Cost of basic retirement falls, but ‘moderate’ retirement expenses keep rising

Fall means that a couple receiving only the State Pension can finally afford a basic level of retirement.

The cost of covering the basics in retirement has finally fallen, but anyone hoping for a more comfortable life after work will need to pay even more.

That’s the finding of a new study from the Pensions and Lifetime Savings Association that looks at how much money people might need to set aside for their retirement.

The 2025 Retirement Living Standards report found that the cost for a minimum retirement living standard, which essentially means covering bills with only a small amount left over for leisure, has fallen by £1,000 since 2024 to £13,400 for a person living alone.

While this fall is welcome, it is still notably higher than the £12,800 figure from 2023.

For couples, the money required for a basic level of retirement now stands at £21,600, down from £22,400 last year.

The fall is significant as it means two people in receipt of the full New State Pension, which is worth £11,973 each, can now at least achieve the minimum required level of retirement.

What about those wanting a more comfortable retirement?

The news isn’t so positive for those hoping to enjoy a more comfortable standard of living in retirement.

The PLSA found that a single person retiring today would need an income of £31,700 a year to have a ‘moderate’ retirement, representing a £400 increase on 2024.

For couples, the figure stands at £43,900, an £800 year-on-year increase.

For a truly comfortable retirement that includes money for luxuries, a single person now needs £43,900 per year, an £800 increase, while couples will need a hefty £60,600 annual income, which is up £1,600 compared to 2024.

‘Retirement isn’t one-size-fits-all’

Of course, these figures merely represent a very rough guide.

Your expenses will vary greatly depending on factors like where you live and what your standard of living was before retirement.

As Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, points out: "The key thing is to think about what retirement means for you."

“Is it lots of travelling or something more sedate? You may find that what you need differs massively.

“Once you’ve got an idea of what you want, then you can start to put a figure on what that might cost and you can then use online calculators to see if what you’ve got in your pension will get you where you need to be.

“Putting your data in an online calculator can show you what you are on track for in retirement.

“This will either give you the confidence of knowing you’ve got enough or the time to put a plan in place if you haven’t.

“They can even be used to model the impact of boosting your contributions over time so you can see how much small changes can help you move towards your retirement goal.”