A new report claims retirees in the UK require a monthly income of £1,700, totalling £20,400 annually, to enjoy their golden years to the fullest, according to research by Legal & General and the Happiness Research Institute.
Furthermore, the study sheds light on the financial strategies that working Brits could employ in order to reach this target figure.
The research revealed a sobering fact; merely a third of currently retired Brits hit this income level, as the nation braces for Chancellor Rachel Reeves’ autumn statement forecasted to cement further “painful” cuts such as modifications to the Winter Fuel Payment.
It found that just 38% enjoyed a monthly income surpassing £1,700, whilst a concerning 22% made do with £1,000 or less.
This finding is particularly disheartening when weighed against the Pensions & Lifetime Savings Association’s recommended minimum of £1,200 a month, simply to afford the essentials.
A substantial quarter of survey respondents expressed difficulty in tracking their costs and finances, and 20% couldn’t keep pace with the fluctuating cost of their standard grocery haul.
A worrying 9% admitted they often struggle to pay for necessities due to financial limitations, while a third disclosed that tight funds hindered their social engagements, exacerbating loneliness and affecting their overall wellbeing.
The research, which delved into the lives of 3,000 retirees, explored their wellbeing across various factors such as social connections, health, and income. It concluded that financial stability is crucial for a happy retirement, but highlighted that contentment levels tend to taper off once monthly income hits £2,000.
However, cash isn’t everything; the cheeriest retirees also relish their daily routines with some free time on the side and nurture strong social ties with friends and family.
Legal & General flagged a warning to younger generations, especially those eyeing retirement in the late 2060s, pointing out that inflation means they might need an annual income of £77,145 for a similarly joyful retirement.
The specialists outlined a savings strategy to gather this tidy sum: “The average person along with their employer would need to set aside nearly 10% of their qualifying income every month, from the age of 22 until retirement.”
This plan assumes a continuous career without breaks, and home ownership on retirement, negating rental costs. But those who’ll rent in retirement could have to stash away up to 21% of their income, say experts.
Meik Wiking, CEO of the Happiness Research Institute, expressed: “Being without sufficient resources to make ends meet causes worry and stress and a lower quality of life for people in the UK. That is especially the case for people in retirement. The good news is that there are ways we can improve happiness levels by planning and saving for retirement.”
