Further to our ‘Saving for Retirement’ post in July, we now have a more definitive and updated post pandemic cost of retirement to share with you.

With additional (dare we say, more realistic and modern) goods in your basket, the latest update from the Pension and Lifetime Savings Association (PLSA) includes everything from hand sanitisers to a higher personal grooming allowance, an increased socialising and eating out budget, right down to the pandemic favourite for binge watching across all age ranges – your monthly Netflix subscription!

I am sure you could think of other ways to spend your retirement, but at least you will be able to keep occupied in the deepest and darkest of winter evenings, knowing you are still comfortably within your retirement budget.

So, what is the post pandemic cost of retirement?

Traditionally, the method of calculating the cost of retirement, and how much income you would need to live your retirement and later life to a comfortable standard, was to fix the amount as a percentage of your pay.

For instance, many worked on the basis of two thirds of their working pay when final salary pension schemes were more common.

But although this was an easy calculation, it could only be used as an indication, as it was rather haphazard. Low income earners were left with a number that was too low, and conversely, higher end incomes gave a cost of retirement figure that was unrealistic at the other end of the scale.      

The most recent study, in which the PLSA have highlighted a method more aligned to approaches taken in other countries, is to focus on living ‘standards’ in retirement, using a scale from minimum, to moderate and then comfortable at the highest level.   

‘Minimum’ standard of living in retirement

The minimum retirement standard of living is modelled around the Joseph Rowntree Foundation’s Minimum Income Standard.

Clearly, much has changed since the Foundation was established in 1904, but as Rowntree was focusing on making sure the population had all they needed to live on, the ‘minimum’ standards (initially recorded in 2019) cover all retirement needs of today, with the exception of budgeting for motor costs.

The 2021 annual budget to achieve this standard has increased since 2019 to £10,900 for a single person, and £16,700 for a couple. The increase allows for higher transport costs (public transport), an increase in costs for hairdressing for both men and women, and in addition to the TV licence which is no longer free for pensioners, Netflix has been included which equates to an extra £1.38 per week.

Every penny counts, of course, so it is important to be realistic and honest in your estimations if you are in the midst of calculating your own cost of retirement and considering how your savings will be best allocated.

Although not the most luxurious of lifestyles, the minimum standards are achievable for approximately 75% of single employees, with a combination of full state pension (£9,339) and a workplace pension.  Couples should be in the same position just with each drawing the full state pension.

Living a ‘moderate’ retirement

An annual budget of £20,800 (single person) and £30,600 (for a couple) will afford you a greater level of financial security and flexibility, including household maintenance and decorating and the running costs of a private car.

Increases in Council Tax between 2019 and 2021, higher costs for social activities and leisure facilities have led to the increase in the cost of retirement for a moderate lifestyle, and the budget for eating out each month has risen by £25 to £100 per person. Not forgetting Netflix once again adding to the increase.

This lifestyle is achievable for an anticipated 50% of single employees, and slightly higher for couples.

‘Comfortable’ standard of retirement

Although fewer single employees are expected to achieve a ‘comfortable’ standard of living, versus the ‘moderate’ and ‘minimum’ lifestyles, the budget increase to £33,600 obviously includes slightly more extravagance and financial freedom of choice.  

You should be able to carry out more household renovations, head off to Europe for at least three weeks each year, and not just run your car without too many financial concerns, but you could actually replace it on a more regular basis too.

At this level the cost of retirement for a couple is calculated at £49,700, and with the urge for foreign travel now high on the agenda for all ages since the start of the pandemic, this is the standard of living in retirement many of our clients are already setting their sights on.

This is where we would advise you targeting your retirement savings and goals if you want to live your best life with a little more freedom.

The table here provides more detail around each of the three standards of retirement you could expect.





What standard of living could you have?

Covers all your needs, with some left over for fun.

More financial security and flexibility.

More financial freedom and some luxuries.


DIY maintenance and decorating one room a year.

Some help with maintenance and decorating each year.

Replace kitchen and bathroom every 10/15 years.

Food and drink

A £41 weekly food shop.

A £47 weekly food shop.

A £59 weekly food shop.


No car.

3-year-old car replaced every 10 years.

2-year-old car replaced every 5 years.

Holidays and leisure

One week in the UK and a long weekend in the UK every year.

2 weeks in Europe and a long weekend in the UK every year.

3 weeks in Europe every year.

Clothing and personal

£410 for clothing and footwear each year.

£730 for clothing and footwear each year.

£1,200 for clothing and footwear each year.

Helping others

£10 for each birthday present.

£30 for each birthday present.

£50 for each birthday present.


Start considering the cost of retirement and how to make the best financial planning choices

Whether you have already taken steps towards saving for later life, or if you are in the early stages of retirement planning, our financial experts are here on hand to assist with your future focus.

Nigel Peaple, Director of Policy and Advocacy, PLSA added his own views to the research by saying: “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… But whatever your retirement aspirations, it is worth reviewing how much you save and where you save it.”  

In many cases, the pandemic has highlighted what is truly important to us all, and also given many the opportunity to glimpse at what retirement could be like. But of course, without the ability and will to save, these aspirations may not be fulfilled.

Don’t let time pass before considering the cost of retirement and how it could creep up on you before you have solid plans in place.

Pension contributions are tax-free, so it is worth topping up your payments as early as you can to gain maximum benefit.  

Simpson Financial Services are experts in all aspects of financial planning – from initial discussions around your state and workplace pension forecasts, to making the most of all savings and investments, retirement goals and estate planning to ensure your loved ones are all catered for in years to come.

Contact our team of Independent Financial Advisors today to start calculating your cost of retirement. With access to a vast range of markets and products, we will ensure you are set up for a financially secure and enjoyable retirement.