Cloud Cuckoo Land

zagfles

hugheskevi said:

It is interesting to note from the pensioner income series that in 21/22 (latest data) the median net income before housing costs was £28,100 for pensioner couples and £14,700 for single pensioners.

As these are from a couple of years ago they will be a little higher now. The data comes from a very large and robust annual survey.

The £14,700 figure for singles is not far about the minimum PLSA standard of £14,400.

The £28,100 figure for couples is far short of the £43,100 moderate requirement for couples.

So the vast majority of pensioners are very "uncomfortable" according to the PLSA. Average pensioner couples' income is less than half required to be "comfortable"

michaels

tunny149 said:

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.

A very good point, they look at the price of an annuity - ie a pension that keeps up with inflation but given they see living costs rising 3x faster than inflation, by definition you could retire in a what they consider to be a 'comfortable' position within a few years be moderate and spend your last years very much at basic..... Sure if real incomes were rising that quickly across the board it might make sense but given they have not done so recently this seems to be all about expectations inflation rather than any real increase in the cost of living. 

I could define £500k plus PA as comfortable and any thing below as moderate or basic but it would hardy be relevant in the context of UK average incomes.

Albermarle

However, I felt extremely frustrated seeing today's updated 2024 figures

They are just figures in a survey, I wouldn't lose any sleep about them.

coyrls

warrenb said:

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.

And that's the flaw.  It's going to be a superset of expenditure in each category.  I can imagine the group process.  Somebody will say "what about.....", others may think that they wouldn't spend money on that but others might and so to avoid conflict they will agree that the item should be included.

They have done a bottom up process with no top down validation.  It's obvious that when the sum required for a comfortable retirement with no housing costs exceeds the average working income that must also cover housing costs, something is wrong with the figures.

bluenose1

I do like all these studies and yes you do have to compare with your own expenditure but it does make me think about my outgoings, though would have preferred the amounts in this study to reflect what the actual weekly / annual expenditure was for each group rather than hypothetical amounts.
Just checked and the Which retirement income targets does this and as of March 23 the couples Essential, Moderate and Luxury lifestyle was £19k, £28k and £44k.
Will be interesting to see the revised amounts this year.

Roger175

I didn't initially spot this thread and have since posted on the the NUMBER thread.

This actually reminds me of reading an article a few years ago on the cost of raising children. This particular article was so ridiculous, to the extent that not only did it bear no resemblance to what it had actually cost us to raise our 3 children, but the article was suggesting the cost was actually more that we were earning at that time!

GenX0212

I think the problem with these figures is that they expect you to have/need the same lifestyle from retirement right up until the moment of death. In reality everyone slows down and if you are only starting from 67 then you have probably began to slow down somewhat already.
My Dad (a widower age 83) has an income of about £14k, he gets three enjoyable European holidays a year from that,  not 4* but that isn't what he wants or needs anyway, and more or less does everything else he wants to. If he wanted or needed anything more then he has four kids only too willing to help out; but he's happy doing what he is doing and doesn't want anymore.

Nebulous2

tunny149 said:

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.

Welcome to MSE. I hope you keep going and continue to contribute. I can see how it would make people feel their target was disappearing over the horizon. Take a look at the pinned number thread, if you haven't already. 

I think the category titles are misleading - They've tried to come up with something which avoids referring to class, or how rich people are, but the names have left me unsure about what they do mean. Comfortable could be pipe and slippers in front of a warm fire, with very little expenditure of either energy or money. I don't want to go down comfortably - I want to keep challenging myself! 

The big rises may be people catastrophising about the cost of living and a general feeling of doom and gloom. I've been trying to do some observational stuff around that and I'm not seeing the impact that some - in for example - the hospitality industry are saying. My biggest problem often seems to be getting a table.

Plasticman

We will all have different expectations, lifestyles and therefore targets.
I know that my retirement target is accurate as I'm comfortably living off it now, before I retire, and it will adjust for inflation (hopefully!).
I don't need more validation that that. 

Mr.Generous

bluenose1 said:

I do like all these studies and yes you do have to compare with your own expenditure but it does make me think about my outgoings, though would have preferred the amounts in this study to reflect what the actual weekly / annual expenditure was for each group rather than hypothetical amounts.
Just checked and the Which retirement income targets does this and as of March 23 the couples Essential, Moderate and Luxury lifestyle was £19k, £28k and £44k.
Will be interesting to see the revised amounts this year.

Much more realistic figures. No, I  can't afford a superyacht, but I think Myself and Mrs Generous had a very nice last couple of years on less than £44k. I guess the key is no mortgage or debts.