Rising prices add almost 20% to the minimum cost of retirement

New analysis from the Centre for Research in Social Policy (CRSP), funded by the Pensions and Lifetime Savings Association (PLSA), shows that what is needed to retire at a minimum living standard has increased over the last year by almost 20% due to high inflation. This substantial increase highlights the need for pension reform to help more people achieve an adequate income in retirement.

The Retirement Living Standards (RLS) describe what the public agree is needed in order to reach a minimum, moderate and comfortable standard of living in retirement.

This latest inflation-based update of the RLS takes into account changes in prices over the last year. The annual increase in what is needed to reach each living standard is by far the largest since the RLS were first established in 2019. Across all of the RLS, the increase in the price of domestic fuel has been the most significant factor in increasing what is needed overall. Between 2021 and 2022, the weekly cost of domestic fuel rose by around 130%. The increase in the weekly cost of domestic fuel accounts for between 30-40% of the increases in the overall budgets for a minimum, moderate and comfortable living standard in retirement between 2021 and 2022.

Between 2021 and 2022, the cost of a minimum RLS increased from £10,900 to £12,800 – or 18% – for a single person and from £16,700 to £19,900 – or 19% – for a couple. The moderate RLS increased 12% to £23,300 for a single retiree and by 11% to £34,000 for a couple. At the comfortable RLS, the cost of living increased 11% to £37,300 for one person and 10% to £54,500 for a two-person household.

Matt Padley, Co-director of CRSP, who led this research, said: “`This latest analysis shows the impact of increases in the cost of essentials – such as food and fuel – on what is needed to be able to live with dignity in retirement. The Minimum Retirement Living Standard sets out what the public think we should all able to have and do in retirement – this isn’t about luxuries, it’s about meeting your basic material needs and being able to take part in the world around you. The reality is that many are not able to do this and face impossible decisions about what to prioritise. As a society we need to work to ensure that everyone is able to reach this minimum in retirement.”

Read the full report here.

Read the full press release here