The Pensions and Lifetime Savings Association (PLSA) has updated its retirement living standards to include Netflix subscriptions and a higher eating out budget as peoples’ lifestyles are changing post-Covid.
In the first update of the retirement living standards since they were established two years ago, published today (October 12), changes included more money for eating out, a higher personal grooming and social activities budget and a monthly Netflix subscription.
The PLSA said just as the most recent updates to the CPI basket of goods included hand sanitiser and home gym equipment, the new retirement living standards reflect changing attitudes towards retirement lifestyles post Covid-19.
The standards show what life in retirement looks like at three different levels, and what a range of common goods and services would cost for each level.
The three levels are minimum, moderate and comfortable, and the standards have been designed to fill the perceived gaps in current approaches and aid advisers when helping their clients with retirement planning.
The annual budget for the minimum standard has risen since 2019 by £700 to £10,900 for a single person and by £1,000 to £16,700 for a couple in 2021.
The minimum basket now includes an increase in the budget for hairdressing, from £15 to £25 for women and from £8 to £10 for men, and the inclusion of Netflix, adding around £1.38 each week.
The moderate income level provides more financial security and flexibility. For example, people in this bracket could have a two-week holiday in Europe and eat out a few times a month.
The annual budget for this standard has risen by £600 to £20,800 for a single person and by £1,500 to £30,600 for a couple.
The eating out budget, which rose from £75 per person per month to £100 per person per month, drove much of this increase and the budget for social activities also grew from £35 to £50 per week.
At the comfortable standard, retirees can enjoy more luxuries such as regular beauty treatments, theatre trips and three weeks holiday in Europe a year.
This budget has increased by £600 to £33,600 for one person and £2,200 to £49,700 for a couple.
Nigel Peaple, director of policy and advocacy at the PLSA, said: “It is important that the retirement living standards remain relevant by reflecting real world price changes and real world expectations about lifestyles in retirement.
“We hope the updated standards will encourage people to think about whether they are saving enough for the retirement lifestyle they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.”
Peaple said lockdown had encouraged workers to think about what activities and services they would want to be able to afford during retirement.
“With barbers and hairdressers closed during lockdowns and many of us taking scissors to our own hair for the first time, it is little surprise that the research groups agreed the budget for personal grooming should be increased across the three standards.
“The addition of Netflix also gives an insight into what many of us expect to be doing when we finish work.”
But Tom Selby, head of retirement policy at AJ Bell, said while an income of between £11,00 and £21,000 each year may be enough for some, this will be far below the expectations of others and therefore saving will need to be boosted.
Selby said: “For those aspiring to more, higher levels of voluntary saving above the automatic enrolment minimum of 8 per cent will almost certainly be necessary.
“Higher contributions, particularly in the early years of saving for retirement, can benefit from extra compound growth over the long-term, with an additional boost provided by tax relief and in some cases matched employer contributions.
“Alternatively, retiring later or working part-time to supplement your pension could help boost your income.
“But whatever your retirement aspirations, it is worth reviewing how much you save and where you save it.
“If having a moderate or comfortable standard of living in retirement is a key goal, you might need to think about saving a bit more in your pension if you can afford to.”
amy.austin@ft.com
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