Retirement Planning Guide

The moment you stop saving and start drawing income, a new set of risks appears that simply did not exist before. A 65-year-old today can reasonably expect retirement to last 20 to 25 years, and at 3.5% average inflation the purchasing power of a fixed £1,000 income falls by around 58% over that period. Sequencing risk — the damage done when poor returns coincide with the first years of withdrawals — can leave two otherwise identical portfolios more than £100,000 apart after 15 years. From April 2027, unspent pension pots will also form part of the taxable estate for inheritance tax, changing how aggressively many people should draw down a pension versus an ISA.

This guide picks up where the Pensions guide ends and works through the decisions that define a sustainable retirement: the State Pension as a foundation, how much you actually need using the PLSA Retirement Living Standards, the choice between drawdown and annuity, the Money Purchase Annual Allowance trap, and how to blend pension and ISA withdrawals to keep taxable income within the basic rate band. It follows Martin, a 58-year-old TV documentary producer with a £420,000 pension and a £52,000 ISA, who phases into retirement at 63 using consultancy income, tax-free cash and a careful withdrawal sequence to hit a £38,000 net target without ever tipping into higher-rate tax.

It is written to help UK retirees and those approaching retirement structure an income that lasts, not to sell a product. Read it in about fifteen minutes.