Pensioners ‘need £2,000 more to make ends meet’

PENSIONERS need an additional £2,000 a year to achieve a basic standard of living as food and energy bills push the cost of retirement to a record high, experts have said.

A single retiree would need an annual income of at least £12,800 to cover their basic needs and live with dignity, an 18 per cent rise on last year’s £10,900, according to a report by the Pensions and Lifetime Savings Association, a trade body. It is the biggest percentage rise on record.

The least wealthy retirees have been hit hardest by the cost of living crisis because more of their budget is spent on food and energy – the main drivers of inflation. A retired couple would need a combined annual income of £19,900 in order to meet the minimum standard, £3,200 higher than in 2021 and equivalent to a 19 per cent rise. A minimum standard of living covers basic needs, such as £96 a week for food, a budget for social occasions and a holiday in the UK.

Wealthier retirees also face rising costs. A single person aiming for a moderate standard of living in retirement that provides more financial security would need £22,300 a year, 12 per cent more than in 2021, the report says. This includes £127 a week for food and two weeks’ holiday in Europe. The cost of achieving a comfortable standard of living in retirement increased by 11 per cent to £37,300. This is the highest standard of living set out in the report and includes the cost of three weeks’ holiday in Europe and a £1,500 annual budget for clothing and shoes.

Nigel Peaple, of the PLSA, said: “The past year has been an enormously challenging one for many households in the UK. Inflation has risen to its highest rate in 40 years, with the cost of essentials and domestic fuel soaring, putting substantial pressure on incomes for working age and retired households, particularly those on low incomes.

“The figures underline why the Government was right to increase the state pension in line with the triple lock.”

Retirees will receive their biggest pay rise on record in April, thanks to the Government’s triple-lock policy, which increases the state pension by the highest of the previous September’s inflation, wage growth or 2.5 per cent. This year, payments will increase by 10.1pc.

Experts have warned that many have failed to build up sufficient savings to help fund their retirement. The Pensions Management Institute said one in five people had stopped or reduced their workplace pension contributions because of financial pressures.