Single retirees need almost £230,000 more in their pension pot than couples to achieve a ‘moderate’ standard of living in retirement, new analysis from Standard Life has revealed.
At a moderate standard of living, single retirees require an after-tax income of £31,700 a year, according to Pensions UK. Assuming a full state pension, this leaves an annual income shortfall of £24,509.50. To secure this income through an RPI-linked annuity, which provides inflation-proofed payments, a retiree would need to have built up around £455,250 in retirement savings at current rates.
By contrast, pensioner couples need a combined after-tax income of £43,900 a year to achieve the moderate living standard. With two full state pensions, this could be achieved with a joint pension pot of £456,500 – funding two annuities of £228,500 each, almost half the amount required by a single pensioner.
Standard Life said the gap is also evident at the minimum standard of living, which covers basic needs. Single retirees need an after-tax income of £13,400 to meet this level, requiring an annuity paying £1,634.50 a year and savings of around £31,750 after taking the full State Pension into account. Couples, however, need £21,600 a year to reach the same standard, which would be covered by two full state pensions.
For retirees seeking a comfortable living standard, the disparity widens further. A single pensioner would need around £736,500, compared with £846,000 for a couple (£423,000 each), leaving a single retiree facing a shortfall of £313,500.
Mike Ambery, retirement savings director at Standard Life, said: “Whether single by choice or by circumstance, the financial reality is that retirement costs are very different for those living alone. Housing, household bills and everyday expenses rarely halve simply because someone is on their own, meaning single retirees typically need to save far more to fund the same lifestyle.
“Planning ahead and taking action early can make a real difference. Pensions UK’s Retirement Living Standards are a helpful starting point for understanding the lifestyle you want in later life, while reviewing savings regularly and increasing contributions where possible – for example after a pay rise or bonus – can help build resilience over time.
“It’s also important to remember that life doesn’t always turn out as expected. It’s worth those in a couple today ensuring they’re well prepared for retirement, including in scenarios where they may be managing their finances alone.”
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