It is without a doubt that arranging one’s finances can be a source of some inherently stressful emotions, particularly when approaching retirement. This transition marks a new beginning, but for many, it comes with a significant challenge: shifting from a steady income stream to living off your accumulated wealth.
This anxiety is widespread, with recent research from Standard Life revealing that 53% of UK adults worry they aren’t saving enough for retirement. Yet, paradoxically, only 15% plan to prioritise retirement savings.
This change doesn’t have to be a source of anxiety. Your journey to a sustainable and enjoyable retirement starts with a well-structured financial plan. In this article, we’ll explore key strategies for positioning and accessing your savings to achieve financial peace of mind.
Keep things tidy: achieve simplicity and cost-effectiveness
It’s common to have contributed multiple pension pots over the course of your working life, since you will have likely worked at different companies who would each have paid into differing schemes. Each of these pensions might be managed by a different company entirely, and when your assets are scattered around like this, it can cause several problems:
Firstly, your costs will likely be higher since each pension provider will likely have a degressive fee structure, meaning higher management charges the less assets they manage for you, which gradually falls as your assets grow. These ongoing fees are deducted from the portfolio automatically, and therefore they eat away at overall performance which can reduce the potential growth of your retirement funds.
Secondly, seeking to eventually draw down will be complex for a couple of reasons. This is the case from an administrative perspective, with the likelihood of much more form filling, as well as a taxation perspective, since your pots will be of different sizes, income tax obligations will vary from pension to pension depending on the amounts you take out.
Finally, you could end up with an unsuitable asset allocation. Traditional pension providers rarely have the full picture of your circumstances, they may not know your total retirement savings across different pots, your time horizon, or your appetite for risk. Without this context, they cannot tailor the investment strategy appropriately, leaving you either overexposed to risk at a time when you should be protecting capital, or conversely, too conservatively invested and missing out on potential long-term growth.
What might be a good solution to this? Consolidation. By bringing your pensions together under one roof, you reduce duplicated fees, simplify administration, and gain a clearer picture of your overall retirement strategy. More importantly, consolidation allows a single provider to align your investments with your actual goals and risk tolerance, rather than leaving them fragmented across multiple disconnected schemes.
This might sound like a labour intensive task where you’d need to dig up lots of scheme information, but it can be made very simple through our pension transfer service with only a few short steps to gathering your pots together. If you don’t know where all your pensions are, then our Find, Check and Transfer service can help locate them, all for free.
Cash: looking after your short-term needs
A crucial element of a sustainable retirement plan is having an accessible cash buffer. This cash reserve serves three primary purposes:
- Covering essential costs: Having a dedicated amount of cash to cover your core living expenses means you are not forced to sell investments to fund your daily life if the markets are temporarily down.
- Emergency fund: A pot for unexpected, large expenses (e.g. home repairs, new car, urgent medical costs).
- Big spends: A chunk allocated for an upcoming holiday, wedding, or another expensive life event.
Our suggestion would be to try and keep one to three years’ worth of essential expenses in easily accessible cash.
Important tip: You don’t want to have too much cash on your hands, as its purchasing power will be gradually eroded by inflation. For instance, UK inflation currently sits at 3.8% (September 2025), and the base rate of interest is 4%. This means your savings would be growing at 0.2% in real terms, barely keeping pace with inflation.
Accessing your retirement pot: a guide to sustainable income
A large part of ensuring you access your savings for a sustainable future involves mitigating the amount of tax you will pay. Fortunately, pension investments are an incredibly tax efficient way to save, and you can look to take advantage of certain tax wrappers too, such as Individual Savings Accounts (ISAs). This will help provide the longevity your savings deserve. It can be tempting to take a large lump sum of tax free cash, but as we know, inflation will not act kindly towards these funds.
To see how this could play out let’s take an example; Sofia (67) has just retired and is planning to enjoy a comfortable lifestyle, requiring an annual net income of £65,000. Having qualified for the full state pension, she also has a sizable pension and ISA with a single provider for efficiency and ease. She needs a plan to combine withdrawals from these accounts to keep her in the lower (basic) tax threshold, saving her unwanted tax liabilities. Mathematically it may seem complex, but thankfully, income tax bands do not change too often.
Tax Bands
- Personal Allowance: £12,570
- Basic Rate Tax Band (20%): £12,571 – £50,270
- Higher Rate Tax Band (40%): £50,270 – £125,140
Sofia’s personal allowance is £12,570, and the full state pension comes to £11,973. This leaves £597 remaining in her personal allowance. On top of the state pension, she can maximise the basic rate tax band by drawing £51,060 from her remaining pension, 25% of this (£12,765) can be withdrawn completely tax free and the remaining 75% (£38,295), will be taxed as income, but will fit neatly into the basic rate tax band of 20%, as well as utilising the rest of the £597 of personal allowance.
| Step / Component | Details | Resulting Net Income |
| State pension | £11,973 per year | £11,973 |
| Pension withdrawal | £51,060 drawn from pension, £7,539.60 paid in income tax @ 20% | £43,520.40 |
| Total income so far | £11,973 (State Pension) + £43,520.40 (Pension) | £55,493.40 (net) |
| ISA withdrawal | £9,506.60 (Completely Tax Free) | £9,506.60 |
| Final net annual income | £65,000 |
This tax-efficient withdrawal strategy allows her to meet her needs without incurring unnecessary income tax in the higher rate band, allowing her savings to last longer.
The path to a sustainable and enjoyable retirement doesn’t have to be complex or stressful. By taking proactive steps, such as tidying up your pension pots, maintaining a strategic cash reserve, and implementing a tax-efficient withdrawal strategy, you can build a financial foundation that provides security and peace of mind. However, we understand that implementing these strategies can still feel overwhelming.
Our team is here to help you navigate any complexities you face, so please get in touch and book an appointment and we’d be happy to provide any guidance we can.
*As with all investing, financial instruments involve inherent risks, including loss of capital, market fluctuations and liquidity risk. Past performance is no guarantee of future results. It is important to consider your risk tolerance and investment objectives before proceeding.
