The detail
Why do we need the Standards?
Since the introduction of auto enrolment in 2012, more than 11 million people are gradually putting money away for their future for the first time or saving more.
There’s no doubting the success of this change, but auto enrolment means savings can now start with a low level of engagement at the outset. Meanwhile, there’s less saving in Defined Benefit (DB) schemes, which offered security and more saving in Defined Contribution (DC). There are also even more options about how to spend pensions savings at the point of retirement which can cause confusion and require more planning by individuals.
Now, more than ever, savers need to engage with their own retirement outcomes. It’s time for us all to picture our future.
Our research showed 82% of savers don’t know how much they’ll need in retirement, with only a third (33%) claiming to have carried out a “great deal” or “fair amount” of retirement planning. Our research also showed that only 48% had ever reviewed whether they are putting enough money into their pension.
Savers now need to take more responsibility for their financial futures and it’s important we all have the education, tools and guidance to make the right decisions for our retirement.
Our research shows 80% of savers believe having an idea of the costs of different living standards in retirement is helpful when planning for retirement, for example the costs at a Minimum, Moderate or Comfortable Standard.
The problem is, working out the exact amount we need is tricky. Our research shows 82% of savers don’t know how much they’ll need in retirement.
What are the Standards?
To keep things simple, the Retirement Living Standards cover three levels of expenditure to help savers understand how much money they’ll need to live the lifestyle they want in retirement.
The Standards provide a benchmark level of annual costs to fund different standards of living in retirement. Each Standard is based around a basket of goods and services and considers different circumstances (living inside or outside London; single or joint income household).
Most pension savers are expected to achieve at least the Minimum Standard thanks to the State Pension, especially when sharing living costs with another person. When combining the State Pension with other workplace and private pension savings, someone on average earnings is expected to reach the Moderate level. For savers to work out which target they should aim for, they should compare the kind of lifestyle they have now and if they wish to maintain this in retirement.
Although more people than ever are saving into a workplace pension, many savers don’t engage with them. Pension Attention is here to tackle this, with a national awareness campaign that urges you to Pay Your Pension Some Attention.
- Find out if you have any lost pension savings
- Log in to your pension accounts and check what you’ll get when you retire
- Picture your future self and how much you’ll need
In 2022, the PLSA and the Association of British Insurers launched the Pay Your Pension Some Attention campaign to encourage people to reconnect with their pensions.
That gives us 12 amounts:
| One person | Two person | |
|
Minimum
Covers all your needs, with some left over for fun | £13,400 LONDON £15,800 | £21,600 LONDON £24,800 |
|
Moderate
More financial security and flexibility | £31,700 LONDON £33,000 | £43,900 LONDON £45,500 |
|
Comfortable
More financial freedom and some luxuries | £43,900 LONDON £45,700 | £60,600 LONDON £62,700 |
But the power of the Retirement Living Standards lies in giving people a real sense of what they will be doing and how they could be spending their money when they finish work.
Talking to people about the building blocks of their lives - their car, their home comforts, how much they can give their family, the kind of holidays they’ll have - helps them to engage with their pension.
Of course, we’re all different. Everyone who reaches the Minimum Standard is not going to have exactly £13,400 or £21,600.
What the Standards mean for people in the uk
Pension saving has changed significantly over the past decade, with auto enrolment, master trusts, reforms to annual allowances and changes to the way we access our money. We’ve created the Standards to take stock of where retirement saving is and inspire people to engage with their retirement savings.
Firstly, picture the financial future you’d like to achieve and what it could cost. These illustrations show we are all on different journeys and will all have different retirements based on our current lifestyles. We have used modelling provided by the Pensions Policy Institute to create a few examples of what kind of living standard different people could have in retirement depending on their salaries, type of household and level of pension savings. We have used some examples of people on a living wage, on average (median) earnings and on a higher income to illustrate what their retirement might look like (an income at the 70th percentile means you earn more than 70% of people, 30% earn more than you).
Take a look and see what it could mean for you.
The History of the Standards
We recommended a set of Retirement Living Standards for the UK in our July 2018 report, ‘Hitting the Target: A vision for retirement income adequacy’, which followed a consultation we ran with the pensions industry to find ways to give people a better income in retirement.
We then partnered with researchers at Loughborough University’s Centre for Research in Social Policy. They developed the Minimum Income Standard, funded by the Joseph Rowntree Foundation, which is the basis for our Minimum Standard.
We set the Moderate and Comfortable Standards with the help of focus groups made up of real people held all over the country.
Between them, the focus groups pulled together a list of the goods, services and activities that they believed to provide our three Standards of living in retirement. The work was extensive – here are all the items that go into the Standards:
House
- Household bills (e.g. water, council tax, insurance, electricity)
- Telephone bills (landline and mobile) and line rental
- Decorating and maintenance
- Furniture, cleaning supplies, lightbulbs, cooking utensils, appliances (e.g. fridge, washing machine), garden supplies, towels, bedding, etc.
- Gardener/cleaner/window cleaner (if applicable)
- Funeral plan (if applicable)
Food
- Eating out budget
- Groceries
- Beer and wine
Transport
- Car (if applicable)
- Railcard and train travel
- Taxis
Holidays & Leisure
- TV, laptop, printer, speakers, CDs and stationery supplies
- TV license and subscriptions
- Internet
- Activities
- Holidays, spending money and passport
Clothing & Personal
- Clothing and footwear budget
- Cosmetics, toothbrush, toothpaste, shaving supplies, hair styling, beauty treatments (if applicable), suitcases, umbrellas
- Dentist, opticians, podiatry, minor first aid (e.g. plasters, paracetamol)
Helping Others
- Gifts for others
- Helping others (if applicable)
- Charitable donations
From this, we were able to calculate a cost for all these items and work out what each living standard would cost a year.
Updating the Standards
We update the Standards annually, carrying out further research with people across the country to ensure that the Retirement Living Standards remain current, incorporating changes in the costs of goods and services as well as reflecting any changes in people’s expectations for retirement. We publish any required changes to the Standards on this website. The latest research updating the Standards was carried out in 2024.
Our most recent review (2024/2025) has shown the need to increase budgets for fuel due to changes to the cap on unit prices. We’ve also increased the budget set for food to above the CPI (Consumer Prices Index) inflation rate. The rise in prices for some core staple goods have increased the cost for grocery shopping across the Standards. Food eaten outside of the home has also increased due to hospitality businesses seeing an increase in costs. Since the pandemic there’s been more focus on spending time outside of the home with friends and family, as a result the Moderate Standard includes a budget for taking family out for meals which it hadn’t before.
Our previous research reports can be found at www.plsa.co.uk
A full report on the original research can be found in the archive
Read the full report on how we carried out the original research.
Read the latest research report
You can download the detailed baskets of goods data for each Standard from the research.
What you need to know about the Standards
The Standards are the first step on the journey: you might want to think about using them to develop your own personal target. When doing this it’s important to know what is and isn’t included in the Standards. We’ve listed the key things below. We've also included some information about what total Defined Contribution (DC) pension (sometimes called Money Purchase) savings might achieve if you were to buy an annuity, and what income you need before tax to afford the costs of each Standard.
State Pension - the full State Pension for the 2025-26 tax year is £11,973. Details on the current State Pension amounts and eligibility can be found on the Government website.
Housing - the Standards assume people are mortgage and rent free, because this is still what most of the population close to retirement will achieve in the next few years. Moreover, some people on low incomes with low savings are sometimes eligible for Housing Benefit payments to cover the cost of rent. However, although most older households are currently projected to be owner-occupiers over the next 20 years or to be in receipt of Housing Benefit, it's crucial to recognize that an increasing number of individuals will face additional housing costs, ie mortgage payments or rental costs. If you think you will be in this position, it will be necessary for you to add the relevant amount of mortgage or rent to the Retirement Living Standard of most interest to you. To provide you with a general idea of additional housing costs we've included recent rental market statistics. However, it's important to note that housing costs vary significantly based on individual circumstances, preferences, and location. We encourage you to explore costs that align with your unique situation for more accurate planning.
Social care - care costs may well arise, especially later into retirement. These costs are very specific to individuals so we haven’t included them in the Standards. If you think you are going to need to cover costs of social care, and want plan an income to cover these, then these would need to be added to the figure the Standards provide. You might want to think about adding in an average cost to give you a ball park figure.
Where you live – our findings were based on research conducted in many locations across the UK which have enabled us to calculate figures for the UK and for London, but there may be some areas that have higher or lower costs of goods and services e.g. additional transport costs.
Dependents - the financial support of (a) dependent(s) other than a partner aren’t included in the Standards – for example, living with relatives could change your expenditure.
DC pot size and income tax – This will provide you with a guideline on how much is needed in your pension savings for each Standard depending on your household occupancy. See how much income you could need for each Standard and also what sort of income you need before tax to afford the costs of each Standard. Please note the Retirement Living Standards are costs at retirement not an income level.
Other sources of income - remember, the Standards are what the basket of goods cost – so if you have sources of income other than your pension – part time work or other savings – you might want to factor this in to whether you are on track for the future you want.
Financial advice – the Standards are designed to provide a helpful rule of thumb and are based on research findings - they do not constitute financial advice.