The Pensions and Lifetime Savings Association (PLSA) has released its 2025 update to the Retirement Living Standards (RLS), offering a refreshed perspective on the annual income required for retirees to maintain varying lifestyles: Minimum, Moderate, and Comfortable.
This year’s update introduces notable changes, including a decrease in the cost of the Minimum lifestyle and modest increases in the Moderate and Comfortable standards. Further information on the updates can be found here: https://www.retirementlivingstandards.org.uk/
At a glance, the current levels are as follows:
| Lifestyle Level | One-Person Household | Two-Person Household |
| Minimum | £13,400 | £21,600 |
| Moderate | £31,700 | £43,900 |
| Comfortable | £43,900 | £60,600 |
Note: The terminology has been updated from “single” and “couple” to “one-person” and “two-person” households to better reflect diverse living arrangements in retirement.
Decrease in Minimum Lifestyle Costs
For the first time since the RLS’s inception, the cost associated with the Minimum lifestyle has decreased:
- One-Person Household: Reduced by £1,000 from the previous year.
- Two-Person Household: Reduced by £800 from the previous year.
This decline is primarily attributed to a significant drop in domestic energy prices, with weekly fuel budgets falling by over 25% since the last update. Additionally, adjustments in public expectations, such as reduced spending on clothing, hairdressing, and technology, have contributed to the lower costs.
Modest Increases in Moderate and Comfortable Lifestyles
While the Minimum lifestyle saw a cost reduction, the Moderate and Comfortable standards experienced slight increases, reflecting inflationary pressures across various expenditure categories:
- Moderate Lifestyle:
- One-Person Household: Increased by £400 from the previous year.
- Two-Person Household: Increased by £800 from the previous year.
- Comfortable Lifestyle:
- One-Person Household: Increased by £800 from the previous year.
- Two-Person Household: Increased by £1,600 from the previous year.
These rises are tempered by the aforementioned decrease in energy costs, which have lessened the overall impact of inflation on retirees’ budgets.
Evolving Living Arrangements
The updated RLS acknowledges the changing dynamics of retirement living. The shift from “single” and “couple” to “one-person” and “two-person” household terminology reflects a broader understanding that many retirees may live with family members, friends, or other companions, sharing housing and living costs.
Implications for Retirement Planning
The 2025 RLS underscores the importance of proactive retirement planning:
- State Pension: The full new State Pension for 2025/26 is £11,973 per person. For a two-person household, this amounts to £23,946, sufficient to meet the Minimum lifestyle standard.
- Pension Pot Requirements:
- Moderate Lifestyle:
- One-Person Household: Estimated pension pot between £330,000 – £490,000.
- Two-Person Household: Estimated pension pot between £165,000 – £250,000 per person.
- Comfortable Lifestyle:
- One-Person Household: Estimated pension pot between £540,000 – £800,000.
- Two-Person Household: Estimated pension pot between £270,000 – £400,000 per person.
- Moderate Lifestyle:
These estimates assume income through annuities or drawdown with 4% returns over 25 years.
As an industry advisers need to take positive action to ensure that the consumer understands where they could be heading in term of potential retirement income and what steps they can take now to improve this position.
As part of Wingate’s standard pension services, members of employers workplace pension have unlimited access to qualified advisers who can help them navigate the retirement puzzle. If you would like to find out more about Wingate’s services, please contact the team at Wingate on 01883 332260 or at info@wbs.e-innovate.dev
