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How much do you need?

How much do you need to live on when you stop working?

We ask you this question in your pension statement each year and most people would agree that they’d like to stop working and ‘retire’ at some point in the future.

Only just started working?

If you’ve only just started working, you might want to add setting a savings target to your future ‘to do’ list – perhaps for when you’re in your 40s. The fact that you are already saving for your retirement is brilliant. But if you’re the type of person who likes to have everything carefully mapped out, or you’re just interested in how you might plan in the future, please read on.

Been working a while?

Many people start to think about how much they’ll need to live on when they stop working when they are in their 40s - when the idea of retirement starts to feel a little closer.

But how exactly do you work out how much you are going to need to live on when you stop working?

By the time you stop working you’ll need to replace your pay each month with some kind of income. Some of this might come from the state pension, and some of this might come from the pension or savings that you have built up over your working life.

It can be difficult to know exactly how much money you’ll need to live on in retirement, particularly if it’s a long way off. But you might have an idea of what kind of lifestyle you’d like to have, as it’s likely you’ll have more time to spend doing the things that you like doing now.

So, the Pensions and Lifetime Savings Association (PLSA) created the ‘Retirement Living Standards’ as a way to help savers picture how much they might need to save for retirement.

Who are the PLSA?

The Pensions and Lifetime Savings Association (PLSA) is an organisation whose mission is ‘to help everyone achieve a better income in retirement’. They bring together people in the pensions industry to carry out research, share best practice and write policies that will help everyone who works in pensions to help savers (and non-savers) to achieve that goal.

The PLSA believes that it helps to know what you’re aiming for, but that it can be easy to get lost in the calculations. So, after a lot of detailed research, they developed the ‘Retirement Living Standards’ – a set of standards that can help you picture what kind of income you should aim for in retirement without having to worry about percentages or complicated calculations.

What are the Retirement Living Standards?

The Retirement Living Standards can help give you an understanding of what different standards of living might look like by showing you examples of different ‘baskets of goods’.

These baskets of goods then help you to build up a picture of what kind of lifestyle you might be aiming for once you stop working.

The standards offer three different levels:




And each standard shows you what a typical year might look like across the following categories:

  • House

  • Food & drink

  • Transport

  • Holidays & leisure

  • Clothing & personal

  • Helping others

They don’t allow for:

  • rent,
  • mortgage payments, or
  • social care.

You can find out more about what is and isn’t included on the PLSA’s retirement living standards website under 'The detail'.