Analysis by the life insurance company compared the pension savings needed by single and coupled-up pensioners to achieve the Pension and Lifetime Savings Association’s (PLSA’s) retirement living standards. The standards are split into three categories: minimum, moderate, and comfortable.
Researchers found there was a huge cost to being single in retirement. While couples can pool their savings and share expenses, single people must foot the bill alone.
The cost of being single
Standard Life found that single pensioners need to save £54,500 just to meet the PLSA’s minimum standard. In contrast, couples with two full state pensions would not need any savings beyond the state pension to reach the same level.
According to the PLSA, single retirees who want to achieve a ‘minimum’ living standard, which includes enough for the basics and one week’s holiday in the UK per year but no car, would require an annual income after tax of £14,400.
Assuming a full state pension (£11,973 per year), a retiree needs an additional income of £2,884 each year, taking account of tax, to maintain this standard of living.
Why Life Insurance Still Matters – Even During a Cost-of-Living Crisis
Sponsored by Post Office
To buy an RPI-linked annuity paying this amount, they would need to have amassed about £54,500 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.
Pensioners seeking a ‘moderate’ retirement standard of living – which allows for a car and one two-week foreign holiday per year – need an after-tax income of £31,300 per year, according to the PLSA.
Assuming a full state pension is received, this would require an annuity that provides £24,010 per year. To achieve this, they would need to save around £439,000.
Pensioner couples, meanwhile, need a joint annual income after tax of £43,100, which they could get if they also amassed £428,000 in their joint pension pot – meaning they would need to save £214,000 each. This is less than half the amount a single pensioner needs.
The PLSA’s definition of a ‘comfortable’ living standard in retirement allows for a three-week foreign holiday, a full kitchen and bathroom replacement every 10-15 years and a £1,500 per year clothing and footwear budget.
To achieve this, single pensioners need to accumulate a pension pot of around £709,000, while pensioner couples would need £398,000 each. This means a single pensioner would need to save £311,000 more than their coupled-up peers to achieve the same lifestyle.
The price tag of solo living
Mike Ambery, retirement savings director at Standard Life, said: “Whether single by choice or by circumstance, solo living comes with a financial price tag. While it seems unfair, mortgage, rent, utility bills and holidays costs don’t simply halve for those living alone. The same applies to pension savings. While couples can combine their resources, single retirees need to build up much more to achieve the same lifestyle in retirement.
“Let’s not forget; relationships don’t always last, and the importance of pension planning extends beyond just those who are single today. Awareness of these figures can help when considering pension sharing in divorce settlements or preparing for a potential single retirement.
“It’s important to take control of your future financial happiness, whether you’re single or in a relationship. Starting early, making regular contributions, and topping up savings where possible can make a real difference.”
