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  • I want to know my income will last as long as I need it to

  • Sustaining your pension income for the rest of your life

    Want your pension to pay you an income for your lifetime but not sure how much income you should take to ensure it lasts? The common perception is that you'll need between half and two-thirds of the annual salary you had when you were working, after tax, to maintain your lifestyle in retirement*. Our examples show how contributing more and managing your investments could impact on your pension income.

    *How much will you need to retire? Which? 2022

  • Before you make any decision about what to do at retirement it's important to know where you currently stand. Things like your pension's value, what funds you're invested in and your selected retirement date are essential to help you plan. You can get all of this from our free online services.


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    How contributing more and managing investments can impact on your pension income

    • Susan is 40 and has a personal pension fund value of £100,000.
    • She currently contributes £200 each month (including tax relief).
    • She is invested in a moderate risk investment (with 4.5% returns).
    • On top of the state pension, Susan expects she'll need her Personal pension to provide an additional £18,000 to meet her lifestyle requirements.
    • Her latest annual statement estimates she'll reach her retirement age of 68 with a personal pension fund value of £205,000.

     This will provide her with a maximum tax free cash sum of £51,400 and either -

    • A standard lifetime annuity (on a single life basis) of £10,500 each year for the rest of her life, or
    • A regular income by taking income drawdown of £18,000 for just under 9 years until 77* (when the money runs out).

    *To illustrate the variables and the type of decisions someone might need to take, this assumes that the remaining fund does not grow. In reality Susan is likely to keep some or all of the funds invested and might factor in some growth into her calculations.

    The above scenario has been based on 2024/25 tax year calculations.

  • Increase in regular contributions Single contribution (top up)
    		Selected retirement age  Assumed growth rate (based on investment selection)  Value at retirement  Maximum tax free cash sum  Standard lifetime annuity*  How long Susan could receive £18,000 as an income 
    +£50 £0 68 4.5% £224,000 £56,100 £11,500

    Until 78                                   
    +£100 £0 68 4.5% £243,000 £60,800 £12,500
    Until 79                                   


    Now let’s assume that Susan decides to change her investment outlook and invest in higher risk funds and invest a lump sum bonus payment she received from work.

    Increase in regular contributions
    		Single contribution (top up)  Selected retirement age  Assumed growth rate (based on investment selection)  Value at retirement  Maximum tax free cash sum  Standard lifetime annuity*  How long Susan could receive £18,000 as an income 
    +£0 £0 68 6% £287,000 £71,700 £14,700 Until 84
    +£50 £0 68 6% £310,000 £77,600 £15,900 Until 87
    +£100 £0 68 6%
    		£334,000 £83,500 £17,100

    Until 89                                   
    +£100 £10,000 68 6% £353,000 £88,300 £18,100 Until 92


    What the examples above demonstrate is that if Susan was to take £18,000 from her pension savings as a regular income, then she would either need to amass a sizeable pot to turn it into a guaranteed income (Annuity) of £18,000, or maintain a higher risk investment strategy through retirement via income drawdown, or she would have to take less of an income from her savings. In addition there’s a 1 in 4 chance that Susan would reach the age of 96 meaning her pension income could have to last for 28 years after she retires.

    * Find out how long your pension may need to last (opens external site in new window)

    To illustrate the variables and the type of decisions someone might need to take, this assumes that the remaining fund does not grow. In reality Susan is likely to keep some or all of the funds invested and might factor in some growth into her calculations.

    The above scenarios have been based on 2024/25 tax year calculations.

  • Is there a gap between what you need and what you might get? If there is here are some actions you could consider

    Put more money into your pension

    Putting more money into your pension can help you reach your retirement goals. Find out how much you can top up your pension by and how to do it.

    Topping up your pension

    Reconsider your investment choices

    Making sure you're invested in the right funds is one of the most important parts of retirement planning. So how do your feelings about risk affect how your money is invested?

    Managing your investments

    Combine your pensions

    If you have more than one pension, bringing them together could help you achieve your targets better than if they sit separately.

    Combining your pensions

    Delay taking your pension

    You might consider delaying when you receive your pension. This gives it more time to potentially grow in value. Call us to discuss.

    Contact us

  • Getting financial advice

    It's important to discuss your retirement options with a financial adviser. They'll be able to help you decide on the right thing to do for your personal circumstances. If you don't have a financial adviser we've outlined reasons why you might benefit from using one and how to find one local to you.

    Getting financial advice