The Pensions and Lifetime Savings Association (PLSA) has updated its Retirement Living Standards for 2025, offering a timely opportunity for financial advisers to engage clients in meaningful retirement planning conversations. These standards provide a clear, relatable framework for understanding the cost of retirement at three lifestyle levels: minimum, moderate and comfortable.
The income required for the minimum retirement lifestyle for a single person has dropped by £1,000 to £13,400 per year, reflecting lower energy prices and changing spending habits. The income required for the moderate and comfortable standards has increased slightly to £31,700 and £43,900 respectively for single-person households. The same trend holds true for couples, and shared costs make the target lifestyles more achievable, but all figures assume no rent or mortgage payments.
Turning data into dialogue
For financial advisers, data is more than just a collection of figures, it’s a powerful tool for engagement. These numbers serve as the foundation for meaningful conversations that help clients connect their financial decisions with their life goals. Rather than presenting abstract statistics, advisers can use lifestyle benchmarks to bring clarity and relevance to retirement planning.
By aligning clients’ aspirations with tangible spending scenarios such as the difference between a “minimum,” “moderate,” or “comfortable” retirement lifestyle, advisers can help individuals visualise what their future might realistically look like. This approach moves financial planning from a technical exercise into a personal journey, making it easier for clients to understand the implications of their choices.
For instance, a single client who envisions a comfortable retirement perhaps involving regular holidays, a new car every few years, and the ability to support grandchildren, may be surprised to learn that achieving this lifestyle could require a pension pot of up to £800,000, on top of the state pension.
The report delves into the specific spending habits associated with different retirement living standards. Take food and drink for example – a category that often reflects both personal preferences and quality of life. For those living at the minimum retirement standard, the budget is understandably tight. A couple might allocate around £60 per month for dining out, which could mean the occasional meal at a low-cost restaurant. Their weekly grocery shop might include a modest £6 bottle of wine, reflecting a focus on affordability and basic enjoyment.
In contrast, retirees aiming for a comfortable lifestyle have more financial flexibility. Their dining habits are more frequent and varied, with a weekly eating-out budget of approximately £42 per person, enough to enjoy regular meals at mid-range restaurants or the occasional fine dining experience. Their wine selection also reflects this upgrade in lifestyle, with a typical bottle costing around £11, suggesting a preference for higher-quality or premium brands.
These spending distinctions are more than just numbers – they paint a picture of what daily life might feel like at each retirement level. By exploring these tangible examples, advisers can help clients better understand what their desired lifestyle will cost and how their current savings align with those expectations.
These conversations not only help clients make informed decisions, but also foster trust and long-term engagement. By turning data into dialogue, advisers can empower clients to take control of their financial futures with confidence and clarity.
