Vacations Within Your Budget: Comparing Costs for Norfolk and Norway Based on Varying Pension Sizes
UK Retirement Living Standards: A Guide to Holidays and Income Requirements
Retirement doesn't have to mean the end of travel and adventure, as Pensions UK's Retirement Living Standards demonstrate. These standards take into account various expenses such as food, clothing, leisure costs, transport, and DIY expenses to help people prepare for life after work.
According to recent estimates, about three-quarters of households are expected to achieve a minimum standard in retirement, with two-person households being more likely to do so due to the generous state pension and the fact many people are auto-enrolled into workplace pensions.
Minimum Retirement Lifestyle
Retirees on a "minimum" budget can afford a week-long holiday in the UK, such as a seven-night stay in a Norfolk caravan park with access to a swimming pool, entertainment, and a range of paid activities. The budget for food, meals out, and visiting attractions during a week-long UK holiday for retirees on a "minimum" budget is approximately £720.
Moderate and Comfortable Retirement Lifestyles
For a moderate lifestyle, the income required is roughly double the minimum, needing a larger pension pot to generate sustainable income. A couple aiming for a "moderate" retirement lifestyle does not require a pension pot, assuming they receive the full new state pension of £11,975 each. This lifestyle allows for more travel and discretionary spending, and the ability to afford better holidays, including some abroad travel and dining out more frequently.
A "comfortable" retirement lifestyle requires nearly three times the minimum income and a pension pot over half a million pounds per person, enabling better housing maintenance, travel abroad, hobbies, and more frequent dining out or entertainment.
Holiday Budgets
Pensions UK has detailed the types of holidays pensioners can enjoy each year, according to the "minimum", "moderate", and "comfortable" retirement lifestyles. For instance, a two-week all-inclusive holiday in Tenerife, Mallorca, Turkey, Rhodes, or Spain costs approximately £1,073 per person.
The Importance of Saving for Retirement
Unfortunately, many people are not saving enough for their retirement. 45% of working-age adults do not save into a pension. Framing retirement planning around lifestyle goals can be a powerful motivator to save, according to Lisa Picardo, chief business officer at PensionBee.
This breakdown helps couples estimate how much income—and accordingly, their pension savings—they require for different retirement standards and their corresponding holiday affordability in the UK context. Retirees on smaller incomes can still enjoy a holiday, even if it's not overseas, according to Cali Sullivan at Pensions UK.
Personal finances play a crucial role in supporting a desirable retirement lifestyle. For instance, saving for a "comfortable" retirement lifestyle requires a pension pot over half a million pounds per person, which can enable better travel, housing maintenance, hobbies, and more frequent dining out or entertainment.
On the other hand, effective management of personal finances, including savings and pensions, can help achieve even the minimal retirement living standards. For retirees on a "minimum" budget, Personal-finance planning allows for a week-long holiday in the UK, such as a seven-night stay in a Norfolk caravan park, thanks to careful budgeting for food, meals out, and visiting attractions during a week-long UK holiday.
