Good news if you’re worried about retirement costs: the minimum income you need for a basic standard of living in retirement has just fallen – at least for now.

According to recent figures from the Pensions and Lifetime Savings Association (PLSA), single retirees now need £13,400 a year to cover essential living expenses – that’s £1,000 less than last year. For couples, it’s dropped to £21,600, down £800. And the reason? Falling energy prices, mostly.

That might not sound like much, but in the context of cost-of-living pressures and gloomy financial headlines, it’s a rare bit of sunshine. So what does this all mean for you? And what do these “retirement living standards” actually cover?

Let’s take a closer look.

What Are These ‘Retirement Living Standards’?

Think of them as a rough guide to how much income you’d need each year in retirement, depending on the kind of lifestyle you want. The PLSA puts them into three categories:

1. Minimum Retirement Income

This covers the basics – food, utilities, transport, and a bit of social life. It doesn’t include luxuries, but it’s more than just surviving. You can still afford a week’s holiday in the UK and some occasional treats.

• Single person: £13,400 a year
• Couple: £21,600 a year

2. Moderate Retirement Income

This gives you a bit more breathing space – a meal out a couple of times a month, some international travel, and the ability to replace household items when needed.

• Single person: £31,700 a year
• Couple: £43,900 a year

3. Comfortable Retirement Income

This covers pretty much everything – regular holidays abroad, more generous Christmas and birthday gifts, a new car every few years, and the flexibility to enjoy retirement without constantly checking the bank balance.

• Single person: £43,900 a year
• Couple: £60,600 a year

(Yes, those figures for a comfortable lifestyle have gone up, reflecting rising costs in lifestyle extras like travel and leisure.)

Why Are the Minimum Costs Falling?

Energy bills. That’s the main reason behind the fall in the minimum income levels. With wholesale energy prices easing off compared to their 2022–2023 highs, pensioners are now spending less on heating and electricity.

The figures also take into account how retirees live – many own their homes outright and live with a partner, which helps stretch the budget. As Zoe Alexander from the PLSA put it, “Retirement isn’t a one-size-fits-all experience.” Sharing costs goes a long way.

That said, these minimum standards don’t include mortgage payments or rent. They assume you’ve cleared your housing costs by the time you stop working – which isn’t the case for everyone.

So… What Does This Mean For You and Your Minimum Retirement Income?

If you’re already retired or close to it, this might bring some comfort – especially if rising costs have had you feeling uneasy.

But if retirement still feels miles off? Don’t assume today’s figures will stay the same. Inflation means everything will cost more in future, and even if the basics are cheaper now, the “comfortable” lifestyle is getting pricier.

This is why the PLSA figures are useful: they give you a starting point. A way to imagine what kind of retirement you want and what it’ll cost.

Planning Ahead: What Should You Do?

Let’s be honest: retirement planning isn’t exactly thrilling. But neither is finding out at 65 that your savings won’t stretch as far as you thought.

Here are a few things to think about:

• Check what you’ve got so far. Look at your pension pots, including the state pension. You can get a forecast of your state pension online.
• Think about the lifestyle you want. Are you happy with “modest but comfortable”, or are you dreaming of winters in Spain?
• Get advice. A financial planner can help you work out how much more you’ll need to save or how to make what you’ve got last longer.

Even small changes now – like increasing your monthly pension contributions or consolidating old pots – can make a big difference later.

Summing Up

Retirement isn’t about chasing some perfect number. It’s about knowing what you need to feel secure, happy, and free to enjoy your time. The drop in the PLSA’s minimum income level is welcome, but it shouldn’t be a reason to ease off your planning.

It’s a reminder that retirement isn’t fixed. It shifts with the economy, the energy market, your living arrangements, and your lifestyle. So keep checking in, keep saving what you can, and if in doubt – ask for help.

Because the best kind of retirement? One you don’t have to stress about.