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How To Manage Your Money Whilst Retired

18th October 2021

When it comes to managing your money during retirement, some have said it’s somewhat easier to manage compared to pre-retirement. But it’s not always found to be smooth sailing, as the rules of money management can often shift in retirement, which can lead to complications and a lack of clarity on what’s best for you.

We’ve put together 7 helpful tips for when it comes to managing money in retirement:

1. Being Tax Efficient with Your Withdrawals

Being sensible with money is always good advice no matter what your age, but every penny counts especially when managing money in retirement. Needless to say, this also applies when it comes to tax savings.

If you are already in a drawdown* arrangement, withdrawing too much at once can lead to a much larger tax bill. It might be worth taking notes on how much you withdraw each year and in turn, how this impacts your tax bracket.

If this all seems a bit daunting – don’t worry! Taxes can be complicated and what’s best for you may be different to what’s best for someone else. The best way to approach this if you’re struggling is to talk to a financial adviser who has experience with income taxes and retirement strategies.

*Using drawdown may impact on levels of retirement income and is not suitable for everyone.

2. Create a Reliable Retirement Income

If you’re in the process of saving a sum of money for retirement, you’ve probably been widely concerned with putting as much as possible aside and maximising your returns on investments.

This is certainly sensible; however, most experts have found that once people have retired, they worry less about returns and fixate more on how to turn their retirement assets into a reliable retirement income.

3. Decide What is Important to You

The sooner you sit down and decide what really matters to you, the sooner you can save some of that well earned money! Splashing out on anything and everything is a sure way to drain the retirement pot quicker than anticipated, and rarely works well for anyone.

Usually, at some point in our lives we start to get a good idea of what we like and what we want. If you focus on what is important to you, you may end up spending less overall without disappointing yourself or your personal bucket list.

4. Prioritise Spending on Yourself

This one is an extension of the previous point – but equally important!

Family can be one of our biggest sources of joy and treating them after you’ve retired might be a desirable notion. But you might want to double check the budget before you prioritise everyone else’s happiness over yours! Unless you’ve taken helping out adult children into account, you simply might not have the money to help them out financially.

Once you are retired, unless you look into part time work etc, you won’t have as many opportunities to make money. Sometimes you have to live with what you have. Therefore, while it can be a hard pill to swallow, every expense needs to be accounted for in retirement.

5. Be Prepared for Spending Shifts

Retirement isn’t a state of mind or a lifestyle – retiring doesn’t mean we don’t continue to evolve and change.

In fact, numerous studies have shown that spending habits throughout retirement go through predictable phases. For instance, when we first retire, we might spend more than we otherwise would’ve before.  After the suppressed splurge, we soon enter a phase of slowing down and maybe even staying closer to home. Finally, naturally in old age, medical expenses can cause spending spikes.

Therefore, when considering your options for managing money, be mindful of these potential shifts.

6. Communication with Family and Your Spouse is Key

According to a study, a whopping 47% of couples disagree about how much savings will be needed to retain their desired lifestyle. Not to mention whether or not they even agree on said desired lifestyle, as couples can have different ideas for how they want to spend their time in retirement.

Communication should always be a priority in a loving relationship, so it’s certainly important to get on the same page with a loved one for spending money.

7. Continue to Keep an Eye on Your Finances

To summarise, retirement certainly isn’t the end of the road for managing money in retirement. This is probably something most don’t want to hear, but it’s true – you’ll find that you can’t simply create a retirement plan, retire and live happily ever after. Things change, people change, and the world is constantly evolving.

To try and achieve a happier, more settled retirement, you should continue to assess your situation and adjust your plans accordingly. There are countless things that could impact your decisions, so keep that in mind!


The content of this blog is for general information only and should not be considered advice.  Pensions are not normally accessible until age 55. Your capital is at risk. The value of investments can go down as well as up in value and you may get back less than you invested.  Your pension income could also be affected by interest rates at the time you take your benefits. 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.    Accessing pension benefits early may impact on levels of retirement income and is not suitable for everyone.  

Reference – BL134 – Oct – 2021

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