Retirement. It’s something that many look forward to as they approach their sixties. However, over the last few years there have been a number of things which have affected income and outgoings for people across the board.
Earlier this year, a report was published by the Pensions and Lifetime Savings Association (PLSA) highlighting the income a retiree needs in order to life an enjoyable and comfortable retirement. Cost of living increases as well as other rising expenses have dramatically impacted the annual income needed to enjoy retirement.
But there are ways to make it work and, if you’re looking for some ideas on ways to boost quality of life in your later years no matter your pension budget, read on.
According to the PLSA, there are three different budget categories when it comes to quality of life during retirement.
As with everything, the calculations are done looking at multiple contributory factors including:
The rate of inflation (and predicted inflation over the next 12 months)
Cost of living (related to outgoings such as rent, mortgage, groceries, utility bills, transport and other general living expenses)
The ongoing expectation of supporting children for longer and contributing to the raising of grandchildren (such as a living inheritance)
The PLSA has calculated the costs associated with three different comfort levels, which includes everything retirees can look to enjoy depending on their annual income after they leave work, including State Pension.
If you are in the ‘minimum’ group, you have a lower annual income and live a lifestyle providing the more basic needs. This includes covering household bills and groceries, as well as a one-week staycation, use of public transport and minimal monthly leisure activities. Individuals in this group have an income of £14,400 per year while couples have £22,400.
The moderate retirement is felt to be the happy medium with an associated annual income of £31,300 for someone living alone, while a couple would need £43,300. It’s felt that this is the spot most people should be aiming for.
Being in this bracket means you will have more financial flexibility and security, can afford one foreign holiday a year and enjoy more social and entertainment outings a month as well as fulfilling the basic needs of rent/mortgage, household bills and groceries.
If you’re in this retirement bracket then you’re looking at a more luxurious retirement with more holidays, day trips and other luxuries on top of the usual living expenses. In order to achieve this, you need an annual income of £43,100 as a single person or £59,000 as a couple.
So, if you’re headed towards retirement, or already there, what can you do that could help you to reduce your outgoings and boost your quality of life?
Below we have a few recommendations to consider.
As well as reducing stresses that you hadn’t considered, moving has many other benefits, including:
Lower running costs – a smaller property could cost less to heat in the winter and keep cool in the summer
Easier to maintain – with less space could come less upkeep, such as a smaller garden
Council tax – though it’s not always the case, downsizing could mean that you’re in a lower payment bracket, thus reducing your outgoings.