the source is the one here says expenditure, so the figures are even higher.  https://www.retirementlivingstandards.org.uk/ 

I think what is interesting is that the pensions minister is on the website talking about the standards, but there is no mention of the state pension needing to match the minimum. 

westv

Ebeneezer9 said:

If these figures truly reflect a moderate lifestyle how do working folk exist with children, mortgage/rent etc. ? Perhaps a knees up, Ibiza four times a year lifestyle is assumed in retirement.  Thank goodness we are all different, and thank goodness for DB pensions too. 

From the report

"Everyone's financial circumstances are different. The standards provide a rule of thumb guide based on common costs for many people in retirement. They are the first step on the journey: you might want to think about using them to go on to develop your own personal target. When doing this it is important to know what is and isn’t included in the standards. We’ve listed the key things below. We've also included some information about what total DC savings might achieve the standards if you were to buy an annuity, and what income you need before tax to afford the costs of each standard"

MeteredOut

westv said:

I don't get all the slagging off of the research.
Just because the figures don't match what YOU spend there seems to be an opinion that they can't possibly be "right". It's an average. It's not meant to define what YOU spend but is a general guide to what is generally spent overall.
You might just as well say the RPI figures are rubbish because you don't buy items included in the basket of items used to calculate the figure or it can't be correct because YOUR inflation bears no relation to the figure.
And I'm sure those doing the study knew what they were doing when they chose 135 (I'm assuming a cross section of society). I'm no expert on statistics but I do know you don't need 1,000s to provide a guide.

I'm also sure the study knew what they were doing when they chose the 135 people. But, I'd bet its NOT a cross section of society. These (sponsored) studies usually start with the expected outcome, and work back from there.

The "get 11 people in a room and let them decide" is never going to give statistically sound results. People are easily swayed by other people through social conformity.

An example: https://www.youtube.com/watch?v=qj5I0VsADS4

GenX0212

Comfortable lifestyle allows you three can of beer a week apparently 

I must be a Millionaire 

tunny149

I found the refreshed figures frustrating enough to start posting on MSE for the first time ever!
 
We are currently working hard on an early retirement plan.  I looked at the PLSA retirement figures last year and they seemed steep (and not exactly representative of UK household incomes).  We are frugal in some areas, but love to travel and like to eat out (i.e. we are probably complete spendthrifts compared to many of the super savvy people here on MSE).  But even with spending fairly lavishly last year, including a two week road trip in the US, we spent quite a bit less than the 2023 'comfortable' PLSA couples figure. 

Still, when I thought about it for a while I came to the conclusion that the PLSA figures are not altogether unreasonable for our particular circumstances because they a) are a buffer for 'real' inflation, b) allow saving for big ticket items such as renovations/new car etc., c) allow for extra hobbies/more travel in retirement.  So in the end I did use the PLSA figures as a benchmark alongside our own figures.

However, I felt extremely frustrated seeing today's updated 2024 figures.  The single moderate UK figure has gone up by £9,500 per year (is this a mistake???).  The London comfortable figure for couples has gone up by £4,700 (not forgetting that these figures are after tax).  Even with inflation running high, our actual household expenditure has not increased at such rates.

So assuming I was aiming for the comfortable London couples standard, we'd have to find an extra £4,700 p.a. in pension in 2024/25 alone to just keep up, as next year the figures surely will go up disproportionately again.  We would have to land major job promotions to manage that.  In fact, I don't see how you can ever retire (unless you have a vast household income or a DC pot and/or SIPP with consistently stellar returns) on the PLSA figures. Because even if you did manage to reach the PLSA target eventually and retired, then it's only a matter of a couple of years before you have fallen way behind the PLSA figures again.  Most pensions won't be able to keep up with the annual PLSA increases, certainly not DB pensions.  

Arguably, the point of the PLSA may be to lobby pension schemes to keep up with 'real' inflation rather than the published inflation figures; however, I really struggle to believe that schemes (certainly DB schemes) can award annual inflationary adjustments of this magnitude without going broke.  And if this is a negotiating tactic of giving super high figures for pension schemes to then compromise half-way, then the PLSA figures are an industry negotiation tool and not a meaningful benchmark for people actually saving for retirement.