Singles need almost £200,000 more in pension than couples for a ‘comfortable’ retirement

Valentine’s Day may be burning a hole in the pockets of couples across the country at the moment, but data shows that single people currently need £187,000 more in their pension pot to have a ‘reasonably comfortable’ retirement.

In 40 years’ time, when today’s young workers retire, that figure could rise to £414,000, according to calculations by Interactive Investor based on figures from the Pension and Lifetime Saving Association.

The retirement income figures collected by the PLSA calculate the cost of a simple, moderate and comfortable later life for individuals and couples, excluding housing costs and after taxes.

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The association’s ‘standard of living’ is widely used by the pension industry as a benchmark for how much money people will need after retirement, depending on their spending habits.

Persistent inflation, especially in food prices, which have risen by eight percent since hitting a 45-year high of 19.2 percent in March last year, has increased pressure on pensioners’ budgets, forcing retirees to spend more of their money to spend on essential items such as food and nutrition. heating costs.

To retire comfortably today, single people need around £377,000 in pension, almost double the £189,000 each member of a married couple needs.

This means they currently need an additional £12,187 in pension income per year to match couples.

Alice Guy, head of pensions and savings at Interactive Investor, said: ‘As the cost of living rises, there is a huge gap between married couples and single people entering retirement.

‘But the contrast is even greater for those who will retire in the future, because of the long-term effects of inflation.

‘The costs of being single are often underestimated and can be a double whammy, making it harder to save and increasing the daily cost of living, so people need a larger pension pot for the same standard of living in retirement,’ she adds to it.

“The problem is that many of our living costs are fixed and don’t vary much depending on family size. Driving a car or owning a dog costs the same whether you are a couple or a single person.’

For a single person in their mid-20s, this means putting aside an additional £414,000 over 40 years to save £832,000 in their pension pot, matching the living standards of couples, according to Interactive Investor.

By comparison, those couples who also plan to retire in 40 years need just £418,000 to enjoy a comfortable retirement, with their combined total just £4,000 higher than the requirement for a single person.

Singles in their 20s would need to add around £425 a month to their pension, including the employer’s contribution, assuming their contributions rise by 2 per cent each year and they see a 5 per cent investment return.

Meanwhile, those in a relationship only need to save around £215 a month into their pension, based on the same assumptions.

To achieve such retirement savings, young people have little choice but to ensure they save now.

However, having a relationship is no reason not to optimally build up your pension pot. If you are too dependent on a partner, you may need more to meet your needs in retirement.

“Life is also unpredictable and it is common for people’s circumstances to change, with many becoming single before or during retirement,” Guy added.

‘Many people become widows and others unexpectedly become single due to divorce or separation.

‘It is important to plan ahead and control the situation if one of you dies. “Many final salary pensions pay only half the amount to the surviving spouse, and most people receive only one state pension when their spouse dies.”