Will you have enough for your retirement?

With the Cost-of-living crisis hitting all UK residents, one segment of those affected are those retired on a state pension. With a fixed income, they may be hit hardest by the recent rise in prices, and are more likely to be unable to supplement it due to infirmity. According to the Pensions and Lifetime Savings Association, pensioners need to spend an extra £2000 just to achieve a basic standard of living.¹

A single person would need an annual income of £12,500+ to cover their basic needs¹. Last year the average cost was £10,900. The PLSA claims that pensioners relying on state pensions, who represent a sizeable proportion of those on minimum living standards, are being hit the hardest because most of their budget is spent on the main components behind the rise in inflation, namely food and the rising cost of energy.

The PLSA’s report has calculated that a retired couple will need an income of £19,900 pa to meet the minimum standard – a 19% rise over 2021. The minimum standard is calculated as basic needs of £96 per week for food and includes a budget for entertainment and one UK based holiday. The cost of what is described as a comfortable standard of living, which includes a greater spend including the cost of three weeks abroad on holiday and £1500 annual spending on clothes.

If you are retired or approaching retirement, plans for a comfortable retirement may have taken a blow because of the cost-of-living increases. For those with outstanding mortgages and other borrowings, the rise in interest rates will have been an unwelcome shock – perhaps upsetting plans for repayment and causing greater financial concerns?

If you do have any concerns about your mortgage repayments or the amount you owe then we are here to help share practical and useful advice for your exact situation, simply get in touch with us to book an appointment.

Sources:

1 - Pensions and Lifetime Savings Association (2023). Rising Prices Add Almost 20% to “Minimum” Cost of Retirement. Available at: https://www.plsa.co.uk/presscentre/news/article/rising-prices-add-almost-20-to-minimum-cost-of-retirement [Accessed 24 Jan 2023]

All the information in this article is correct as of the publish date 26 January 2023. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.