Saving Money As A Couple for Retirement

Retired couple walking through woods

Saving money for retirement can seem like a daunting task, but it’s something we all have to plan for, especially when you’re contributing as a couple. When you build a retirement fund as a couple, there is a lot of misleading and skeptical information around the topic. This article will deliver reliable information about how much couples need before retiring and helpful tips to achieve this.

How Much Does a Couple Need to Retire In the UK?

It’s difficult to put a single figure on how much each couple should save in order to retire as it depends on many factors. The factors will include a couple’s lifestyle, household running costs, what they’re wanting to do during their retirements like going on long-haul holidays, etc.

However, based on the industry averages that have been apposed online from several sources, we’re able to suggest the following:

Retirement LifestyleEstimated Annual Requirements
Basic£8,546 – £18,000
Comfortable£16,817 – £26,500
Luxury£35,000 – £40,000

The information above was provided by many reliable sources such as Gov.uk, Royal London, and Tilney. The above shows three different retirees that are estimated between various sources to provide you with an accurate amount of how much you may need before you retire based on your lifestyle.

As you can see from the above, it widely changes depending on your type of living. However, even these averages should only be taken with a pinch of salt. The cost of retirement will massively vary from couple to couple, and the above should only be used solely as a guideline.

Partners looking suprised

What Is The Average Yearly Retirement Amount In The UK?

On average, couples based in the UK use approximately £30,160 per year after tax and other relatable fees from their pension. Which is £15,080 per person, which is more than a liveable standard if you live in a rural area.

To put this into perspective, on average a UK household typically spends around £27,500 a year. However, this takes into consideration various transporting costs, clothes and housing, which as a retired couple, you’ll have a decreased costs in all of them.

A couple planning for retirement

How To Calculate How Much You Will Need To Retire

When it comes to planning your retirement, you should most definitely overestimate how much you may need. In the long run, it’s much better to have more than not enough. So you’re able to get a better understanding of the above graph, I want to break down each “lifestyle” so you’re able to decipher which category suits you.

Basic Lifestyle  

As you’re able to guess by the name, an essential lifestyle is pretty much exactly as it sounds. It’ll cover the absolute essentials, including food, heating, water, and housing. In this lifestyle, you’ll have little to no money to do anything else such as going on foreign holidays, luxurious days out, etc.

Comfortable Lifestyle

A step up from a basic retirement is a comfortable lifestyle. If you fancy going on holiday once or twice a year and enjoying some meals out with your friends and family, you should be aiming for a retirement fund to provide this average per annual.

Luxury Lifestyle

A luxury lifestyle is for the very small minority, but if you’re able to achieve this with careful planning, you can expect to go on frequent trips abroad (long or short-haul) and be accompanied by lavish items. It’s a dream for many, but if you’re able to accomplish this level of retirement, you certainly won’t be restricted by much.

Married couple talking

How to Save Money as A Couple for Retirement

As a couple, it can seem difficult to organise a retirement, particularly in your younger years. Although there are countless tips on saving money, let’s break it down into three simple sections.

Start Talking About It

  • Estimate – The first step to achieving your best possible retirement is to estimate. Estimate what lifestyle you’ll like to live when you retire, how much outgoings your future holds, and finally, is it achievable with your wage packets.
  • Strategise – Once you have a solid estimate that both members of the couple are happy with, it’s time to strategise on how you’re going to accomplish this. Be open with any debts, bills, or secret investments that you may be hiding from one another.
  • Consider the worst – Once you’ve estimated and strategised, consider the worst scenario. Here you’ll want to save more money than planned to ensure you’re covered from any unexpected situations.

Understand Your Options

  • Providers – You may have been automatically added to a pension scheme by your employer. However, this may not be the best option for you. Make sure you understand their policies and search for others that are available on the market. Here you’ll be able to gather data about what’s currently available and compare them to one another.  
  • Think about other investments – Pensions are a great way of saving for your retirement, but what about other assets you’re able to shelter away from tax? A great retirement option could be a Lifetime ISA, or even a long-term savings bond! Branch into these opportunities as you may be able to achieve a better return.
  • Understand your pension – If you’re involved within a pension scheme, see if there are any actions you’re able to take to increase your pot. For example, an employer may provide extra contributions if a certain amount is paid into your pension from your salary.

Plan As A Couple

  • Financial advice – Planning as a couple is vital, but you also need to plan the correct way. To prepare for a successful retirement, you may need to seek financial advice from a professional to add extra security to your plans.
  • Consider a Will – Something couples don’t want to contemplate, but it’s a must to guarantee your financial legacy is given to a loved one of your choice.
  • Finalise a plan – Lastly, finalise your plan and stick with it by all means necessary. Ensure that both people in the couple are happy, then go ahead and accomplish your dream retirement together.

Once you have gone through the above steps, you should have at least a semi solid retirement plan!

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