One of the most important—and often most overlooked—questions people face as they approach retirement is this:
With people now spending 20 to 30 years in retirement, it’s no longer enough to build up a pension pot and hope for the best. You need a clear sustainable income strategy; one that supports your lifestyle today and still works in 10, 20 or even 30 years’ time.
A sustainable retirement income is one that:
Sustainability doesn’t mean being overly cautious or living frugally; it means planning your withdrawals and income sources in a way that maintains stability over time.
With the removal of default retirement ages and the introduction of pension freedoms, people now have far greater flexibility in how they use their pension pots.
But flexibility comes with risk.
Many retirees draw income too quickly or invest too conservatively, increasing the chance that their money runs out earlier than expected.
Even with sizeable savings, poor timing—or a lack of planning—can erode your pension much faster than you might imagine.
Here are some of the key elements that influence whether your income will last throughout retirement:
Withdrawal rate
This refers to the percentage of your pension pot or assets you withdraw each year. A commonly quoted “safe” withdrawal rate is around 4% per year, adjusted for inflation, but the reality is more complex.
Your optimal rate depends on:
Withdrawing too much early on can make your pot vulnerable to running out later on, particularly if markets perform poorly in the early years (known as sequence risk).
Investment strategy
Your investment approach in retirement should match your income goals and tolerance for risk.
Some people move into very low-risk assets when they retire, but this can actually increase the risk of running out of money, especially if inflation erodes returns.
A well-diversified, appropriately balanced portfolio is often key to maintaining both growth and income over time. While guidance can help you understand the principles, financial advice ensures the strategy reflects your personal goals and risk profile.
Inflation
Even modest inflation reduces the real value of your income over time. For example, with 3% annual inflation, £30,000 of income today would have the purchasing power of just £16,000 after 20 years.
Retirement plans must account for rising costs, especially for essentials like food, fuel and healthcare. Some pensions (e.g., defined benefit schemes) offer inflation-linked income, but others require careful management to preserve their real value.
Tax efficiency
Taxes can take a bigger bite out of your retirement income than many people expect.
Factors that affect how much tax you’ll pay include:
Using your allowances effectively can significantly improve income sustainability. Financial advice can help structure withdrawals in a tax-efficient way.
Unexpected costs and lifestyle changes
It’s wise to plan for the unplanned. These might include:
Building some flexibility and contingency into your retirement plan helps ensure that unexpected events don’t derail your long-term finances.
There’s no one-size-fits-all approach—but a sustainable income plan usually includes:
It’s possible to do some of this through online tools or guidance, but putting the pieces together in a way that reflects your unique goals and risk profile is where financial advice adds real value.
While general guidance can help you understand retirement options, financial advice provides a tailored plan, including:
Financial advisers use tools like cash flow modelling and scenario testing to help assess how sustainable your plan is over different market and lifestyle conditions.
A sustainable income in retirement doesn’t happen by accident; it’s the result of thoughtful planning, careful structuring and regular reviews.
Whether you are planning to retire soon or already taking an income from your pension, the decisions you make now can help secure a better financial future.
And while it’s natural to have questions (Will I have enough? How long will it last? What if things change?), the right advice can bring clarity and confidence.
At Pension Sense, we specialise in helping people over 50 turn their pension savings into lasting, flexible income.
Our qualified advisers can help you:
There’s no pressure or obligation—just clear, supportive advice tailored to you.
Discover more in this website about our services and how we do things. If you are ready to start your journey towards a more secure retirement:
