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£33,600 a year – that’s YOUR target for a luxury retirement. Here’s what you need to save

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If you want to enjoy your final years, buying nice clothes, running a decent car, enjoying meals out and having holidays abroad, the State Pension isn’t going to be enough. It doesn’t even cover the basics.

“The more you save during your working life, the more enjoyable your retirement will be,” said Becky O’Connor, head of pensions and savings at Interactive Investor.

Many have no idea how much they income they need but the UK Retirement Living Standards aims to help.

It calculates that a single person needs £10,900 a year to meet the “basic” minimum living standard, while a couple needs £16,700.

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That £10,900 figure is £1,561 more than the new State Pension, which pays a maximum £9,339 a year (and many get less).

Those who retired before April 2016 on the old State Pension get just £7,155 a year.

Having your own savings is therefore essential.

To enjoy a “moderate” standard of living in retirement, including occasional meals out and a Netflix subscription, a single person needs £20,800 a year and couples need £36,000.

Those who want a “luxury” retirement need to set their sights even higher, with singles needing £33,600 a year and couples £49,700, according to the research by Loughborough University for the Pensions and Lifetime Savings Association.

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These figures was calculated for 2021 – with inflation set to hit six percent next year a luxury retirement will soon cost even more.

O’Connor said: “Inflation is a disaster for pensioners as it destroys the spending power of your savings.”

Single people who qualify for the maximum new State Pension of £9,339 need to generate a further £24,261 a year to hit that luxury retirement income target.

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Today’s workers need to save all they can to plug the gap. “Even if you fall short, saving something is always better than saving nothing,” O’Connor said.

More than 10 million employees now get a company pension for the first time, through the workplace auto-enrolment scheme.

That will help.

They should save regular sums in personal pensions and tax-free Isas on top of that.

If you do fall short don’t despair – income of £20,800 a year will still buy you a “moderate” retirement income.

To achieve that you will need a pension pot of £286,525 (plus full State Pension).

Younger people should make saving in a pension their number one financial resolution in 2022.

It won’t be easy, though, given all the other challenges we face.

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