Many retirees worry about running out of money – even when they’ve saved carefully. Research suggests these fears can lead people to restrict spending more than their finances require1, potentially holding back the retirement lifestyle they worked towards.
Balancing security with enjoyment isn’t always easy, especially during a big life change.
Anxiety around spending is more common than you might think
Studies indicate that around one in three retirees feel anxious about spending money.1 Some even avoid buying things they need because they’re worried about the future.
Emotions play a role too. For many people, financial decisions in retirement are influenced as much by fear as by the numbers.
The risk of being too cautious
Of course, managing spending matters. Taking too much too soon can, in some cases, increase the risk of a shortfall later on.
But the opposite can also be true.
Being overly careful can mean:
- Missing out on experiences you’ve planned for
- Delaying enjoyable activities unnecessarily
- Living more restrictively than your finances require
Fear can quietly shape decisions if it’s not acknowledged.
Flexibility brings choice – and responsibility
If you access your pension flexibly, such as through drawdown, you can adjust your income as needed. That flexibility can be useful for one-off costs or changing circumstances.
At the same time, the amount withdrawn each year needs careful thought. Your pension remains invested, so its value can go down as well as up. Taking income during periods of market volatility could mean your pot falls more quickly.
Decisions made early in retirement can affect your income in later years, particularly during periods of market movement or rising inflation.
How planning can help reduce uncertainty
A structured retirement plan can help put worries into context.
One tool often used is cashflow modelling. This looks at your current finances and explores how they may change over time based on different assumptions.
It might help you consider questions like:
- What happens if I withdraw a certain income each year?
- How could a one‑off expense affect my longer‑term plans?
- What impact might inflation or unexpected costs have?
These projections aren’t guarantees. They rely on assumptions and estimates. Still, many people find that seeing different scenarios laid out helps them feel more informed and less anxious.
A shift in mindset
During working life, many people focus on building wealth – saving, investing and growing assets.
Retirement often requires a shift to using those assets. That change can feel uncomfortable, especially if strong saving habits have been in place for decades.
Understanding that emotional shift can be just as important as understanding the numbers.
The right planning can make a difference
Good planning won’t remove uncertainty entirely. But it can help you make decisions with greater confidence, rather than fear.
If you’d like to discuss how your retirement income might support the life you want, our advisers would be happy to help.
Things to consider
- A pension is a long-term investment not normally accessible until 55 (57 from April 2028).
- Your capital’s at risk.
- Fund values can fall as well as rise, and future income isn’t guaranteed.
- The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.
This article is for general information only and doesn’t constitute financial advice. It’s intended for retail clients.
