Managing your pension doesn’t stop once you retire and start to draw an income from it. In fact, your pension still needs careful attention in retirement – just as much as when you were contributing – to ensure you don’t deplete it too quickly.
Research suggests that many retirees aren’t taking professional advice and are potentially making financial decisions they’ll regret in the future.
According to the Financial Conduct Authority (FCA) (22 September 2025), in 2024/25, less than a third of people accessing their pension for the first time took regulated financial advice.
In addition, an FTAdviser article (5 March 2026) noted that a previous survey found that many retirees will deplete their pension by their late seventies if they maintain their current withdrawal rate, leaving the average person with a nine-year shortfall. 1 in 7 already regret how much they’ve withdrawn.
Pension Freedoms provide retirees with greater flexibility but also risk
Pension Freedoms were introduced in 2015 and changed how you could access your defined contribution pension.
With a defined contribution pension, you and your employer both contribute to a pot, which is usually invested. When you retire, you use this pot to create an income. Under Pension Freedoms, you have several options, which can provide retirees with the flexibility to create an income that suits them.
However, you’re also responsible for ensuring your pension provides an income for the rest of your life. As a result, there’s a risk that you could spend too much too soon, or that a poor financial decision has a long-lasting impact.
6 steps that could help you manage pension withdrawals in retirement
1. Consider your life expectancy
The research reported by the FTAdviser suggests the average person could deplete their pension nine years before the average life expectancy, which could leave them in a financially vulnerable position.
According to the Office for National Statistics, the average 65-year-old woman has a life expectancy of 88. For men of the same age, it’s 85.
Yet, using the average figure when assessing your pension withdrawals could still leave a gap, as many people exceed this. For example, 1 in 4 65-year-old women will celebrate their 95th birthday, and 1 in 4 65-year-old men will reach 92.
2. Calculate the effects of inflation
One of the challenges of retirement planning is that you need to consider how your expenses will change over several decades. One of the factors that will affect your outgoings is inflation.
The Bank of England inflation calculator shows that an annual retirement income of £30,000 in 2015 would need to have grown to more than £41,000 by the end of 2025 simply to maintain your spending power.
As retirements are likely to span several decades, failing to factor in inflation when creating a withdrawal strategy could leave you struggling financially day to day or at risk of depleting your pension too soon.
3. Understand your guaranteed income
Having a guaranteed income that could cover your essential outgoings could offer peace of mind.
Most retirees will receive a reliable income for life from the government once they reach the State Pension Age. In addition, you may use your pension to purchase an annuity, which would provide a regular income for the rest of your life.
The amount you receive from an annuity will depend on the rates you are offered, which may be affected by your personal circumstances and external factors. You might also select an annuity where the income rises in line with inflation to preserve your spending power or provide an income for your partner if you pass away first.
You can use some or all of your pension to purchase an annuity to suit your needs. The decision is often irreversible, so it’s important to assess if an annuity is right for you first.
4. Assess your drawdown strategy
One way you might access your pension is known as flexi-access drawdown. This allows you to withdraw money from your pension and adjust the amount to suit your needs.
For many retirees, their income needs will change. So, this option can be valuable, and it’s important to calculate what your sustainable spending rate is to avoid running out of money.
Working with your financial planner to create a cashflow model could help you visualise how long your pension would last, depending on different withdrawal rates, including if your income needs rise and fall. It’s important to note that while a cashflow model can be useful when making financial decisions, the outcome isn’t guaranteed.
5. Make potential risks part of your retirement plan
You can’t always prevent events from affecting your finances, but you might be able to take steps so you’re in a better position to manage them.
For example, maintaining an emergency fund in retirement could help you cover unexpected costs, such as property repairs, or you might draw income from it during a period of market volatility if your pension remains invested.
6. Schedule regular reviews with your financial planner
Finally, scheduling regular reviews with your financial planner could provide you with an opportunity to ask questions and assess whether your withdrawals remain sustainable. By checking your pension throughout retirement, you might be in a better position to spot potential risks to your financial security.
If you’d like to arrange a meeting to talk about your pension and retirement, please get in touch.
Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
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. Past performance is not a reliable indicator of future performance.
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 Financial Conduct Authority does not regulate cashflow modelling.