One thing you should be able to look forward to in retirement is plenty of time to enjoy yourself. According to the Pensions and Lifetime Savings Association (PLSA), anyone approaching retirement should plan their finances according to their desired lifestyle.
Unfortunately, the PLSA’s Retirement Living Standards reveals a gap between a ‘minimum’ standard of living in retirement and the State Pension for a single person. Such a gap could have a significant impact on how enjoyable your retirement will be.
How much money do single people need in retirement?
The PLSA states that a ‘minimum’ income of £10,900 per year should be enough for a single person in retirement to ‘cover all of your needs with some left over for fun’. The full State Pension for a single person retiring after 2016 will pay out £9339.20, which is £1,560.80 per year or £30 less per week less than the PLSA’s recommended minimum.
Singles with a workplace pension or savings, on an income of £33,600 a year, can look forward to a ‘comfortable’ lifestyle. This could include three weeks’ holiday in Europe and a new car every five years.
Relying solely on the State Pension in retirement could mean cutting back on basics and little room for fun.
What does a ‘minimum’ standard of retirement fun look like?
On £10,900 a year, a single person over retirement age can look forward to:
- A week’s holiday plus a long weekend away in the UK.
- No car.
- A £10 budget per birthday present.
- £460 to spend on clothing and footwear per year.
In addition, you can eat out once a month or get a takeaway, pay a subscription to a streaming service, and get a haircut.
If you are facing retirement with only the State Pension to meet your needs, it’s clear that holidays and entertainment will be difficult to afford.
The £10,900 recommended by the PLSA for a basic standard of living doesn’t involve paying for help with maintaining your home. It covers DIY costs only. Couples on the ‘minimum’ income of £16,700 per year are also expected to do home repairs themselves, but at least there’s someone there to hold the ladder!
Paying for help with home maintenance could severely dent a retirement budget, leaving no funds for leisure activities.
Can single pensioners afford fun in retirement?
First of all, it’s vital not to assume that the State Pension will be sufficient on its own. It’s worth checking what you will get, in case there are any gaps in your National Insurance record.
According to the Office for National Statistics, in 2020, two in 10 employees did not have a workplace pension. Add to this all of the self-employed people who have not arranged a private pension. This amounts to quite a lot of single people who will struggle to meet their weekly bills, let alone have fun in retirement, without savings, investments or other forms of income.
Thinking more positively, you only have to find an extra £30 per week in retirement to make the difference between being able to afford a meal out with friends, or having beans on toast alone at home.
How easy is it to fund leisure activities on the single State Pension?
Looking at a retirement budget in detail, and in advance, highlights the importance of pension contributions and savings. It’s never too late to start saving, but there are other ways to top up your pension and pay for things you enjoy.
- Keep working. You don’t have to continue with the work you did before retirement; something new might be more enjoyable.
- Release equity in your home. This could fund travel, or just allow you to live more comfortably.
- Let your garage or a room in your home.
- Downsize. Move to an easier-to-maintain smaller property to reduce bills.
- Clear your credit card debts as soon as possible to avoid paying interest in retirement.
- Claim all benefits that you are entitled to, such as the Winter Fuel Allowance and Housing Benefit.
Is there fun for free in retirement?
You may need to cut back on more expensive leisure activities, but once you stop working, there will be time to find different things to do. One option to consider is volunteering in retirement, which can be fulfilling, sociable and fun.
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