Are your employees on track for a comfortable retirement?

Few people know how much money they need or how much they need to save

How much money will employees need when then retire? And what standard of living will that give them?

In 2019, the Pensions and Lifetime Savings Association (PLSA) launched its Retirement Living Standards (RLS) to help members answer those questions.

The RLS are the levels of income required to achieve minimum, moderate and comfortable standards of living in retirement.

These standards are derived using a ‘basket of goods’ approach, which means they can be described in terms of the goods and services members will spend their money on when they retire.

The PLSA hopes that, “by giving savers a general figure that they can understand, they can start to develop their own personal targets based on individual circumstances and aspirations”.

How much do employees need?

If they are single, then:

• A minimum standard of living will need £10,900 a year

• A moderate standard of living, which gives more financial security and flexibility than the minimum, requires £20,800 a year

• For a comfortable standard of living, which gives more financial freedom and money for some luxuries, £33,600 a year will be needed.

The PLSA also defines standards for couples which are approximately 1.5 times the singles’ RLS.

Hymans Robertson’s guided outcomes model was used to determine the chance of meeting the RLS for different combinations of salary and total contribution rate. Click here to find out more.