A single person will need post-tax annual income of £10,900 for a minimum standard of living in retirement, academics have estimated.
That spending budget increases to £16,700 for a couple, the calculations for The Pensions and Lifetime Savings Association (PLSA) suggest.
For the first time in the assessment, Netflix subscriptions and items such as haircuts are included.
The PLSA said lockdowns gave workers a foretaste of retirement needs.
“The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement,” said Nigel Peaple, director of policy and advocacy at the PLSA.
“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.”
The calculations for retirement living standards are pitched at three different levels – minimum, moderate and comfortable – and are developed and maintained independently by the Centre for Research in Social Policy at Loughborough University.
The assessment is intended as a guide for those planning their retirement savings. Housing costs are not included on the assumption that most pensioners have paid off mortgages, although the PLSA said that decision would be kept under review.
The minimum retirement living standard covers a typical retiree’s basic needs plus enough for some social activities, such as a week of holiday in the UK, eating out once a month, but not including running a car.
The estimate of an annual budget for the minimum standard has risen since 2019 by £700 for a single person, and by £1,000 for a couple.
The total requirement would generally be made up of a full state pension of £9,339 per year, as well as some workplace pension savings.
The moderate retirement living standard includes a two-week holiday in Europe and more frequent eating out.
This was assessed to require a budget of £20,800 for a single person, £600 higher than two years ago, and £30,600 for a couple, up £1,500.
The PLSA said around half of single employees were on track to expect a lifestyle between minimum and moderate. The position would be better for couples who were able to share costs.
‘Comfortable’ retirement
The annual budget needed for a comfortable retirement living standard has increased since 2019 by £600 to £33,600 for one person and £2,200 to £49,700 for a couple.
This covered items such as regular beauty treatments, theatre trips, and annual maintenance and servicing of a burglar alarm.
About one in six single employees is projected to have an income between moderate and comfortable.
Tom Selby, head of retirement policy at investment firm AJ Bell, said: “The pandemic has exposed gaping holes in the finances of millions of people, with many having little or nothing saved for an emergency.
“What’s more, contribution levels into pension schemes remain low, particularly among self-employed workers. As the UK economy slowly recovers from lockdown, it is vital financial resilience becomes a key focus for policymakers, both in the short and long-term.”
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Experts say £10,900 a year needed to retire