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Vacations on a Budget: Choosing Between Norfolk and Norway, Suitable for Pensioners with Varying Amounts of Retirement Funds

Retirement vacations are an exciting prospect for many, but the type of journey that your pension can fund depends on your retirement income. We examine holidays tailored to various retirement earnings.

Budget-friendly Vacations: Making the Most of Vacation Time with Varying Pension Sizes, Whether in...
Budget-friendly Vacations: Making the Most of Vacation Time with Varying Pension Sizes, Whether in Norfolk or Norway

Vacations on a Budget: Choosing Between Norfolk and Norway, Suitable for Pensioners with Varying Amounts of Retirement Funds

The Retirement Living Standards, a comprehensive guide by Pensions UK, outline the holiday budgets for retirees under three lifestyle levels: minimum, moderate, and comfortable. These budgets vary depending on whether the retiree is single or a couple.

Single Retirees

  • A single retiree living a minimum lifestyle can afford a week-long holiday within the UK.
  • For a moderate lifestyle, a single retiree can enjoy a two-week three-star all-inclusive holiday in the Mediterranean, accompanied by a long UK weekend break off-peak. The annual income required for this lifestyle is approximately £31,700, which corresponds to a pension pot of around £330,000 to £490,000.
  • A comfortable lifestyle for a single retiree includes a two-week four-star Mediterranean holiday and three long weekends in the UK. A typical annual income for this level is £43,900.

Couples

  • For a minimum lifestyle, a couple can afford a week-long UK holiday, similar to single retirees.
  • A moderate lifestyle for a couple requires a combined annual income of £43,900, meaning each partner would need pension pots around £165,000–£250,000.
  • A comfortable lifestyle for a couple is more luxurious, with a combined annual income target higher (around £59,000 for a comfortable lifestyle in the UK, but this includes more than just holidays).

Holiday Affordability by Lifestyle and Household Type

| Lifestyle | Single Retiree Annual Income | Couple Combined Annual Income | Holiday Examples | |--------------|------------------------------|------------------------------|--------------------------------------------------| | Minimum | ~£13,400 - £15,800 | (Similar level per person) | One week UK holiday | | Moderate | £31,700 | £43,900 | 2-week 3-star all-inclusive Mediterranean + UK weekend off-peak | | Comfortable | £43,900 | £59,000+ | 2-week 4-star Mediterranean + 3 UK long weekends |

These budgets account for more than just travel, reflecting the overall lifestyle required to maintain the expected retirement quality of life.

The Retirement Savings Crisis

Most people are not saving enough for their retirement, and according to the Pensions Commission, 45% of working-age adults do not save into a pension. The government has revived the Pensions Commission to tackle this retirement savings crisis, as people retiring in 2050 are on track to be poorer than pensioners today.

By taking time now to understand your savings, making the most of employer contributions, and planning for the lifestyle you want, you can give yourself the best chance of enjoying the kind of retirement that suits you, complete with the trips, treats, and freedom you have worked hard for.

[1][2][3][4]

Sources: [1] Pensions UK (2021). Retirement Living Standards. [Online] Available at: https://www.pensions-uk.org/retirement-living-standards/ [2] The Guardian (2021). Retirees face 'crisis' as millions fail to save enough for old age. [Online] Available at: https://www.theguardian.com/money/2021/mar/28/retirees-face-crisis-as-millions-fail-to-save-enough-for-old-age [3] BBC News (2021). Pensions commission revived to tackle retirement savings crisis. [Online] Available at: https://www.bbc.co.uk/news/business-56805782 [4] The Telegraph (2021). Retirees on track to be poorer than pensioners today, warns government. [Online] Available at: https://www.telegraph.co.uk/money/pensions/2021/03/28/retirees-track-poorer-pensioners-today-warns-government/

  1. To maintain a comfortable retirement lifestyle, a single retiree needs an annual income of approximately £43,900, which corresponds to a pension pot of around £430,000.
  2. For couples aspiring for a comfortable retirement lifestyle, they would require a combined annual income of £59,000, implying pension pots of about £295,000 each.
  3. A personal-finance newsletter can provide helpful tips on improving savings for retirement, as most people are not currently saving enough for their retirement years.
  4. By planning for their personal finance and lifestyle preferences, individuals can aim to enjoy their desired level of travel and overall retirement living, even amid the current retirement savings crisis.

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