Defining what makes an ‘adequate’ retirement income is always going to be tricky. It’s inherently difficult to know exactly what people’s spending choices and needs are likely to be, or how they will adjust to stopping work.
Add in the changing nature of retirement, where increasing numbers of people are working past their State Pension age, it becomes even harder.
New paper, new ideas?
The Institute for Fiscal Studies (IFS) recently published a paper investigating a new method of looking at retirement incomes. It identifies an ‘optimum’ level of pension saving for each couple household. Instead of income band, this is based on a range of personal circumstances (e.g. number of children) and an
assessment of spending patterns. It then evaluates whether people have saved below, at, above or the ‘optimal’ level required to achieve a comparable standard of living for their retirement.
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