Even after years of careful saving and investing, managing wealth in retirement can feel complex. Income needs change, markets fluctuate and tax rules evolve. Staying informed and proactive helps you keep control, ensuring your money continues to work for you, while also supporting the legacy you’d like to leave.
The challenge of managing pension income
Today’s retirees have more flexibility than ever when it comes to accessing pensions, but that freedom also brings new responsibilities. Research shows that some retirees risk depleting their savings too early – a pattern known as the ‘lottery effect.’
This happens when people withdraw large lump sums from their pension, often viewing it as a bonus rather than a resource to sustain long-term income. The research1 shows that one in seven see their pension pot as a windfall, while almost half access it simply because they can. With average life expectancy for a 60-year-old now around 86, that can create a significant shortfall when funds run out.
Planning with care
With rule changes on the horizon that will see unused pension funds become liable for Inheritance Tax (IHT) from 2027, careful planning is more important than ever. Structuring withdrawals sensibly not only helps preserve income for later life but can also support efficient wealth transfer to future generations.
A balanced plan considers three key aims:
- Sustainability – ensuring income lasts as long as you do
- Flexibility – allowing adjustments as needs or markets change
- Legacy – passing on remaining assets tax-efficiently to loved ones
Working with a financial planner ensures these priorities align. They can help determine an appropriate drawdown strategy, manage tax implications and keep your investment portfolio suited to your goals.
Staying balanced
Even in retirement, behavioural biases can influence financial decisions. Loss aversion can make investors overly cautious, while the desire for higher income may tempt others to take on excessive risk. Awareness of these tendencies, supported by regular advice, helps maintain the right balance between growth, security and access to cash.
While it may feel natural to prioritise capital protection, remember that your investments still need to work for you, often over decades. Maintaining some exposure to growth assets helps preserve your purchasing power and offset inflation, even in later years.
Feel empowered
Understanding what you need from your money helps put you back in control. The Pension and Lifetime Savings Association (PLSA) suggest a moderate retirement lifestyle typically requires around £31,700 a year for a single person or £43,900 for a couple (excluding housing costs). While everyone’s circumstances differ, these benchmarks can help shape a sustainable income plan.
How advice adds value
Your financial planner’s role is not only to manage your money, but also to help you make confident, informed decisions about how to use it. They can:
- Review income withdrawals to ensure long-term sustainability
- Protect against unnecessary tax and inflationary erosion
- Rebalance your portfolio to reflect changing priorities
- Support your legacy goals through smart estate planning.
Good advice brings reassurance as much as financial benefit, ensuring you can enjoy retirement without constantly worrying about markets or money.
Confidence for the years ahead
Retirement should be a time to live well and give meaningfully, not to stress about finances. With clear planning, thoughtful guidance and a steady long-term approach, you can enjoy life with confidence, knowing your wealth is supporting your wellbeing today and creating a lasting impact for those you care about tomorrow.
After all, financial success in retirement isn’t just about numbers. It’s about stability, freedom and peace of mind – the kind of wealth that truly lasts.
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.