For the past two months, our series on navigating the transition to retirement has explained the journey we take with clients as they prepare to finish working.
The first instalment outlined how we would use our initial meetings to discuss your goals and assess your financial position, so we can begin building a picture of your dream retirement.
The second part of the series then explored the importance of organising your pensions in the lead up to retirement so you can keep track of your savings and effectively draw an income in later life.
Now, the final entry looks at the ongoing support we offer once you retire.
A long-term relationship with your financial planner is crucial because, despite being important, building wealth for retirement is only half the challenge.
Once you enter the “decumulation” phase and start drawing from your savings to fund your lifestyle, you may face new hurdles. Fortunately, with our support, you can overcome these difficulties and achieve your dream lifestyle in retirement.
Read on to learn more.
Only 48% of those aged 65-75 are confident their savings will last through retirement
With our support, you can build a healthy retirement pot to fund your lifestyle when you finish working.
However, as life expectancies increase and the cost of living rises, it is more important than ever to manage your spending and ensure that your savings last for the rest of your life once you retire.
Unfortunately, a recent survey reported by Pensions Age revealed that only 48% of mid-retirees (aged between 65 and 75) felt confident their savings would last throughout retirement.
Your savings could run out for several reasons. For example, you might underestimate your life expectancy and how long you need to make your savings last, leading you to overspend.
Alternatively, inflation could mean it costs more than it previously would to maintain your current standard of living. As a result, you might deplete your savings pot quicker than expected.
Fortunately, there are several ways we can help you manage your retirement savings and fund your dream lifestyle for years to come.
Reviewing your budget to ensure your spending is sustainable
When helping you prepare for retirement, we use cashflow forecasting software to determine how much you can afford to spend each year in later life. These predictions will be based on your ideal lifestyle.
As you make the transition to retirement, we will continue reviewing these forecasts. We’ll consider how living costs have changed, and the level of growth you potentially achieve on your savings.
That way, we can see whether your current level of spending is still sustainable or if you would benefit from making changes to your budget.
Ultimately, this means you can be confident that you are spending a sustainable amount during retirement and your savings may be more likely to last the rest of your life.
Finding the most tax-efficient ways to generate an income from your savings
It’s important to consider the tax you might pay when drawing from your savings. We can help you improve tax efficiency, meaning you can potentially retain more of your wealth and make your savings last longer.
You can typically withdraw the first 25% of your pension as a tax-free commencement lump sum. Any withdrawals from the remaining 75% of your pension are taxed at your marginal rate of Income Tax, if they exceed your Personal Allowance (£12,570 in 2025/26).
Crucially, many pension providers allow you to make withdrawals from the tax-free and taxable portion of your pensions at the same time.
You may also have other tax-efficient sources of wealth such as your ISAs to rely on.
By carefully considering how you draw from your pensions and other savings, you could mitigate the tax you pay.
If your living costs were £30,000 a year, for example, you could take £10,000 from the tax-free portion of your pension and another £10,000 from the remaining taxable part. You might then take another £10,000 from your ISAs, and there would be no tax to pay when withdrawing these funds.
As a result, your taxable income would only be £10,000, meaning you wouldn’t exceed your Personal Allowance and so wouldn’t pay Income Tax.
Bear in mind that this strategy only applies while you have your tax-free lump sum available. Additionally, if your living costs are significant and you draw a higher income, you might pay some tax. Despite this, careful planning could potentially reduce your bill.
We can review your savings and help you find the most tax-efficient ways to draw an income in retirement.
Monitoring your investments to achieve sustainable growth during retirement
You may draw a portion of your pension savings each year to fund your lifestyle, but the rest remains invested.
If your savings grow well, you can maintain a healthy retirement pot even as you make regular withdrawals. This means you could reduce the risk of your savings running out and potentially achieve all your goals in later life.
Additionally, if your pensions grow, this could mean you have more wealth to leave for your loved ones when you’re gone.
During your retirement, we will continue to manage your investments for you and make adjustments when necessary. Consequently, you may be more likely to achieve consistent long-term growth.
Our ongoing support gives you peace of mind throughout your retirement
Retirement can be daunting and you may worry that your savings will not last, meaning you have to make sacrifices to your lifestyle.
Luckily, our ongoing support means you can draw sustainably from your savings throughout retirement. We can also help you respond to any legislation changes that might affect you.
Ultimately, this gives you peace of mind and confidence that you can achieve all your goals in later life.
Get in touch
Whether you are preparing for retirement or have already made the transition, we can support you.
Please give us a call on 01276 855717 or email info@braywealth.com today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
HM Revenue and Customs’ practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
The Financial Conduct Authority does not regulate cashflow planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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