Home Money Single people need almost £200,000 more in their pension than couples for ‘comfortable’ retirement

Single people need almost £200,000 more in their pension than couples for ‘comfortable’ retirement

by Elijah
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To retire today, single people will need more than £400,000 more in their pension than each member of a couple, according to new research
  • Singles currently need £187,000 more in their pension to be ‘comfortable’
  • But in 40 years’ time, when today’s young workers retire, that figure could rise to £414,000.

Valentine’s Day may be burning a hole in the pockets of couples across the country, but data shows single people currently need £187,000 more in their pension pot to have a “moderately comfortable” retirement.

In 40 years, when today’s young workers retire, that figure could have risen to £414,000, according to calculations by Interactive Investor based on figures from the Pension and Lifetime Saving Association.

Retirement income figures compiled by the PLSA estimate the cost of a basic, moderate and comfortable future life for individuals and couples, excluding housing and after-tax costs.

To retire today, single people will need more than £400,000 more in their pension than each member of a couple, according to new research

The PLSA costs the different types of retirement: Will you reach the one you want?

The PLSA costs the different types of retirement: Will you reach the one you want?

The association’s “retirement living standards” are widely used by the pension industry as a measure of how much money people need in retirement based on their spending habits.

Continued inflation, particularly in food prices, which have risen eight percent since hitting a 45-year high of 19.2 percent in March last year, has increased pressure on pensioners’ budgets, forcing them to spend more of your money on essential items like food and heating bills.

If they want to retire comfortably today, singles will need around £377,000 in their pension, almost double the £189,000 each member of a couple needs.

This means they currently need an extra £12,187 in pension income per year to match couples.

Alice Guy, head of pensions and savings at Interactive Investor, said: “With the cost of living rising, a huge chasm is opening up between couples and single retirees.

‘But the contrast is even starker for those retiring later in life, due to the long-term impact of inflation.

“The cost of being single is often underestimated and can be a double whammy, making it harder to save and increasing daily living costs, so people need a larger pension for the same standard of living in retirement,” he adds.

‘The problem is that many of our living costs are fixed and don’t vary much depending on household size. Taking a car or having a dog costs the same whether you are a couple or single.’

For a single person in their 20s, this means they will have saved an extra £414,000 over 40 years, putting £832,000 into their pension fund to match the standard of living of couples, according to Interactive Investor.

By comparison, those in couples who also plan to retire in 40 years will need just £418,000 to have a comfortable retirement, with a combined total of just £4,000 more than the requirement for a single person.

Single 20-somethings would need to add around £425 a month to their pension, including their employer’s contribution, assuming their contributions rise by 2 per cent each year and they see a 5 per cent return on investment.

Meanwhile, those in a relationship only need to save around £215 a month into their pension, based on the same assumptions.

To achieve those pension savings, young people have no choice but to make sure they are saving now.

However, being in a relationship is no reason not to build your pension fund to the greatest extent possible. Relying too much on one partner could cause you to need more in retirement to meet your needs.

“Life is also unpredictable and it is common for people’s circumstances to change, and many become single before or during retirement,” Guy added.

‘Many people are widowed and others end up unexpectedly single due to divorce or separation.

‘It is important to plan ahead and check the situation if one of you passes away. Many final salary pensions will pay only half the amount to the surviving spouse, and most people will receive only a state pension if their spouse dies.’

Will you be able to afford the retirement you want?

The cost of a comfortable retirement has risen over the past year, but what does it take to achieve it? Will he get it?

As the Pensions and Lifetime Savings Association updates its analysis of how much income people need for a basic, moderate or comfortable retirement, the This is Money podcast looks at what it all means for you.

Press play to listen to the episode in the player above, or listen (and subscribe and review us if you like the podcast) on Apple Podcasts, audio boom, Youtube and Spotify or visit our This is the Money Podcast page.

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