Yet, many people approach this transition with uncertainty. Questions like “Do I have enough?” or “When should I start drawing my pension?” are common and completely normal. What matters is having clarity, a plan and the confidence to make informed decisions.
Understanding your retirement landscape
For most people today, pensions are made up of several pots accumulated through different employers or personal arrangements. Knowing what you have, where it’s held and how it’s invested can bring valuable peace of mind.
The State Pension also forms part of the picture. The full New State Pension is currently £11,973 per year, available from age 66 (rising to 67 by 2028). While it may not cover all your retirement needs, it provides a foundation to build upon.
Checking your entitlement – Check your State Pension forecast – GOV.UK – ensures you understand how it fits with your broader financial plan.
Avoiding the ‘lottery effect’
One of the biggest risks facing retirees today is what researchers call the ‘lottery effect.’ This occurs when individuals access large lump sums from their pension, often viewing them as bonuses and spend them impulsively.
A recent study1 found that one in seven people see their pension lump sum as a windfall, and nearly half withdraw it simply because they can. With the average 60-year-old in the UK expected to live to age 86, that’s potentially a long gap to fund if money runs out too early.
Accessing pension funds too quickly can lead to shortfalls later in life and could trigger unnecessary tax charges. Unused pension funds will also become subject to Inheritance Tax (IHT) from 2027. Careful planning, therefore, is essential to ensure your savings last as long as you do and that any remaining wealth can be passed on efficiently.
Feel empowered
Before you decide how or when to access your pension, it helps to understand what you’ll realistically need. According to the Pension and Lifetime Savings Association (PLSA), a single person typically requires £13,400 a year for a minimum lifestyle, rising to £31,700 for a moderate standard. For couples, the figures are £21,600 and £43,900 respectively. These estimates apply to those living outside London and exclude housing costs.
Having these benchmarks allows you to measure where you stand and consider whether your current plans, including pension drawdown, savings and other income sources will meet your goals.
Planning for longevity
One of the biggest challenges in later working life is balancing short-term desires with long-term needs. With people living longer, it’s important that retirement income strategies are sustainable.
Working with a financial planner can help ensure your withdrawals, investments and tax planning work together supporting both your lifestyle and your long-term security. They can also help you prepare for changes such as the IHT rules and manage behavioural biases like overconfidence or loss aversion – natural tendencies that can lead to impulsive or overly cautious decisions.
What you can do now
- Review your pensions – Know where your pots are and whether consolidation could simplify management or reduce costs
- Assess your income needs – Estimate how much you’ll need each year and identify any gaps
- Plan your withdrawals carefully – Avoid taking lump sums without understanding tax and long-term implications
- Stay invested strategically – Keep a mix of growth and defensive assets suited to your time horizon
- Seek expert guidance – Professional advice helps connect your investments, pensions and estate planning for lasting security.
Looking ahead with confidence
You’ve worked hard to build your wealth, now is the time to make it work for you. With clarity, structure and professional guidance, you can approach retirement with calm assurance, knowing that your plan is built to last.
Good financial advice does more than protect money. It provides reassurance, balance and freedom – helping you enjoy the next chapter with confidence, purpose and peace of mind.
1L&G, 2025
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.