The cost of comfort

Paul Heneghan, Principal of Sterling Wealth Management, Chartered Financial Planner, discusses retirement funding

We now have more information, more choices, and more responsibility for our retirement savings. But will the future we want be the future we are able to get?

The Retirement Living Standards, launched by the Pensions and Lifetime Savings Association (PLSA), has been developed to help people picture what kind of lifestyle they could have in the future.

Pitched at three levels: minimum, moderate and comfortable, the standards have been designed to assist people who are unsure about how much to put away.

According to the trade association, a single person will need £10,200 a year to achieve the minimum living standard, £20,200 a year for moderate, and £33,000 a year for comfortable.

The minimum living standard covers most people’s basic needs plus enough for some fun.

The moderate lifestyle provides, in addition to the minimum lifestyle, more financial security and more flexibility.

At the comfortable level, retirees could enjoy some luxuries like regular beauty treatments, theatre trips and three weeks in Europe a year.

Assuming you qualify for the full State Pension of £8,767 a year, the PLSA says you’ll still need to build up a pension pot worth at least £587,116 to achieve a comfortable retirement.

Given that the average amount sitting in pension pots after a lifetime of saving is £61,897, many retirees may be shocked to learn how little income their savings will provide.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.