The Retirement Living Standards provide a simple framework to expenditure needs in retirement, making them both valuable for both non-advised and advised clients.
In June 2025, the Pensions and Lifetime Savings Association, now Pensions UK, announced its new Retirement Living Standards. These living standards were created to help people picture what kind of lifestyle they could have in retirement and the costs involved.
The standards show what life in retirement looks like at three different levels — minimum, moderate and comfortable living — breaking down how much a range of common goods and services would cost for each level.
This is, of course, a very rough average and you as a financial adviser would be looking at your client’s individual needs and objectives. But you could use them at an initial client meeting, or if there are employers on the books who would like a presentation for their employees, the living standards are a useful introduction to how much they are likely to spend in retirement.
These could also be used to bring retirement to life, for example to explain how a couple outside of London looking for a comfortable retirement would need roughly £60,600 a year to maintain their lifestyle.
This would allow them to have £600 a year for maintenance of their house, £252 per week for food, £1,500 per person each year on shoes and clothes, and to replace their car every five years.
People do not know how much they may spend in retirement and only have a vague sense of what they should be targeting, so adding the Retirement Living Standards to your company website is also a valuable exercise.
This gives potential clients an idea of how much income they should be targeting, but it does not tell potential clients how they can achieve these targets, which is where you come in to help provide a targeted plan to achieve their needs and objectives.
High inflation has meant that the Retirement Living Standards have increased considerably since being introduced in 2019 — remember the £10,000, £20,000 and 30,000 figures for singles and £15,000, £30,000 and £45,000 for couples?
But in 2025 the levels have been only modestly increased, and due to the minimum level being rebased, the level has actually fallen. These recent changes are primarily due to a substantial reduction in energy costs and some small spending adjustments made to the living standard by research participants.
Thankfully, for those receiving the state pension, basic income needs will mostly be met if they receive the full new state pension, which in 2025-26 is £12,014.12. Checking the government’s website will explain how much recipients will get. Perhaps knowing that the minimum retirement living standards will be met will encourage more people to target a higher income and save more into their pension.
In fact, with the exception of the ‘comfortable’ living standard, the increase in the new state pension from April 2025 has offset the new living standard figures.
If we consider the standards for singles outside London, the figures are:
In 2024, the new state pension would have covered £11,541.90 of the £14,400 that Pensions UK (PLSA) said you would need each year for the minimum standard retirement, leaving a shortfall of £2,858.10. In 2025, the amount you need for the same level of retirement is lower, £13,400, and the new state pension covers £12,014.12 — a difference of just £1,385.88 — demonstrating the importance the new state pension has in helping towards meeting expenditure needs in retirement.
Despite this, there is still a funding gap between the new state pension and the Retirement Living Standards. Pensions UK is keen to point out that, while the auto-enrolment minimum of 8 per cent is a good starting point, if someone starts early enough, for many, saving 12 per cent or more offers a better chance of reaching the retirement they expect.
The alternative is working for longer, if you can, or targeting a lower income.
Everyone’s financial circumstances are different, and the Retirement Living Standards provides a guide based on common costs for many people in retirement — but there will be a pick-and-mix element, and some retirees may find they have elements of all three levels depending on their own future priorities.
While your clients will often have bespoke plans with a target income during retirement in mind, this becomes especially relevant for workplace scheme members, many of whom may be unaware of their funding gap and will need help to get their retirement plans on track.
Craig Muir is senior technical manager at Royal London