Cost of being single in retirement: £277.5k

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• Single pensioners need £277.5k more in their pension pot to secure a ‘moderate’ standard of living in retirement than pensioner couples
• Standard Life compares the pension pots single and couple pensioners might need to secure each of the Pension and Lifetime Savings Association (PLSA)’s Retirement Living Standards – ‘minimum’, ‘moderate’ or ‘comfortable’ retirement
• A single pensioner would need to accumulate a pension of £75,000 in addition to their state pension just to meet the PLSA minimum standard of living, while couples with a State Pension each would achieve the same minimum standard without the need for additional savings

New analysis by Standard Life, part of Phoenix Group, highlights the additional savings that single people need to build up for retirement, compared to pensioner couples who benefit from shared costs in retirement.

Single retirees who want to achieve a minimum living standard, which includes enough for the basics and one week’s holiday in the UK a year but no car, would require an annual income after tax of £14,400 according to the PLSA¹. Assuming a full state pension (£11,502.40 a year²) is received, a retiree needs an income of £3,355.10 before tax each year to maintain this standard of living. To buy an RPI linked annuity - which is a guaranteed income for life - they would need to have amassed around £75,000³ in retirement savings at current rates. In comparison, pensioner couples need an annual income of £22,400 to reach the same standard of living, however this would be covered by two full state pensions meaning they would not need to have accumulated any additional savings to cover a basic retirement lifestyle.

The MoneyHelper annuity tool was used to reveal the pension pots needed to secure the PLSA’s ‘minimum’, ‘moderate’ and ‘comfortable’ standard of living in retirement.

For a moderate retirement standard of living, which allows for a car and one two-week foreign holiday a year, the PLSA say single pensioners need an after-tax income of £31,300 per year. Assuming a full state pension is received, they would need an annuity which provides £24,480.10 a year, taking account of tax. To achieve this, they would need to save around £555,000. Pensioner couples, meanwhile, need an annual income, after tax of £43,100, which they could get if they also amassed £555,000 in their joint pension pot, meaning they would need to save £277,500 each – half the amount of a single pensioner, assuming two full state pensions being received.

For a comfortable living standard in retirement, which allows for a three-week foreign holiday, a full kitchen and bathroom replacement every 10-15 years and a £1,500 a year clothing and footwear budget, single pensioners would currently need to accumulate a pot of around £890,000. Pensioner couples would need £985,000 between them, or £492,500 each – meaning a single pensioner would need to save an additional £397,500 to achieve the same lifestyle as a couple.

Retirement savings needed for single pensioners and pensioner couples to secure an annuity – guaranteeing an income for life:

PLSA Retirement Living Standard	Pot needed for Single Pensioners	Pot needed for Pensioner Couples (per person)	Difference
Minimum	£75,000	N/A - enough on two state pensions	£75,000
Moderate	£555,000	£277,500	£277,500
Comfortable	£890,000	£492,500	£397,500

^{* Figures assume retirement at the age of 66, single life annuity, no guarantee, paid monthly in arrears, linked to RPI, non-smoker with no underlying health conditions. Account for tax free income up to Personal Allowance and then income taxed at 20%. More detail in notes.}

Dean Butler, Managing Director for Retail Direct at Standard Life said: “Whether single by choice or by circumstance, single people must front a whole host of expenses on their own – from mortgage or rent payments, utility bills and council tax, to broadband, holidays and TV subscriptions – and unfortunately these aren’t automatically half the amount that couples pay. It’s similar when it comes to pension savings too. Couples can pool their finances for retirement, and as our analysis shows, single pensioners need to amass a significantly bigger pension pot to achieve the same standard of living as pensioner couples.

“It’s therefore vital that single people start thinking about their retirement finances as early as possible. And unfortunately not all relationships last, so awareness of these figures becomes important when thinking about how to approach pension sharing and the possibility of a single retirement. Knowing the sort of lifestyle you want in retirement will help develop a plan, and the PLSA Retirement Living Standards tool outlines the savings target that you might need to achieve the retirement you desire. Saving into a pension from an early age will give your money more time to grow and benefit from any associated compound investment growth, while boosting your pension contributions is also a great way to build up savings. To help keep your pot growing more, consider making top ups to the amount you regularly pay into your pension if you get a pay rise for example, or make a one-off contribution following a bonus. 

“The unfavourable economic environment of the past few of years has significantly impacted the pension savings required to meet even the minimum of standards in retirement, as seen when we look to last year’s analysis. The updated PLSA retirement standards for 2024 mean single pensioners now need £25,000 more in pension savings than in previous years to achieve a minimum level retirement, £240,000 to achieve a moderate standard and £215,000 more to achieve a comfortable level of retirement.”
 

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Notes to editors:

Calculations are intended only for the sole purpose of providing an illustration regarding the projection of savings and pensions. They should not be used with the intention to give an accurate representation of real-world outcomes. Notably, our calculations here assume the same pot and annuity rates for both people in a couple – in reality, one is likely to earn more than the other through their career and so are likely to have a bigger pot in retirement. Annuity rates can also differ depending on health.

Pot Calculations

Single pensioners cap

PLSA Retirement Living Standard (single pensioner)	Gross annual income required to meet living standard (before income tax)	Gross annual income required (after taking into account the full State Pension of £11,502.40 and current income tax rates)	Pension pot needed to purchase an annuity, to provide annual income required for living standard*
Minimum (£14,400)	£14,857.50	£3,355.10	£75,000
Moderate (£31,300)	£35,982.50	£24,480.10	£555,000
Comfortable (£43,100)	£50,886.67	£39,384.27	£890,000

^{* Figures assume retirement at the age of 66, single life annuity, no guarantee, paid monthly in arrears, linked to RPI, non-smoker with no underlying health conditions. Account for tax free income up to Personal Allowance and then income taxed at 20%.}

Pensioner couples

PLSA Retirement Living Standard (pensioner couple)	Gross annual income required to meet living standard (before income tax)	Annual income required (after taking into account two full State Pensions of £23,004.80 – 2 x £11,502.40 and current income tax rates)	Pension pot needed (for the couple) to purchase an annuity, to provide annual income required for living standard*
Minimum (£22,400)	£22,400	N/A – enough on two state pensions	N/A – enough on two state pensions
Moderate (£43,100)	£47,590	£24,585.20	Two single life annuities of £277,500 each (£555,000)
Comfortable (£59,000)	£67,465	£44,460.20	Two single life annuities of £492,500 each (£985,000)

^{* Figures assume retirement at the age of 66, single life annuity, no guarantee, paid monthly in arrears, linked to RPI, non-smoker with no underlying health conditions. Account for tax free income up to Personal Allowance and then income taxed at 20%.}

1 – PLSA Retirement Living Standards - https://www.retirementlivingstandards.org.uk/details

2 – Based on the new full state pension

3 – Rates correct as of calculation in April 2024 via the MoneyHelper annuity tool

About Standard Life

• Standard Life is a brand that has been trusted to look after peoples' life savings for nearly 200 years
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