Retirement’s finally here (or just around the corner) and you’ve saved carefully. When you see that lump sum or drawdown option appear, it’s easy to think:
Why not take a bit more now?
A new kitchen? A dream holiday? Helping out with the kids?
But before you do, it’s worth understanding how those early decisions could shape the next 20, or even 40 years, of your life.
In this week’s blog, we look at the risks of drawing too much, too soon, and the simple steps you can take to help your money, and your desired lifestyle go the distance.
The Temptation to Take More Early On
It’s completely natural to want to enjoy your retirement and we’re all for that. But over the years, we’ve met many people here in Teesside who’ve taken more than they needed in the early days, only to realise later that it left them with fewer options.
According to the MoneyHelper Pension Calculator, a £250,000 pension pot could last over 30 years if you take £12,000 a year. But increase that to £20,000, and your pot could run dry in less than 15–18 years, depending on investment returns and inflation.
Inflation Quietly Eats Away at Your Spending Power
One thing that often gets overlooked is inflation.
What feels like “enough” now, might not go as far in 10 or 20 years. Everyday essentials such as food, energy, fuel and travel will likely cost more in the future.
So, if your pension pot takes a hit early on, you could end up struggling later—right when you need that income the most, especially if health or care costs become a concern.
What Happens to Your Pension When You Pass Away?
It’s a key topic that’s often overlooked, but understanding what happens to your pension after you die can make a difference for your loved ones.
Some pension types offer benefits like spousal or inheritance options that only apply if the money stays within the pension fund. On the other hand, if you withdraw your pension savings and move them into a regular savings account before you pass away, those benefits may no longer apply. This could:
- Lead to your money being taxed more heavily than necessary.
- Make it harder or less efficient to pass on your savings to loved ones.
Because pension rules and benefits vary, it’s important to plan carefully to help protect your family’s inheritance and avoid unnecessary tax.
It’s not always the easiest topic to think about, but it’s a big part of Lifestyle Financial Planning.
So, What’s the Right Answer?
There’s no single right answer. It really depends on your personal circumstances. The key is understanding how much you can safely take now without putting your future financial security at risk.
At Joslin Rhodes, we can help you:
- Estimate a sustainable income level each year, so your savings can go the distance.
- Factor in inflation, emergencies, and lifestyle changes.
- Make sure your pension is structured in a way that supports your loved ones too.
We look at the full picture from your pension and savings to your goals and lifestyle, so you can enjoy retirement with confidence and peace of mind.
Let’s Make a Plan That Works for You
Thinking about taking money from your pension – or already started and not sure if it’s the right move? Let’s have a chat.
We’re here to help you get the most out of your pension, not just today, but for the years ahead.
Why not book your free, initial meeting by tapping here?
Or join us at our next Pension & Retirement Planning Workshop – but be quick, spaces tend to go fast!
It’s all about helping you feel confident about the future, with friendly, expert advice, right here in Teesside.
