How financial advice could help you enjoy your retirement wealth and spend with confidence

If you’re used to receiving a regular salary, adjusting to a fixed or variable income in retirement – for example, from pensions and investments – can feel daunting. This transition may be especially difficult if your income falls when you retire.

Research by PensionsUK shows that many people are not saving enough for retirement, with just 23% expected to achieve a “moderate” standard of living and 9% reaching a “comfortable” standard.

Even if you have a healthy retirement fund, pacing your spending could be challenging. You might rush to achieve the big goals you’ve been working towards for years and risk overspending. Conversely, you may feel anxious about using the wealth you’ve built up. This could lead to underspending, which might prevent you from enjoying your retirement.

Indeed, recent research findings published by IFA Magazine reveal that a lack of confidence, not money, is one of the biggest barriers to retirees getting the most from their savings.

Keep reading to find out why confidence is crucial for managing your retirement finances effectively and learn how a financial planner can remove the guesswork and anxiety around spending.

Just 38% of retirees are confident they’re spending the right amount

According to IFA Magazine, a minority of retirees (38%) are confident about their level of spending, while:

• 24% say they are spending less than they could comfortably afford
• 24% feel they’re spending too much too quickly
• 11% have no idea if their spending is sustainable.

The survey revealed a worrying lack of clarity among respondents about how much they could safely spend each year; over a third (36%) had only a rough idea or no figure in mind at all.

These findings suggest that a lack of confidence, not just financial status, is stopping some retirees from spending in line with their plans and goals.

Why retirees often lack spending confidence

Shifting from a saving to a spending mindset when you retire is a major transition. It’s natural to worry about whether you’re getting the balance right.

Here are a few reasons why you might lack spending confidence:

A fear of running out of money

Pensions Age recently published research findings that 66% of UK adults worry about running out of money in retirement.

This is perhaps unsurprising given the ongoing cost of living crisis and longer average life expectancies, increasing the risk of outliving savings.

Moreover, the survey found that 62% of adults may face a significant life event or financial challenge – such as ill health, divorce, or bereavement – that negatively affects their retirement plans.

Read more: Don’t let money fears haunt you: 3 common financial worries and how to overcome them

The complexity of managing retirement income

In retirement, you may have multiple income streams, including:

• State Pension
• Private and workplace pensions
• ISAs
• Investments
• Property
• Part-time or consultancy work

As such, you might feel uncertain about what to spend first to make the most of your wealth. When should I take tax-free lump sums? Which accounts are most tax-efficient to draw from? Questions and concerns could quickly multiply, leading to procrastination and inaction.

Lack of a clear financial plan

New research from the Money & Pensions Service reveals that two in five UK adults approaching retirement have no financial plan for later life.

Without a strategy for turning your savings and investments into a sustainable retirement income, every spending decision could feel like a risk, undermining your confidence.

Financial advice could be the key to enjoying your retirement wealth

Working with a financial planner could help you feel more confident about spending your retirement wealth in the following ways:

Helping you understand exactly how much you can afford to spend

Advised clients are almost three times more likely to have a defined annual spending figure (71%) than non-advised retirees (24%).

A financial planner can calculate this figure based on your assets, income, goals, and risk tolerance, ensuring that it’s achievable and aligned with your desired lifestyle. This removes the uncertainty and guesswork that might otherwise be involved in spending decisions.

Modelling different scenarios and testing spending strategies

A financial planner can use sophisticated cashflow planning software to help you visualise the impact of different scenarios (such as market downturns) and levels of spending (for example, spending £60,000 each year compared to £70,000). This could allow you to make informed decisions and prepare for unexpected events.

According to IFA Magazine, retirees with a written cashflow plan are more confident about their spending, scoring 65 out of 100, compared to 49 out of 100 for those without a plan.

Planning a tax-efficient income strategy

Worries about making tax mistakes could undermine confidence in retirement spending. A financial planner can help you optimise tax efficiency by:

• Taking tax-free lump sums strategically
• Making the most of available allowances and exemptions
• Reducing your Inheritance Tax liability through lifetime gifting and estate planning
• Creating a withdrawal strategy (for ISAs, pensions, and so on) that minimises your tax liability.

Providing ongoing support and accountability

Financial planning for retirement isn’t a once-and-done task. You’ll need to review your strategy annually (or possibly more frequently) and make adjustments in line with life changes, evolving goals, market performance, and so on.

The survey referenced by IFA Magazine found that taking financial advice about spending behaviour provides reassurance. However, this effect fades over time, making regular reviews with your financial planner essential if you want to enjoy your retirement wealth and spend with confidence.

Get in touch

If you feel uncertain about how much you’re spending in retirement or you’d like to plan for the future, we can help.

Our financial planners can create a bespoke plan, tailored to your circumstances, needs, and long-term goals, helping you make spending decisions with confidence.

To find out more about the services we offer, please get in touch by email at helpme@aspirellp.co.uk or call 0117 9303510.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.