Many retirees fear running out of money in later life – but too few take time to check if they are truly on track. Having regular retirement reviews could be the answer.
Running out of money in retirement
Retirement is meant to be a time of freedom and security, but for many retirees, the reality is a lingering fear of funds running out. Exclusive modelling for a recent report by the Pensions Policy Institute (PPI) shows the risks: ‘mid-retirees’ aged 75 who withdraw more than 7% annually from a £100,000 pension pot face significant danger of depleting their funds prematurely. At a 10% withdrawal rate, this could be within 13 years, with a 75% chance that the money will run out while one partner is still alive.
These figures highlight a sobering reality: while many retirees plan for themselves, It is also essential to account for the ongoing needs of a surviving spouse or partner. Without proper planning, one partner could be left financially vulnerable at a stage of life when it is hardest to adjust.
The importance of reviewing your retirement income
This is where a having a regular retirement review becomes invaluable, ensuring that your income strategy remains sustainable for both you and your partner.
A thorough review should cover:
- Drawdown versus annuity plans: Assessing whether to continue drawing down from your pension pot or to secure guaranteed income through an annuity. The right balance can reduce the risk of funds running out.
- Estate planning: Ensuring wills, trusts, and powers of attorney are up to date, reflecting not only your wishes but also tax-efficient strategies for your family.
- Eligibility for spousal benefits: Checking what entitlements exist in the event of death, from State Pension inheritance to private pension death benefits.
By addressing these areas throughout retirement, you can make confident choices to protect your and your family’s future.
Understanding State Pension inheritance
One aspect that is often overlooked by many retirees, is the inheritance rules surrounding the State Pension. For some, especially those with additional “protected payments,” it is possible for a surviving spouse to inherit part of the pension. This can add a predictable income stream without any extra contributions – a powerful tool to complement your existing retirement income plans.
For example, a surviving spouse who inherits part of their late partner’s State Pension could have additional secure income for life. This could provide peace of mind that more essential expenses are always covered, and potentially free up other retirement income sources elsewhere that improve your retirement lifestyle.
Private pension death benefits*
Private pensions often come with death benefits that can be passed on to a chosen beneficiary. However, the details vary depending on the type of scheme and the age at death. For instance, funds left in a defined contribution pension can usually be transferred tax-free if the account holder dies before age 75, but may be subject to tax if they die later.
A retirement review is the perfect moment to:
- Review beneficiary nominations: Ensuring the right people are listed to receive your pension benefits.
- Understand tax implications: Knowing how timing, age, and withdrawal methods affect what your spouse or family ultimately receive.
- Clarify claim rules: Some schemes have strict deadlines for notifying providers – missing these could reduce what beneficiaries receive.
When did you last review your retirement income?
The figures from the PPI modelling show just how fragile retirement finances can be if not carefully managed. The good news is that with timely planning, you can take steps to protect yours and your family’s future. Your Origen adviser will help you to:
- Reassess your withdrawal strategies to avoid depleting pension pots too quickly.
- Confirm your entitlements under both State and private pension schemes.
- Make sure any surviving partners and other family members are financially secure.
A regular review with your Origen financial adviser will help you stay on track with your financial plans and help you make informed decisions for the years ahead.
*From April 2027 the value of most unused pension funds and pension death benefits will be included in the estate for Inheritance Tax purposes
CA13075 Exp: 08/2026
