Single pensioners need £277.5k more in their pension pots to secure a ‘moderate’ standard of living in retirement than pensioner couples.
Analysis by Standard Life, part of Phoenix Group, examined the pension pots needed to secure the PLSA’s ‘minimum’, ‘moderate’ and ‘comfortable’ standard of living in retirement.
For single retirees wanting to achieve a minimum living standard, which includes enough for the basics and one week's holiday in the UK a year but no car, a person would need an annual income after tax of £14,400.
To buy an RPI linked annuity the person would need to have amassed around £75,000 in retirement savings at current rates.
In comparison, pensioner couples would need an annual income of £22,400 to reach the same standard of living but would need to have accumulated any additional savings to cover a basic retirement lifestyle.
For a moderate living standard, which includes a car and one two-week foreign holiday a year, a single pensioner would need an after-tax income of £31,300 per year.
Assuming a full state pension is received, they would need an annuity which provides £24,480 a year, taking account of tax and to achieve this, they would need to save around £555,000.
Pensioner couples, meanwhile, need an annual income, after tax of £43,100, which they could get if they also amassed £555,000 in their joint pension pot, meaning they would need to save £277,500 each, assuming two full state pensions are being received.
Dean Butler, managing director for retail direct at Standard Life said: “Whether single by choice or by circumstance, single people must front a whole host of expenses on their own. From mortgages or rent payments, utility bills and council tax, to broadband, holidays and TV subscriptions.
“Unfortunately these aren’t automatically half the amount that couples pay. It’s similar when it comes to pension savings too. Couples can pool their finances for retirement, and as our analysis shows, single pensioners need to amass a significantly bigger pension pot to achieve the same standard of living as pensioner couples.”
The analysis also found for a single pensioner to have a comfortable standard of living in retirement which included a three-week foreign holiday, a full kitchen and bathroom replacement every 10-15 years and a £1,500 a year clothing and footwear budget, they would currently need to accumulate a pot of around £890,000.
While, pensioner couples would need £985,000 between them, or £492,500 each, meaning a single pensioner would need to save an additional £397,500 to achieve the same lifestyle as a couple.
Butler said: “It’s vital that single people start thinking about their retirement finances as early as possible. And unfortunately not all relationships last, so awareness of these figures becomes important when thinking about how to approach pension sharing and the possibility of a single retirement.
"Knowing the sort of lifestyle you want in retirement will help develop a plan, and the PLSA Retirement Living Standards tool outlines the savings target that you might need to achieve the retirement you desire.”
alina.khan@ft.com
