The cost of living a comfortable retirement has shot up in the last four years, new research has discovered.
Pensioners are now paying £2.7k more in tax to live comfortably than four years ago. (Image: Getty)
Pensioners must now pay £2,700 more in tax to maintain their lifestyles than four years ago. In 2020-21, a pensioner would have paid £5,058 in income tax to live a “comfortable” retirement, whereas this rose to £7,787 in 2023-24, as per The Telegraph
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. This is due to higher living costs and frozen tax thresholds that have sent tax bills rising by £2,729, the equivalent of 54%.
The Pensions and Lifetime Savings Association (PLSA) defines a “comfortable” retirement as spending £70 on groceries and £60 on meals out each week, while still having enough for activities such as theatre trips, holidays, and regular beauty treatments. The cost of maintaining this lifestyle shot up from £32,800 a year in 2020-21 to £43,100 in 2023-34 as the cost of energy, groceries, holidays, and driving have all increased, as per the PLSA.
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State pensioners at risk of paying more tax because of one crucial change
The cost of maintaining a ‘comfortable’ retirement has increased. (Image: Getty)
Compounding this, income tax thresholds have been frozen since 2020-21 until 2027-28, but Rachel Reeves has not ruled out extending this period.
This has forced pensioners into higher brackets as incomes rise in a failed effort to keep up with inflation.
Jon Greer, head of retirement policy at Quilter, told The Telegraph: “Retirees are increasingly finding themselves caught paying ever increasing amounts of tax.
“The cost of maintaining a decent standard of living in retirement has risen sharply in recent years, yet income tax thresholds have remained unchanged.
“As a result, pensioners are now paying significantly more tax than they were just a few years ago – not because their incomes have grown, but because the system hasn’t kept pace with inflation.
