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Subscriptions to Netflix and increased personal grooming budgets have been included in an updated assessment of how much money people may need in retirement.
The Pensions and Lifetime Savings Association (PLSA) first set out “rule of thumb” guidance for people’s retirement spending two years ago – helping to give savers an idea of how much they might need.
More money for eating out was also included in the updated guidance.
The retirement living standards are pitched at three different levels – minimum, moderate and comfortable.
The calculations were developed and maintained independently by the Centre for Research in Social Policy at Loughborough University.
Researchers held 13 discussion groups with people from across the UK, including both retirees and over-55s approaching retirement.
The minimum retirement living standard covers a typical retiree’s basic needs plus enough for some fun. It includes a week’s holiday in the UK, eating out about once a month and some affordable leisure activities about twice a week. It does not include a budget to run a car.
The annual budget for the minimum standard has risen since 2019 by £700 to £10,900 for a single person and by £1,000 to £16,700 for a couple in 2021.
Through a combination of the full state pension of £9,339 per year, and auto-enrolment in a workplace pension, this level should be very achievable for most people, the PLSA said.
The minimum basket includes an increase in the budget for hairdressing, from £15 to £25 for women and from £8 to £10 for men, as well as the inclusion of Netflix.
The moderate retirement living standard provides more financial security and flexibility. For example, someone could have a two-week holiday in Europe and eat out a few times a month.
The annual budget for the moderate standard has risen since 2019 by £600 to £20,800 for a single person and by £1,500 to £30,600 for a couple.
The eating out budget, which rose from £75 per person per month to £100 per person per month, drove much of the increase.
The budget for social activities was increased from £35 to £50 per week, with Netflix also added alongside price inflation across leisure services and leisure goods.
The PLSA said around half of single employees are on track to expect a lifestyle between minimum and moderate – and couples who are able to share costs will be higher in this range.
At the comfortable retirement living standard, retirees can expect to enjoy some luxuries such as regular beauty treatments and theatre trips.
The annual budget needed for a comfortable retirement living standard has increased since 2019 by £600 to £33,600 for one person and £2,200 to £49,700 for a couple.
About one in six single employees are projected to have an income between moderate and comfortable.
The cost of annual maintenance and servicing of a burglar alarm was included in the comfortable standard for the first time.
Nigel Peaple, director of policy and advocacy at the PLSA, said: “It is important that the retirement living standards remain relevant by reflecting real-world price changes and real-world expectations about lifestyles in retirement.
“We hope the updated standards will encourage people to think about whether they are saving enough for the retirement lifestyle they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.
“The lockdowns caused by the pandemic have given many workers a foretaste of being retired and made people think about the activities and experiences they truly value. The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement.
“With barbers and hairdressers closed during lockdowns and many of us taking scissors to our own hair for the first time, it is little surprise that the research groups agreed the budget for personal grooming should be increased across the three standards. The addition of Netflix also gives an insight into what many of us expect to be doing when we finish work.”