Retirement Living Standards in the UK: 2024 update published

Albermarle

GenX0212 said:

Roger175 said:

SouthCoastBoy said:

Our annual expenditure is around 30k a year(after tax) give or take a couple of thousand. On this we run two cars,have holidays abroad (at least once a year) and some uk weekend breaks, plus support  2 adult kids with the odd few hundred pounds now and then. 

The 30k puts us in the moderate category, but I would say I am living comfortably on 30k after tax, which should get easier when we are retired as currently we have to take holidays during school holidays as my wife is a TA.

Totally agree, our expenditure is around £35k which buys us a comfortable living. We've accurately recorded exact expenditure for the last 3 years as we geared up for retirement, so this is not an estimate. We have a large detached countryside property, run 3 cars, take several foreign holidays a year and help 3 adult children from time to time.

I've always found the PLSA figures bizarre. They suggest our comfortable cost of living in retirement will be more than we've ever actually earnt and that was when we were building up pensions, bring up 3 kids and paying a mortgage etc. 

My Dad probably has in the region of £15k annual pension (incl. SP). He lives a happy life and still manages 4 to 5 weeks a year holiday abroad.

I could guess he has some savings to dip into to fund some of these holidays, and maybe other one off purchases?

Organgrinder

Albermarle said:

Organgrinder said:

michaels said:

Organgrinder said:

When compared to the IFS figures for household incomes, the PLSA figures place the categories for singles/couples a follows:

Comfortable: Better than 91%/85% of the population
Moderate: Better than 78%/66% of the population
Minimum: Better than 17%/17% of the population

Of course this is after housing costs - so will differ even more for those with housing costs. But we should remember that the figures themselves are based on a survey of a small number of people. Myself and my wife do not come anywhere near the comfortable figure but our figures would I think provide for a nice retirement.

So I delved further into their examples.

Nicole who they decribe as a higher earner contributing 8% of her salary - she would have a slightly below moderate retirement.
Daniel and Aisha (one higher earner, one median) - a similar story moderate
Josh and David (both higher earners) - again moderate but slightly higher
etc.

They suggest increasing the pension contributions. Hardly surprising given who the PLSA represent - yes, the pensions industry.

This is the bit I find hard to fathom - surely the standard of living should compare to the average standard of living in the UK - afaik median household income is about 34k so 'moderate' which sounds to me like some sort of measure of average surely should reflect what life in the UK is actually like rather than being something highly aspirational for most?

Perhaps income distribution is skewed towards those who are older so may be moderate rather than relating to the general population should be linked to the median household income of those close to retirement age?  Is there any data for this?

Roger175 said:

SouthCoastBoy said:

Our annual expenditure is around 30k a year(after tax) give or take a couple of thousand. On this we run two cars,have holidays abroad (at least once a year) and some uk weekend breaks, plus support  2 adult kids with the odd few hundred pounds now and then. 

The 30k puts us in the moderate category, but I would say I am living comfortably on 30k after tax, which should get easier when we are retired as currently we have to take holidays during school holidays as my wife is a TA.

Totally agree, our expenditure is around £35k which buys us a comfortable living. We've accurately recorded exact expenditure for the last 3 years as we geared up for retirement, so this is not an estimate. We have a large detached countryside property, run 3 cars, take several foreign holidays a year and help 3 adult children from time to time.

I've always found the PLSA figures bizarre. They suggest our comfortable cost of living in retirement will be more than we've ever actually earnt and that was when we were building up pensions, bring up 3 kids and paying a mortgage etc. 

I too find the figures the PLSA uses bizarre.  

We estimate being able to holiday abroad 3 or 4 times a year. Be able to replace our cars every 4 years, eat out regularly etc and still find our savings growing! Ok things may change over the next few years but even so I find the figures they quote somewhat unrealistic.

As you can guess I am somewhat cynical with regard their motives. So maybe what we should be asking is "in comparison to the PLSA figures what do those on similar incomes spend their money on?" or "what do you need to have a lifestyle similar to those quoted?"

I am getting some deja vu regarding these discussions about these figures.

Doubtless because every time they are published people (like me) simply cannot believe them!

GenX0212

Albermarle said:

GenX0212 said:

Roger175 said:

SouthCoastBoy said:

Our annual expenditure is around 30k a year(after tax) give or take a couple of thousand. On this we run two cars,have holidays abroad (at least once a year) and some uk weekend breaks, plus support  2 adult kids with the odd few hundred pounds now and then. 

The 30k puts us in the moderate category, but I would say I am living comfortably on 30k after tax, which should get easier when we are retired as currently we have to take holidays during school holidays as my wife is a TA.

Totally agree, our expenditure is around £35k which buys us a comfortable living. We've accurately recorded exact expenditure for the last 3 years as we geared up for retirement, so this is not an estimate. We have a large detached countryside property, run 3 cars, take several foreign holidays a year and help 3 adult children from time to time.

I've always found the PLSA figures bizarre. They suggest our comfortable cost of living in retirement will be more than we've ever actually earnt and that was when we were building up pensions, bring up 3 kids and paying a mortgage etc. 

My Dad probably has in the region of £15k annual pension (incl. SP). He lives a happy life and still manages 4 to 5 weeks a year holiday abroad.

I could guess he has some savings to dip into to fund some of these holidays, and maybe other one off purchases?

He has a bit squirrelled away but not loads. Judicious choices of when and where to go keep his costs down.

QrizB

westv said:

GenX0212 said:

My Dad probably has in the region of £15k annual pension (incl. SP). He lives a happy life and still manages 4 to 5 weeks a year holiday abroad.

I guess it depends on what your expectations of a holiday are.

I've mentioned before that my parents have about £19k pa of pensions between them, run two cars and take two 6-to-8-week motorcaravan holidays (their third vehicle) each year.

I'm wondering if my plan for £40k gross pa is seriously over-egged!

Pipthecat

Single person comfortable is £43,900 which excludes tax and housing costs.  Given the average UK rent is around £1,000 a month (average mortgage is higher), exactly how much of a pot is needed? And good luck if you earn the UK average of £38k

They should change names of the pots to minimum, comfortable and luxury

Cobbler_tone

QrizB said:

westv said:

GenX0212 said:

My Dad probably has in the region of £15k annual pension (incl. SP). He lives a happy life and still manages 4 to 5 weeks a year holiday abroad.

I guess it depends on what your expectations of a holiday are.

I've mentioned before that my parents have about £19k pa of pensions between them, run two cars and take two 6-to-8-week motorcaravan holidays (their third vehicle) each year.

I'm wondering if my plan for £40k gross pa is seriously over-egged!

Living arrangements and what makes people content and happy is the crucial context.
I can absolutely see how people can have holidays abroad. If you go out of the main season it can be the same price (or cheaper) than a week in the UK. I gave up UK trips when the kids were young, £1500 for a week in a caravan. 
I've just been 5 star all inclusive in absolute luxury in Madeira for that as a couple.
There are plenty of weeks away at the right times for under £500 each and who wants to go in July/August?!
 
If someone is paying £500+ a month across council tax and gas/electric it starts to make a big difference. If a couple spend £60 a week on sausage and mash dinners, it is a big difference to a couple who have always been used to spending £150 etc.
The other important factor is that it is very difficult to change who you are and what your approach is to money. 
If some people were given £10m they would find it a challenge to fork out £50k+ on a new car, or a couple of million on a house...I appreciate some wouldn't!
Back to shopping, my parents are a good example. They could do all of their shopping in M&S and Waitrose but have never changed their normal habits...Aldi on a Monday, B&M on a Tuesday etc 

Where some probably struggle is when life throws you a curve ball, e.g. you need a new roof for £25k. Some people won't have access to that level of cash.

I am sure your parents enjoy a very good lifestyle. I've always considered a motorhome and had enough of airports. 

artyboy

I always look at these figures and note the paradox between me being on the one hand a total MSE (I just spent 30 minutes cancelling and rebooking a car hire to save a fiver), and on the other a total spendthrift. Because in my book, £60k in retirement for Mrs Arty and me won't be especially comfortable! 

I guess if we live long enough and these figures are an averaging over the years, it might well be accurate, but I'm intending to get out and travel loads, treat the (already spoilt) kids a lot, eat out well etc etc, and it's surprising how quickly that adds up, especially sitting at the pointy end of the plane...

Moonwolf

artyboy said:

I always look at these figures and note the paradox between me being on the one hand a total MSE (I just spent 30 minutes cancelling and rebooking a car hire to save a fiver), and on the other a total spendthrift. Because in my book, £60k in retirement for Mrs Arty and me won't be especially comfortable! 

I guess if we live long enough and these figures are an averaging over the years, it might well be accurate, but I'm intending to get out and travel loads, treat the (already spoilt) kids a lot, eat out well etc etc, and it's surprising how quickly that adds up, especially sitting at the pointy end of the plane...

I think there are two types of MSE.

One type won't spend a lot of money on anything.  The second likes some nice things, perhaps they have an expensive hobby or they like nice wines, the things they buy are expensive but they always do their research and never pay full price for those things. 

I quite like eating in quite expensive restaurants but I always use deals.

Cobbler_tone

Moonwolf said:

artyboy said:

I always look at these figures and note the paradox between me being on the one hand a total MSE (I just spent 30 minutes cancelling and rebooking a car hire to save a fiver), and on the other a total spendthrift. Because in my book, £60k in retirement for Mrs Arty and me won't be especially comfortable! 

I guess if we live long enough and these figures are an averaging over the years, it might well be accurate, but I'm intending to get out and travel loads, treat the (already spoilt) kids a lot, eat out well etc etc, and it's surprising how quickly that adds up, especially sitting at the pointy end of the plane...

One type won't spend a lot of money on anything. 
The second likes some nice things, perhaps they have an expensive hobby or they like nice wines, the things they buy are expensive but they always do their research and never pay full price for those things. 

Type 1: A close friend of mine and probably the wealthiest retired individual I know...."I like to count it"
Type 2: Definitely me. I'd pay £5k for a first class seat. I'd pay £5 for a great loaf of bread. I'd pay £100 for a £150 jumper. However, I'm not paying £8 for a McDonalds meal...maybe something from the saver menu on an odd occasion.

Ibrahim5

'Wrap of the day' from McDonald's is actually quite good, and good value too. £2.