Key facts
- Annual cost for a comfortable retirement for a two-person household rose to £62,700.
- A minimum retirement standard for a single retiree now costs £13,900 annually.
- 82% of the working population is projected to achieve only a minimum retirement standard.
- Rising costs for food, bills, and transport are driving increased retirement expenses.
- The full state pension is projected to be insufficient for a single retiree's minimum annual expenditure.
The annual cost of retirement has increased across all living standards, according to new figures from Pensions UK. A 'minimum' standard of living for a retiree living alone now costs £13,900 a year, up £500 from last year. A comfortable retirement for a two-person household now costs £62,700, an increase of £2,100. These rising costs are attributed to increased everyday expenses in categories such as food, household bills, and transport, as well as social activities and hobbies. Pensions UK's research, based on public consultations, defines 'minimum', 'moderate', and 'comfortable' retirement living standards. The data suggests a significant gap between current savings and future needs, with 82% of the working population expected to reach only the minimum standard, while just 23% and 9% are projected to reach moderate and comfortable standards, respectively. Experts warn that younger and middle-aged savers need to account for inflation over the long term, as future costs will be substantially higher. Retirees living alone face higher costs due to fixed expenses like energy and broadband being the same regardless of household size. The full state pension is projected to be insufficient to cover the minimum annual expenditure for a single-person household. Furthermore, the retirement living standards assume homeownership without mortgage or rent costs, a situation expected to decrease for future pensioners, with renters projected to form half of those in poverty by 2050.