I came across a rather striking statistic the other day.
Apparently, seven out of ten parents admit that they avoid talking to their teenage children about money.
More than a quarter (28%) do so because they don’t want to worry their kids, while 22% believe teenagers already have enough to focus on, according to a survey commissioned by savings and investment firm M&G.
It isn’t just parents who find talking about money problematic.
Recent research from Opinium found that 26% of people in long-term relationships (lasting two or more years) manage their lives together but not their finances.
And if that wasn’t bad enough, Co-op Legal Services found that one in three married people aged over 65 hide money from their spouse with more than one in ten having £50,000 or more stashed away on the quiet.
So while money talks, it seems we don’t talk about money.
The ironic thing is that staying silent about money in many ways can actually cost you money, not to mention the damage it can do to relationships.
And conversely, bringing the issue out of the shadows and into the light can bring multiple financial and emotional benefits.
This doesn’t mean that every conversation around the dinner table should go into the minutae of exchange traded funds or offshore bonds.
But talking things through with clarity and purpose – and taking action early as a result – can literally bring dividends.
I’ll give you an example.
Let’s say your first grandchild has been born. You want to make sure that when you are no longer here, they are provided for.
Instead of holding on to your money – and potentially letting the taxman enjoy an Inheritance Tax windfall – talk to your son or daughter about opening a child’s pension for your grandchild.
You can contribute up to £2,880 a year into that pension and, providing that doesn’t affect your day to day income, it will be free from Inheritance Tax.
What’s more, assuming you’re a basic rate taxpayer, the contributions will attract 20% tax relief from the Government so your £2,880 a year becomes £3,456 a year.
Continue that until your grandchild is 18 and that’s over £60,000.
Assuming the pension fund grows by an average of 6% a year, by the time your grandchild is 57, that pension will be worth over £1m.
Just think: a million-pound pension, all because you talked with your family about money.
Being open and upfront about finance can also be educational.
Let’s take the situation referred to at the start of this column.
What better way to introduce the topic of money to your children at an early age and talk about some of its essential features than to get them actively involved?
By opening a Junior ISA and sharing its progress with your children, you can educate them on the difference between saving and investing and how financial decisions may affect outcomes over time.
By the time they reach 18, they will hopefully have learned about what money can do for you (and what it can’t) and will be able to make sensible decisions on how they want to use their nest egg.
This isn’t about setting aside vast sums of money. The watchwords here are “early, little and often” – and it’s surprising how that builds up over time.
In my own case, the government of the day helped to give my kids a head start.
My daughters were born at a time when the Government gave every child a £250 voucher to invest in a Child Trust Fund (CTF).
We took advantage of this and invested £25 a month each for both daughters in CTFs.
Fast forward some 20-plus years and they now each have enough for a deposit on a house.
Talking more openly about money is also set to be even more important.
With the introduction of Inheritance Tax on unused pensions from April 2027, keeping mum about how much you plan to pass on to your family could leave them saddled with a substantial bill and a lot of complicated paperwork at a stressful and emotional time.
Having a family discussion could help to head off a lot of these issues – and give you and your family much greater peace of mind.
A financial adviser can help you to transform discussions into action and advise on the best path for you and your family.
However, one of the great things about having a financial adviser is that they can also act as a catalyst to have those conversations in the first place.
Having been in this business for over 25 years, I know that many people tell their financial adviser things they don’t even tell their own family.
The presence of an outside observer who possesses the expertise but doesn’t have the emotional ties is invaluable and often makes people open up.
A financial adviser who knows your wishes and who has worked on your financial plan will help you to facilitate those crucial conversations with family – and can also help the next generation to get a good financial start in life.
So if you’re finding it tricky to talk to your family about money, talk to an adviser.
It could be one of the most crucial conversations you ever have.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
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Open conversations about money can help families make better financial decisions, understand each other’s wishes and plan ahead for issues such as inheritance, pensions, savings and investments.
Start with simple, age-appropriate conversations about saving, spending and investing. Involving children in a Junior ISA or another savings or investment plan can help them understand how money can grow over time.
Practical experience can be a useful starting point. Showing children how regular contributions to a savings or investment account grow over time can help them understand concepts such as compound growth, investment risk and the difference between saving and investing.
Yes. A grandparent can contribute to a child’s pension, subject to the relevant pension rules and allowances. Personal contributions of up to £2,880 a year can currently receive 20% tax relief, potentially making the contribution £3,600 gross.
Potentially. Gifts can have different Inheritance Tax implications depending on the circumstances, including whether they are considered normal expenditure out of income or fall within other gifting exemptions. Anyone considering gifts as part of an estate plan should take professional advice.
A Junior ISA is a tax-efficient savings or investment account for children. Money invested in a Junior ISA belongs to the child and can generally be accessed when they reach 18.
Talking about inheritance plans in advance can help family members understand what is intended, identify potential tax issues and reduce confusion and disagreements at an already difficult time. This can be particularly important as the tax treatment of pensions and estates changes.
A financial adviser can help families understand their options around pensions, investments, savings, gifting, Inheritance Tax and estate planning. They can also provide an impartial setting that makes difficult conversations about money easier to have.
Generally, the earlier you start, the more opportunity there is for regular contributions and investment growth to compound over time. Even relatively small amounts can become significant over several decades, although investment returns are not guaranteed.
There is no universal amount. The appropriate level depends on your own financial circumstances, objectives and whether giving money away could affect your future financial security. Professional advice can help you balance helping the next generation with maintaining your own financial resilience.
Pension consolidation can reduce administration, potentially lower charges and make retirement planning easier for some people.
But is it right in every circumstance?
This is a question coming to the fore as the Government looks at ways to consolidate small, dormant pension pots.
Pension consolidation generally means transferring several pension pots into one pension or a smaller number of pensions.
People move jobs, leave old workplace pensions behind and then start again with a new employer.
Over a working lifetime, this can result in a collection of relatively small pension pots that are difficult to keep track of and expensive for providers to administer.
There are currently around 16 million deferred pension pots in the UK worth £1,000 or less.
The number is growing by around another million each year, according to the Department for Work and Pensions (DWP), which estimates that these small pots cost pension providers around £240m a year to administer.
The Government is looking at ways to consolidate small, dormant pension pots.
It has floated plans for certain small, dormant defined contribution pensions to be moved into authorised consolidator schemes.
The ambition is for the system to be operational from 2030, although the proposals are still under consultation and the final approach and implementation timetable may change.
The changes are summarised in the table below:
| Statistic | Figure |
|---|---|
| Deferred pension pots worth £1k or less | Around 16 million |
| Additional small pots each year | Around 1 million |
| Estimated annual administration cost | Around £240m |
| Target for authorised consolidator system | 2030 |
From April 2027, most unused pension funds and relevant pension death benefits will generally be brought into the inheritance tax net.
This change, combined with the Government push for pension consolidation, could encourage more people to look at the number of pensions they have and consider bringing them together.
For many people, that could make sense.
But it is not the case that consolidation is the right thing to do in every instance.
Bringing small pots together could reduce administration and make the pension system easier to manage.
For an individual, it can also make it easier to see how much they have saved and where their money is invested.
The same principle can apply to someone with several larger pensions.
If you are approaching retirement and have five different pension providers, bringing some of those arrangements together could make it easier to manage your investments, keep track and plan how much income you need to take during retirement.
So, pension consolidation can absolutely be the right thing to do. The problem is that not every pension is the same.
Some pension policies were taken out decades ago and contain benefits that are no longer available on modern pension contracts.
An older pension, for example, could have a guaranteed annuity rate, which may provide a significantly higher level of retirement income than someone could secure by buying an annuity from a modern pension.
Another pension might have a protected pension age, allowing someone to access their pension earlier than the normal minimum pension age.
There can also be protected or enhanced tax-free cash benefits (i.e more than 25% tax-free), depending on the terms of the individual policy.
These features can be worth considerably more than the difference between one provider’s annual charge and another’s.
More importantly, transferring the pension could mean losing those benefits permanently.
This is why, when I look at an older pension, I am not just interested in its investment performance and charges.
I want to understand what else comes with the pension and whether there are any benefits that would be difficult or impossible to replace elsewhere.
If there is a valuable benefit attached to the contract, it needs to be considered before any decision is made to transfer it.
The inheritance tax changes add another reason for people to review their pensions.
From 6 April 2027, most unused pension funds and relevant pension death benefits will generally be included when calculating the value of an estate for inheritance tax purposes.
The personal representatives of the estate (usually the beneficiaries) will be responsible for reporting and paying any inheritance tax due on those pension benefits.
This means the administration of an estate could become more complicated where someone has several pension arrangements.
The personal representatives will need to identify the pensions held by the deceased and obtain information from the relevant pension providers or scheme administrators.
Those administrators will then provide information about the pension benefits, beneficiaries and amounts involved so that the overall inheritance tax position can be calculated.
For someone with significant pension savings who does not expect to spend all their pension during retirement, this could be an important change.
It is easy to see why the changes might encourage people to think about pension consolidation.
If someone has accumulated several pensions over their working life, having all their retirement savings in one place could appear to make things easier for their family when dealing with their estate.
But making things easier for your family does not necessarily mean transferring everything into one pension.
There are other ways to make the administration of an estate easier, such as keeping a clear record of existing pensions, making sure beneficiaries know where the information is held and regularly reviewing the arrangements.
That could save your family considerable time without necessarily requiring you to give up valuable benefits attached to an existing pension.
And that is an important distinction. The fact that your family may have more pension administration to deal with after your death does not, by itself, mean that transferring the pensions during your lifetime is the right answer.
No, and this is where I think the distinction between the Government’s small-pot reforms and wider pension consolidation is important.
For example, a £500 pension that has been sitting untouched since someone changed jobs is very different from a £100,000 pension that contains a valuable guaranteed annuity rate.
Both are pensions, but they are not necessarily problems that should be solved in the same way.
Imagine someone has four pension pots.
One has high charges and limited investment options, another has a broad investment range and competitive charges, a third has a guaranteed annuity rate and the fourth has a protected pension age.
Putting all four into one modern pension would certainly make things simpler, but simplicity is not the only consideration.
The transfer could mean giving up benefits that are more valuable than the administrative convenience of having everything together.
Equally, keeping every pension simply because it is an old policy is not necessarily the right answer either.
If a pension is expensive, restrictive and offers no valuable benefits, consolidation could improve the position.
It comes down to understanding what you have before deciding what to do with it.
There isn’t a simple answer to this question.
For some people, bringing pensions together will reduce costs, simplify investment management and make retirement planning easier.
For other people, keeping pensions separate may be more appropriate because of the valuable benefits attached to individual contracts.
It may be worthwhile to think of the following comparisons when making a decision on pension consolidation:
| Consideration | Existing pension | New/consolidated pension |
|---|---|---|
| Annual charge | £x | £y |
| Investment choice | Limited/broad | Limited/broad |
| Guaranteed annuity rate | Yes/No | Yes/No |
| Protected pension age | Yes/No | Yes/No |
| Protected tax-free cash | Yes/No | Yes/No |
| Transfer charge | £x | N/A |
| Other benefits | Details | Details |
The number of pensions you have is not really the issue.
What matters is what each pension gives you, what it costs and what you might lose by moving it.
The Government’s plans to tackle small pension pots could make the system simpler for millions of savers, while the inheritance tax changes may encourage more people to review how their pensions are organised.
Both are good reasons to understand what you have, but neither is, on its own, a reason to move everything into one pot.
Sometimes consolidation will be the right answer, while in other circumstances keeping pensions separate may be more appropriate.
The important thing is to understand the difference before making a decision that may be difficult, or impossible, to reverse.
Getting expert advice can help to make the situation much clearer when it comes to whether or not to consolidate your pensions.
A financial adviser can:
Get in touch with an adviser today to find out more.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
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Pension consolidation is the process of bringing money from multiple pension arrangements together into one pension or a smaller number of pensions. It can simplify administration and retirement planning, but the benefits and costs of transferring depend on the individual pensions involved.
There is no universal answer. Consolidation can simplify administration and potentially reduce costs, but transferring an older pension could mean losing valuable benefits such as a guaranteed annuity rate, protected pension age or protected tax-free cash.
Not necessarily. Each pension should be assessed individually before deciding whether to transfer it. The number of pension pots you have is less important than the benefits, charges, investment options and other features attached to each one.
Potential disadvantages include losing valuable safeguarded benefits, paying transfer or exit costs, losing access to certain investment options and moving into a pension with higher charges or less suitable features.
Yes. Some older pensions contain benefits that may be lost permanently following a transfer, including guaranteed annuity rates, protected pension ages and protected or enhanced tax-free cash.
The Government is developing reforms intended to address the growing number of small, deferred defined contribution pension pots. The article notes that the ambition is for the new authorised consolidator system to be operational from 2030, although the proposals are still under consultation and the final approach and implementation timetable may change.
From 6 April 2027 most unused pension funds and relevant pension death benefits will generally be included when calculating the value of an estate for inheritance tax purposes.
It can create additional administration because personal representatives may need to identify multiple pension arrangements and obtain information from different providers. However, that does not necessarily mean the pensions should be consolidated.
The inheritance-tax changes provide a reason to review pension arrangements, but the article’s central point is that the tax changes alone should not determine whether pensions are transferred. The benefits and drawbacks of each existing pension should be assessed first.
Yes. A financial adviser can review existing pension arrangements, compare their charges, investments and benefits, and assess whether consolidation is appropriate for your circumstances and financial objectives.
As we head into Autumn, the Budget starts to loom large on the horizon – and with it, the inevitable Budget rumours.
I don’t have a crystal ball so I can’t tell you what the Chancellor will announce on October 28, but I do have one piece of advice right now:
Don’t believe the hype.
Every year, rumours multiply in the media about what the Budget will contain and how it will affect you.
While some rumours may have a grain of truth to them, they rarely turn out to be accurate. They can also cause serious damage to your wealth if you act on them.
In 2024 and 2025, claims that the Government was planning to take away the tax-free lump sum element from private pensions swept the financial press.
Tax-free pension lump sum withdrawals increased by more than 60% from £11.25bn in 2023/24 to £18.08bn in 2024/25.
The acceleration was particularly striking in the six months to March 2025 with £10.43bn withdrawn as tax-free cash. This was 72% more than the £6.07bn withdrawn in the corresponding six months of 2023/24.
That means the UK consumer moved £26bn from a tax-advantaged investment into a taxed environment. This is certainly good for the Chancellor of the Exchequer; maybe not so good for an individual.
Taking tax-free cash out from pensions is like toothpaste: you cannot put it back in the tube if you’ve taken too much out.
While figures are not yet available for the 2025/26 tax year, the indications show similar levels of withdrawals have continued.
In the end, no change was made to tax-free pension lump sums. While many of those who took their lump sums may always have intended to do so, it’s a safe bet that with figures like those above, many were spooked into premature action.
At Fairstone, we warned of the dangers of reacting to speculation around pension lump sums at the time. We also showed how cashing in your lump sum all in one go can mean you miss out on further tax-free money later on.
The tax-free element of the pension is an extremely effective way to manage income and taxation in retirement. You can use it to pay off debts, to finance dream holidays or phase retirement.
Many more favour flexibility to do something they enjoy rather than take a complete hard stop at retirement.
You should never take lightly the decision when and how to access that sum or make a decision on the strength of speculation in the media.
I’m not going to make myself a hostage to fortune by saying the Government will never change the rules on pension lump sums – just look at what changes have been brought in about inheritance tax on pensions.
But what I would say is that it is much better to base your financial planning on facts instead of speculation. Consulting a financial adviser adds an invaluable external expert perspective.
Practising what I preach, here are some important factual events coming up in the next few years. You should take these into consideration when making your financial plans.
The Government is aiming to have all pension schemes connected via its new pension dashboards system by October 2026.
This should enable people to see all their pensions information online, securely and in one place for the first time.
You can find more about the dashboards programme by clicking here.
From April 6 2027, most unused pension funds and death benefits will become part of your estate for Inheritance Tax purposes.
This could mean major changes in how people use their pension and plan their estate.
Find out more by reading our guide to the changes.
From April 2028, for most people the minimum age at which they can access a private pension will rise from 55 to 57.
If you are planning to retire early or take advantage of your pension commencement tax-free lump sum, you will need to check when your pension will become available.
From April 2029, only the first £2,000 of employee pension contributions made through salary sacrifice each year will be exempt from National Insurance contributions.
If you regularly pay in more via salary sacrifice, you may want to review how you fund your pension.
You can find out more about these changes by reading through our guide for employees and employers.
An expert financial adviser will explain these and other changes, how they affect your financial plan and how to navigate them.
Your adviser will also review your pension with you before you make any major decisions about it.
To ensure you can separate fact from rumour and act accordingly, get in touch with one of our advisers.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
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There is currently no confirmed change that abolishes the tax-free pension lump sum. Pension rules can change, however, so it is important to distinguish confirmed Government policy from Budget speculation before making decisions about accessing your pension.
The Budget may result in changes to pensions and taxation, but until announcements are made, it is important not to treat media speculation or rumours as confirmed policy. Any proposed changes should be assessed in the context of your individual financial circumstances.
The tax-free lump sum remains an important part of pension planning under the current rules. Whether and how much you can take depends on your circumstances and pension arrangements, so you should check the rules applying to you before accessing your pension.
For most people, the normal minimum pension age is due to increase from 55 to 57 on 6 April 2028. Some people may have a protected pension age, so the change will not necessarily apply to everyone in the same way.
From 6 April 2027, most unused pension funds and certain death benefits are due to be brought within the scope of Inheritance Tax. This could make pensions and estate planning more closely connected than they have been historically.
The pensions dashboards programme is intended to enable people to access information about their different pensions digitally in one place. The Government is aiming for pension schemes to connect to the system by October 2026.
Yes. From April 2029, only the first £2,000 of employee pension contributions made through salary sacrifice each year will be exempt from National Insurance contributions under the announced changes. The impact will depend on your circumstances and how much you contribute through salary sacrifice.
You should not take a pension lump sum simply because of an unconfirmed Budget rumour. The decision should be based on your retirement objectives, tax position, income needs and wider financial plan, rather than speculation about what the Government might announce.
For most of our working lives, we are encouraged to save, invest and build financial security for the future.
Then retirement arrives, and the focus changes completely.
After years of building wealth, the challenge is no longer just accumulating money. It is knowing how to use it well.
I see this often. Clients spend decades carefully building pensions, ISAs and investments, only to find that drawing on those savings feels uncomfortable.
It can feel far easier to preserve wealth than to spend it, even when the money is there to support the lifestyle they have worked hard for.
That is the idea behind the “Die With Zero” philosophy, popularised by author Bill Perkins.
In simple terms, the argument is that money should be used to create experiences, memories and impact during your lifetime, rather than being left untouched until it is too late to benefit from it.
I think there is a lot of value in that message.
But, as with most areas of financial planning, the right answer is rarely at either extreme.
Money is not the end goal. It is a tool that should help you live the life you want, look after the people you care about and make choices with confidence.
For some retirees, that might mean travelling more while they are still fit and active.
For others, it might mean helping children onto the property ladder, supporting grandchildren with education, or simply saying “yes” to the experiences they have delayed for years.
There is also a practical point here. The early years of retirement are often when people are healthiest, most active and best able to enjoy their money.
Waiting too long can mean missing opportunities that cannot always be recreated later.
That does not mean spending recklessly.
It means recognising that there can be a cost to being too cautious as well as a cost to spending too much.
The difficulty is that deliberately aiming to run your wealth down too aggressively carries real risks.
The biggest unknown is longevity: none of us knows how long we are going to live.
A retirement lasting 30 years or more is now a realistic possibility for many people.
That creates a genuine risk of spending too much too soon and having fewer options later in life.
Care costs are another important unknown.
The UK does benefit from the NHS and some social care support, but later-life care, property adaptations and additional support can still create significant costs.
Investment markets also need to be factored in. Retirement plans are built using assumptions about growth, inflation and withdrawals, but markets do not move in straight lines.
A difficult period early in retirement can have a lasting impact on how sustainable withdrawals are.
This is known as ‘sequence of returns risk’, where poor investment returns early in retirement will cause a portfolio to run out of money much faster. That is why many people still want a sensible financial cushion.
It is not about hoarding money for the sake of it. It is about keeping enough flexibility to deal with the unknowns.
In my view, good retirement planning is not about choosing between spending everything and preserving everything.
It is about deciding what level of spending, security and legacy feels right for you.
Most retirement plans need to balance three things:
For some people, the right answer is to spend more in the earlier years of retirement, when they are more likely to enjoy it.
For others, leaving an inheritance is a core part of their values and financial planning.
Neither approach is automatically right or wrong.
The important thing is that the decisions are intentional, affordable and linked to what actually matters to you.
This is where estate planning becomes part of the same conversation.
Spending, gifting and leaving money behind are not separate decisions.
They all sit within the wider question of how your wealth should support you and the people who matter to you.
Effective estate planning is about making sure assets pass to the right people, at the right time, in a tax-efficient way that remains consistent with your wishes.
That might include:
For many families, having these conversations earlier can be extremely valuable. A gift made at the right time can have a far greater impact than a larger inheritance received much later.
However, you need to do this carefully.
You should not compromise your own financial security to make gifts or reduce a potential inheritance tax bill.
This is where proper financial planning adds real value.
A good plan does not just show what you have today. It helps you understand what your money may allow you to do over the rest of your life.
Through cashflow modelling, you can test different scenarios before making big decisions.
For example:
Can you afford to retire earlier?
Could you gift money to your children now without putting your own future at risk?
Can you take the holiday you have always talked about?
What happens if markets fall, inflation is higher than expected, or care costs arise later in life?
These are not questions that can be answered properly by looking at a pension balance or investment statement in isolation.
They need context. They need assumptions. And they need a plan that can be reviewed as life changes.
That, for me, is the real point of financial planning.
It is not about encouraging people to spend everything. It is about helping them make informed decisions with confidence.
Not necessarily.
The better aim is to avoid reaching later life with unnecessary regret: regret that you spent too much too soon, or regret that you were so cautious you never enjoyed what you had built.
The goal should be to live with confidence, enjoy the wealth you have worked hard to build, support the people who matter to you where appropriate, and keep enough flexibility for whatever life brings next.
A financial adviser can help you to navigate your way through the different pitfalls of spending too little or too much and help you plan your financial future with confidence – whichever way you see it.
An adviser can:
Get in touch with an adviser today to start your plan – or check on its progress so far.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
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The “Die With Zero” philosophy argues that people should aim to use their wealth during their lifetime to maximise experiences, fulfilment and impact, rather than accumulating substantially more wealth than they need and leaving it unused.
It can be a useful way of thinking about retirement spending, but deliberately trying to reduce your wealth to zero carries risks. Longevity, investment returns, inflation, care costs and unexpected expenses can all affect how much money you need later in life.
Not necessarily. A more realistic goal may be to spend and enjoy your wealth while maintaining enough financial security to support you throughout retirement and deal with unexpected costs.
There is no universal amount that everyone should spend. The appropriate level depends on your income, pension and other assets, lifestyle, health, housing costs, expected longevity and whether you want to leave an inheritance.
The main risks include living longer than expected, experiencing poor investment returns, higher-than-expected inflation, unexpected expenditure and later-life care costs. Spending too aggressively early in retirement can leave you with fewer financial options later.
Giving money during your lifetime can allow family members to benefit from it when they may need it most. However, gifts should be considered alongside your own financial security, tax implications and wider estate-planning objectives.
Cashflow modelling is a financial planning tool that projects your income, expenditure, assets and liabilities over time. It can be used to test different retirement and spending scenarios and assess how sustainable a financial plan may be.
Yes. Cashflow modelling can help illustrate how different levels of spending, investment returns, inflation and unexpected costs could affect your finances over time. It can therefore provide useful context when deciding whether you can afford to spend or gift more.
That depends on your personal priorities. Some people place a high value on leaving money to their family, while others prefer to use more of their wealth during their lifetime. Financial planning can help you balance both objectives.
A combination of appropriate retirement income planning, sensible investment management, realistic spending assumptions and regular reviews can help. Cashflow modelling can also be used to test how your finances might cope with different scenarios.
Building a pension can take 30 or 40 years. It is surprisingly easy to undo some of that good work in an afternoon.
After more than a decade helping people plan for retirement, I tend to see the same mistakes cropping up.
Some are technical. Others are behavioural.
And quite a few look completely harmless until you discover the tax bill or valuable benefit hiding underneath.
So what are the five biggest pension traps I regularly come across when people are planning for retirement?
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One thing comes up time and time again when I talk to people about their retirement.
They look at their current salary and assume they need to replace it and they usually don’t.
If you’re earning £100,000 today, that doesn’t necessarily mean you need £100,000 a year in retirement.
On a £100,000 gross salary in the UK (for the 2026/27 tax year) with a 5% pension contribution (£5,000), your annual take-home pay is approximately £64,807 (about £5,400 per month).
When you switch to pension income it isn’t subject to National Insurance, although taxable pension withdrawals may still be subject to Income Tax but, NI is a big tax that many don’t consider.
You are also no longer making pension contributions and, depending on your circumstances, the mortgage may have been repaid.
Your salary and the amount you actually live on are two very different numbers.
Retirement income can also often come from several places. Pensions, ISAs, cash and other investments can all play a part.
I’ve seen situations where careful use of pensions, tax-free cash, ISAs and other savings has meant the overall tax paid on retirement withdrawals was surprisingly low.
Not because of some clever tax avoidance scheme, but because income was taken from the right places at the right time, in the right order.
I often ask clients a very simple question: if there was a cash machine in your life, how much would it need to print every month for you to feel financially free?
Ignore tax for a moment. What actually needs to land in your bank account?
Once we know that figure, we can work backwards and look at how it might be produced.
Because every pound unnecessarily lost to tax is a pound that cannot be spent enjoying retirement, gifted to your family or left invested for later.
Lesson 1: Don’t start with your gross salary. Start with how much you actually need to land in your bank account each month. They are two very different numbers. Retirement may be be closer than you think, since you base it on your current gross earnings.
New clients often come to me assuming retirement starts when their State Pension starts. But those are two very different things.
The State Pension provides a valuable foundation to someone’s retirement income.
But if you have built pensions, savings and investments alongside it, you may have options long before State Pension age.
And this is where I think people can make quite a sad mistake.
They spend decades building wealth but never quite give themselves permission to use it. If you want to stop working at 60, travel more, spend time with your grandchildren or simply stop setting the alarm clock every morning, why automatically wait?
Quite often, the barrier isn’t money, it is confidence.
People don’t know whether they can afford to stop, so the default becomes carrying on working. This is where cashflow planning can be incredibly powerful.
We can model, for example, someone taking £6,000 a month from age 60 and then reducing withdrawals later when State Pension income begins. We can look at different retirement dates, spending levels, market falls and life expectancies.
Suddenly retirement stops being a guess, it becomes a plan.
For me, that is one of the most valuable parts of financial planning. In retirement, peace of mind and clarity becomes a currency in its own right.
Nobody wants to reach 85 with a huge pension pot and realise they could have retired five years earlier.
That being said, work gives us much more than a salary. For many people it provides purpose, routine and friendships too. Retirement is never one size fits all.
But neither should your retirement date automatically be dictated by when the State Pension happens to arrive.
Lesson 2: Clarity is often the key that unlocks financial independence. Don’t automatically assume State Pension age is your retirement age.
People love tidying things up and with consolidation, three pensions become one pension.
One login. One statement. And quite often, consolidation does make sense.
But doing it purely for administrative convenience can be an extremely expensive tidy-up.
I once came across a client with an old pension containing a guaranteed annuity rate of around 10%.
In simple terms, a £100,000 pension could potentially provide roughly £10,000 a year of guaranteed income for life under the terms of that particular guarantee.
Finding an old pension capable of producing that level of guaranteed income can look almost suspiciously generous by modern standards. But valuable guarantees can still be buried inside old pension contracts.
Other plans may contain protected tax-free cash (above 25%) or other benefits that could potentially be lost if the pension is transferred.
It is important to note that, at current rates, the standard tax-free lump sum allowance is £268,275, with higher amounts possible for people with certain protections.
That is why you need to understand what is under the bonnet before deciding an old pension should be consolidated.
A pension statement might look dull enough to cure insomnia, but occasionally there is something extremely valuable hiding in the small print.
That’s why before transferring an old pension, you should check for the following:
Lesson 3: Don’t consolidate simply because it looks tidier. Understand exactly what you may be giving up before transferring an old pension
Another common misconception is that retirement means everything suddenly needs to become “safe”.
You retire on Friday, by Monday morning, apparently the entire investment strategy needs changing.
If you retire at 60, you could have another 30 years ahead of you. That is nearly as long as many people spent building their pension in the first place.
Retirement isn’t a single event. It could be a three-decade investment journey. That doesn’t mean taking unnecessary risk, far from it.
It means understanding all the risks, people naturally worry about their pension falling during a market correction and that is understandable.
But there is another risk at the opposite end of the spectrum: becoming too cautious, not achieving enough growth and gradually watching inflation and withdrawals eat away at your spending power.
The more important question is how much short-term volatility you can financially and emotionally tolerate, this is why some clients like to have what I call an “ammunition fund”.
For some people, that might mean keeping one or two years of expected withdrawals in cash or lower-risk assets.
If markets fall, they aren’t automatically forced to sell investments at exactly the wrong moment.
Cashflow planning can then look at both sides of the equation: what happens if markets fall sharply, but also what happens if the portfolio grows too slowly over a retirement that could last 30 years.
Most people spend far more time worrying about the first risk than the second.
Lesson 4: Retirement doesn’t mean investment risk disappears. Understand the risk of markets falling, but also the risk of becoming too cautious for a retirement that could last decades.
I sometimes say to clients: don’t let Donald Trump be in charge of your retirement, or the Prime Minister, or the Chancellor.
Markets will always give you a reason to worry. Clients understandably want to sell before the market falls, buy back at the bottom and neatly sidestep all the difficult bits.
There is just one small problem: you have to be right twice. You need to know when to get out and, crucially, when to get back in.
If you can consistently do that, you don’t need a financial adviser. You need the DeLorean from Back to the Future.
Good retirement planning should instead accept that difficult markets will happen.
The question shouldn’t be: “How do we make sure markets never fall?”
It should be: “What have we put in place so that when they do, I don’t have to panic?”
That may mean holding an ammunition fund. It might mean understanding how much of your essential expenditure is already covered by guaranteed income such as the State Pension or a defined benefit pension.
If your normal expenditure is covered, it becomes much easier to ride out the waves.
This is also where having a financial plan really earns its keep. Clarity is the goal, not trying to predict.
When markets fall, you aren’t making decisions from scratch while surrounded by alarming headlines. You can go back to the assumptions you made when everybody was calmer.
In our planning, we stress-test retirement plans against some horrible periods for investors, including the dot-com crash and the global financial crisis.
They aren’t particularly pleasant scenarios to look at. But that’s the point.
I’d rather discuss the storm while the sun is shining. Then, if markets fall and somebody starts worrying, we can go back to the plan and say: we planned for this.
Sometimes financial planning is spreadsheets and tax allowances. Sometimes it is a good dose of market therapy.
Lesson 5: Don’t let emotions take control of your retirement plan. They have a habit of becoming very expensive.
Expert advice from a professional financial adviser can help you avoid these common pension traps – and quite a few more besides.
Fairstone has expert advisers across everything from how to plan your retirement to passing on wealth to the next generation.
With offices across the UK and Ireland, we combine local knowledge with national scale and global investment options.
Find an adviser near you to start planning confidently for your retirement today.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
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The biggest pension traps include assuming you need to replace your gross salary in retirement, automatically waiting until State Pension age to consider retirement, consolidating pensions without checking their benefits, becoming too cautious with investments and allowing emotions to drive investment decisions.
The amount you need depends on your lifestyle, housing costs, debts, tax position and other sources of income. Rather than simply trying to replace your salary, it can be more useful to calculate how much you actually need to spend each month and then work out how pensions, savings, investments and the State Pension could provide it.
No. You can choose to retire before State Pension age if your financial circumstances allow it. Your private or workplace pensions and other assets can potentially provide income before your State Pension begins. Cashflow planning can help you assess whether retiring earlier is sustainable.
Not necessarily. Consolidating pensions can make them easier to manage and may have other advantages, but transferring an old pension could mean giving up valuable guarantees or protections. You should check the benefits and terms of each pension before transferring it.
Yes. Some older pension schemes can contain valuable benefits such as guaranteed annuity rates, protected tax-free cash or a protected pension age. These benefits may be lost when a pension is transferred, so it is important to understand what you have before consolidating pensions.
A guaranteed annuity rate is a feature of some older pension policies that can provide an annuity at a predetermined rate, potentially producing a significantly higher income than rates available on the open market. Because these guarantees can be valuable, transferring a pension that contains one should be considered carefully.
Retirement does not necessarily mean you should move your pension entirely into cash. If retirement lasts 20 or 30 years, your investments may still need to grow to keep pace with inflation and withdrawals. The appropriate level of investment risk depends on your circumstances, income needs, time horizon and ability to tolerate market falls.
Sequence of returns risk is the risk that poor investment returns early in retirement, combined with withdrawals, can have a significant impact on how long your pension savings last. This is one reason why retirement planning needs to consider not just average investment returns but also the timing of market falls.
Cashflow planning uses assumptions about income, spending, investments, inflation, tax and life expectancy to model how your finances could develop over time. It can help you assess different retirement dates and spending levels and test how your plan might cope with events such as market falls.
Having a clear financial plan can help you avoid making decisions based on short-term market movements or alarming headlines. Building appropriate cash reserves, understanding your investment strategy and stress-testing your plan can give you greater confidence when markets fall.
Yes. Taking too little investment risk can reduce the potential for your pension and other investments to grow over a long retirement. While protecting your income from market falls is important, being overly cautious can also expose you to inflation and the risk of your money not lasting as long as you need it to.
You need to consider your expected spending, guaranteed income, pensions, savings, investments, tax position and how long your money may need to last. A cashflow plan can model different retirement dates, spending levels, investment returns and market conditions to help determine whether your retirement plans are sustainable.
There are many reasons why people choose to consult a financial adviser.
To help plan for their retirement; to see how they can maximise the money they put aside; to secure their legacy and pass on wealth to the next generation.
But there’s one reason that’s not talked about enough.
And that’s to feel better about themselves and their life.
The very best financial advice doesn’t just give you a pounds and pence output – it can genuinely transform your life.
You may think I’m exaggerating for effect, but I have seen it happen with my own eyes, as have many of our advisers at Fairstone.
To take an example, one client came in to see one of our advisers in a state of great anxiety.
Their workplace was undergoing a major restructure and their job was under threat of redundancy.
Naturally, the client was worried about how they would cope financially if they were to lose their job.
However, after the adviser sat down with the client and went through their finances and the plans they had put in place over the years, it was clear that not only could the client cope if they lost their job, they could actually afford to stop work altogether.
The sheer relief on the client’s face at the burden and worry that had been taken off their shoulders was quite something to behold, our adviser told me.
In another case, one of our advisers took a client on quite a retirement journey.
Before he’d first talked to our adviser, the client had assumed he’d have to work till State Pension age – 67 for him – before he could afford to retire.
With the benefit of some initial advice, 67 turned to potentially 65 – two years of additional time in retirement.
The client continued to take our advice, adjusting his plan in accordance with changes in his working life, to the point where, following some cashflow modelling exercises, it turned out that he could retire as early as 59.
The client had been handed potentially up to eight extra years choosing how he wanted to spend his time rather than having to do what his employer wanted. Add it up and that’s over 2,000 extra days of freedom to enjoy.
While it is sensible to caveat these examples by saying that investment values can go down as well as up and a model is not a guaranteed outcome, they are nevertheless life-changing conversations for the people involved.
Every adviser I’ve ever met since I started working in the industry in 1993 has got similar real-life examples of the positive impact they have on their clients.
It’s one of the main reasons why they do their job and it shows that financial advice is about so much more than figures on a spreadsheet: it’s about people’s everyday lives and how they can be changed for the better.
Done well, financial advice can turn a dream into reality and give you peace of mind and a feeling of genuine freedom.
Even the process of sitting down with an expert adviser, talking through your hopes and fears and looking clearly and closely at your finances, can make you feel better.
In fact, financial advice in many ways is financial therapy.
When you build a bond of trust with your adviser, you can tell them things which you might not tell anyone else – maybe not even yourself – and you get to share your dreams and unburden some of your worries.
Good advisers offer valuable unbiased external perspectives – they often see things about your life which you may be too busy or too involved to see and are often the catalyst for the changes that are needed.
Because the advice is personalised rather than off the shelf, you get to have a one-off plan which is unique to you and which has the flexibility to change as you do.
This means that you can take control of your life rather than just going along with things. Advice enables you to make positive choices about you and your loved ones’ lives instead of just accepting whatever comes to you.
You may have a burning desire to learn scuba diving in Bali or just want to spend more time at home spoiling your grandchildren – or maybe you want to do both.
What you need is to get advice to turn that dream into a plan and then make that plan a reality.
For expert professional advice on how to turn your life dreams into a practical plan, get in touch with one of our advisers.
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Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
Many people spend years preparing for retirement, carefully building pension savings and investments with the goal of achieving financial freedom.
However, retirement is not the end of the planning journey. In reality, some of the most important financial decisions are often made after retirement.
Whether it is managing income sustainably, navigating tax rules, dealing with an inheritance, reviewing investment strategy or considering the impact of inheritance tax, ongoing financial planning can help ensure your money continues to work effectively for you and your family.
One of the most significant changes to pension planning in recent years will take effect from 6 April 2027.
From this date, unused pension funds are due to be included within an individual’s estate for inheritance tax (IHT) purposes.
Historically, pensions have been an effective estate planning tool because pension savings could often be passed to beneficiaries outside of the estate for IHT purposes.
Following the proposed changes, pension funds may become subject to IHT where an estate exceeds the available allowances and, depending on the circumstances, beneficiaries could also face income tax when accessing inherited pension benefits.
As a result, many existing estate plans may need reviewing.
This does not necessarily mean pension savings should be spent first or that pensions are no longer valuable planning tools.
Instead, retirement planning will need to balance several competing factors, including:
There is no one-size-fits-all solution.
The most appropriate strategy will depend on your personal circumstances, objectives and family situation.
Since the introduction of Pension Freedoms in 2015, many retirees have chosen flexi-access drawdown rather than purchasing an annuity.
Flexi-access drawdown provides flexibility and control, allowing you to choose when and how much income to take from your pension.
However, careful planning is essential to ensure your pension savings remain sustainable throughout retirement.
One of the key risks faced by retirees is known as sequencing risk.
Sequencing risk occurs when withdrawals are taken during periods of poor investment performance. When markets fall, more units of an investment need to be sold to generate the same level of income.
This can have a lasting impact because when markets subsequently recover, there is less capital remaining to benefit from growth.
The risk can be particularly significant during the early years of retirement or when large lump sums are withdrawn at a single point in time.
Many retirees naturally focus on the amount of income they require, but the timing of withdrawals can also be important.
Taking a regular monthly income can help smooth the impact of market fluctuations compared with taking a large annual withdrawal.
By spreading withdrawals throughout the year, different amounts are sold at different market levels, reducing reliance on market conditions at a single point in time.
For many people, monthly withdrawals also mirror their previous salary pattern, making budgeting and cashflow management easier.
Whilst this does not remove investment risk, it can help make retirement income planning more predictable.
One of the less frequently discussed challenges of retirement is not financial, but behavioural.
The move from guaranteed pension incomes towards flexi-access drawdown has given retirees greater flexibility and control over their finances.
However, it has also introduced a new concern commonly referred to as Fear Of Running Out (FORO) – the worry that pension savings may be depleted too early, leaving insufficient income later in life.
Many retirees find themselves asking questions such as:
As a result, some individuals become overly cautious and spend significantly less than they could comfortably afford, despite having accumulated substantial retirement savings.
Financial planning can play an important role in addressing these concerns.
Through detailed reviews of expenditure, assets and future objectives, alongside the use of cashflow modelling, it is possible to assess whether existing resources are likely to support a desired lifestyle throughout retirement.
This can provide reassurance that spending plans remain sustainable, including allowances for larger one-off expenses such as holidays, home improvements or replacing a car.
In some cases, it may also demonstrate that retirement is achievable earlier than originally anticipated, helping people make informed decisions about when they wish to stop working.
Perhaps most importantly, effective planning can provide reassurance that it is acceptable to spend the money that has been accumulated for retirement, whilst remaining confident that future needs can still be met.
Whilst running out of money is a common concern, the reality is often more complex than many people assume.
Retirement income is rarely reliant upon a single source.
In addition to pension savings, many retirees may have other assets available, such as ISAs, investment portfolios, property or cash savings.
Over time, guaranteed income sources such as the State Pension may also form an increasingly important part of retirement income.
The purpose of ongoing financial planning is to identify potential shortfalls before they become a problem.
Cashflow modelling can help highlight whether future spending plans appear sustainable and, if not, provide an opportunity to consider alternative strategies at an early stage.
These strategies might include adjusting expenditure, reviewing withdrawal levels, changing investment strategy, utilising other assets more effectively or, where appropriate, considering the role of equity within your home within a broader retirement plan.
By regularly reviewing plans and adapting them as circumstances change, retirees can gain greater confidence that their resources remain aligned with both their current needs and their longer-term objectives.
A common misconception is that investment risk should automatically reduce once retirement begins.
For some individuals this may be appropriate, but retirement does not necessarily mean investments should become overly cautious.
Many retirees may spend 25 to 30 years or more in retirement. In fact, for a couple retiring today there is a realistic possibility that one partner could live well into their 90s.
As a result, retirement planning often needs to consider investment growth over several decades rather than just capital preservation.
The key question is not simply “How much risk do I want to take?” but “How much risk do I need to take to achieve my objectives?”
When reviewing investment strategy in retirement, factors that should be considered include:
Every retiree’s situation is different, which is why tailored investment advice remains an important part of retirement planning.
Tax efficiency can have a significant impact on how long retirement assets last.
A common misunderstanding is that the State Pension is tax-free.
In reality, the State Pension is taxable income. However, tax is not usually deducted before it is paid.
Where additional taxable income exists, HMRC will typically collect any tax due through other sources of income or through a self-assessment tax return.
Most defined contribution pensions allow up to 25% of the fund to be accessed tax-free, subject to current legislation and available allowances.
Many people assume this must be taken as a lump sum. However, it can also be phased alongside taxable withdrawals to create a more tax-efficient income strategy.
This can help:
For those retiring before State Pension age, there may also be valuable opportunities to utilise otherwise unused personal allowance before State Pension income commences.
Careful planning can help maximise these opportunities while ensuring the strategy remains appropriate over the long term.
As life expectancy increases, it is becoming more common for people to receive inheritances later in life, often when they have already retired.
Receiving a significant inheritance can create opportunities, but it can also raise new questions.
For some retirees, an inheritance may strengthen long-term financial security, allowing additional funds to support future spending needs, healthcare costs or family assistance.
The funds could potentially be invested through a combination of:
These can provide additional flexibility and help create a diversified and tax-efficient retirement income strategy.
For others, the inheritance may not be required to support their own lifestyle and could instead increase an existing inheritance tax liability.
In these situations, options such as gifting strategies, trusts or, in some circumstances, a Deed of Variation may be worth considering as part of wider estate planning discussions.
The best course of action will depend on individual circumstances, objectives and family arrangements.
Retirement can last for several decades, during which time legislation, tax rules, investment markets and personal circumstances are likely to change.
Regular financial planning can help ensure your strategy remains aligned with your objectives throughout these changes.
The decisions made after retirement can be just as important as those made beforehand.
From managing retirement income and investment risk to planning for inheritance tax and considering how best to use inherited wealth, ongoing financial advice can help ensure your financial plan continues to meet your needs as circumstances evolve.
With increasing complexity and changing legislation, regular reviews can provide reassurance that your retirement strategy remains aligned with your goals, helping you make informed decisions for both yourself and future generations.
Here are some of the key questions you should ask yourself when reviewing your finances in retirement:
Talking to an expert financial adviser can help you navigate through retirement and create a personal financial plan to ensure you’re making the most of your time.
Get in touch with one of our advisers today to start your post-retirement journey.
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Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
Post-retirement financial planning is the process of managing your income, investments, taxes and estate after you stop working to ensure your money lasts throughout retirement.
Most advisers recommend reviewing your retirement plan at least annually or whenever there is a significant change in your finances, health or legislation.
Sequencing risk is the danger that poor investment returns early in retirement reduce the long-term sustainability of your pension because withdrawals are made while markets are falling.
Yes. The UK State Pension counts as taxable income, although tax is usually collected through your other income rather than deducted before payment.
Not necessarily. Many people spend 25–30 years or more in retirement, so maintaining some investment growth may be necessary to keep pace with inflation.
Fear of Running Out (FORO) describes the anxiety many retirees feel about spending their pension savings, even when they have enough money to support their lifestyle.
From April 2027, unused pension funds are expected to be included within a person’s estate for inheritance tax purposes, making estate planning even more important.
Yes. Cashflow modelling can show how your income, investments and spending may evolve over time, helping you make informed decisions and gain confidence in your retirement plans.
I recently read a BBC article about a couple who retired at the ages of 35 and 40 and who were part of the so-called ‘FIRE’ movement – Financially Independent, Retire Early – and it got me thinking about what financial independence really is.
The concept is straightforward. Save and invest aggressively while you’re young, keep spending to an absolute minimum, and build enough wealth to become financially independent decades before the traditional retirement age.
It is undoubtedly an impressive achievement.
However, it prompted an important question.
Is financial independence really the end goal for people, or is it simply a means to something greater?
For many people, work provides far more than an income. It gives us:
There is, of course, no right or wrong answer.
Some people dream of retiring early, while others cannot imagine ever stopping work.
The key is understanding what you want your future to look like, rather than pursuing someone else’s definition of success.
I firmly believe in helping people achieve financial independence as early as possible.
However, I don’t believe it should come at the expense of living life today.
When we are young, we are often at our wealthiest in terms of health, energy and opportunity.
Whilst saving for the future is incredibly important, there is a balance to be struck between preparing for tomorrow and making the most of today.
After all, life is uncertain.
There is also the reality that retirement itself is changing.
The age at which we can access pensions continues to rise, life expectancy has increased significantly over the last century, and many question what the future of the State Pension will look like over the coming decades.
Whilst nobody knows exactly what lies ahead, one thing is clear: relying on a traditional view of retirement is becoming increasingly uncertain.
So rather than spending 20years counting down the days until you can stop working, why not spend those 20 years building a career, a business or a life that you genuinely can’t wait to wake up for?
To me, that’s a far richer definition of financial freedom.
This is why financial planning should never be solely about reaching a particular figure.
Whether that number is £500,000, £1 million or £5 million, it is simply a milestone.
Without direction, even substantial wealth can leave people feeling uncertain.
Conversely, someone with clear goals, meaningful hobbies, strong family relationships, travel plans and projects often enjoys retirement far more because they are retiring to something, rather than simply from something.
Ultimately, financial planning is not about stopping work.
It is about creating the freedom to choose how you spend your time.
One of the most rewarding aspects of my role as a financial planner is helping clients gain clarity.
We cannot – and will not – promise extraordinary investment returns or create wealth overnight.
What we can do is build a financial roadmap.
Through detailed cashflow modelling, we stress test different scenarios, explore future possibilities and answer the questions that naturally keep people awake at night:
More often than not, clients leave those meetings with exactly the same amount of money they arrived with.
What changes is how they feel.
They leave with greater confidence, greater clarity and significantly more peace of mind.
I always say that a cashflow plan is the trailer of your life: you write the story, we help produce it and show you a snippet of what the movie could look like.
Perhaps one of the biggest misconceptions about financial planning is that it is entirely focused on the future.
In reality, it often helps people enjoy the present more.
When a robust financial plan demonstrates that someone is comfortably on track, it can give them permission to spend that annual bonus, take the holiday they’ve been postponing, reduce their working hours or even pursue a career that offers greater fulfilment, despite paying less.
Knowing that your future is secure allows you to make better decisions today.
That, to me, is genuine financial independence and is really fun.
Not necessarily retiring early, but having the freedom to live life on your own terms, with confidence that your future has been carefully planned and forecasted.
Because, ultimately, the most valuable currency we transact in is not money.
It is peace of mind and that only comes once you have clarity.
An expert financial adviser can help you to map out how your financial future could look – and how you can get there.
Get in touch with an adviser today to find out more.
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Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
The FIRE movement stands for Financial Independence, Retire Early. It focuses on saving and investing aggressively so that people can become financially independent and potentially retire much earlier than the traditional retirement age.
No. Financial independence means having enough financial security to choose how you spend your time. Early retirement is one possible outcome, but many financially independent people continue working because they enjoy it.
Cashflow planning uses financial modelling to forecast your future income, spending, savings and investments under different scenarios. It helps you understand whether you’re on track to achieve your goals.
A financial adviser can assess your finances, model different retirement dates and help you understand whether retiring early is achievable based on your goals and circumstances.
Good financial planning connects your finances with your lifestyle goals. It helps you make informed decisions about work, retirement, family, travel and spending so your money supports the life you want.
Not necessarily. While some people value retiring early, others prefer a balance between saving for the future and enjoying life today. Financial planning should reflect your own priorities and circumstances.
For many people, retirement planning raises an important question: can the State Pension alone provide enough income to live on?
While the State Pension forms a valuable foundation, for most people it is unlikely to fully fund the lifestyle they want in retirement.
Private pensions, workplace pensions and other savings are often needed to bridge the gap.
Understanding how these income sources work together is key to building a sustainable retirement plan.
The State Pension is a regular payment from the Government that you may be entitled to when you reach State Pension age.
For the 2026/27 tax year, the full new State Pension is £241.30 per week (around £12,547 per year), as set out on the official New State Pension GOV.UK page.
Most people need 35 qualifying years of National Insurance contributions or credits to receive the full amount, as explained in the State Pension eligibility guidance.
Overall, the State Pension is designed to provide a basic level of income in retirement rather than replace earnings entirely, as outlined in the UK Government State Pension overview.
A private pension is a long-term savings arrangement designed to support you in retirement, usually built through a workplace scheme or personal pension.
It grows through a combination of:
The final value depends on how much is paid in, how long it is invested, and how investments perform.
As highlighted in Fairstone’s retirement planning across life stages guide, starting early and contributing consistently can significantly improve long-term retirement outcomes.
To understand its real-world impact, it helps to compare the State Pension with typical retirement income needs.
The Retirement Living Standards provide a useful benchmark:
With the full State Pensionat around £12,547 per year as of the date of this article, it is clear it generally covers only a basic level of living costs rather than a moderate or comfortable lifestyle.
Several long-term trends are increasing reliance on private pension savings.
People are living longer, meaning retirement savings need to last more years.
At the same time, the cost of living has increased, and fewer people now benefit from generous defined benefit pension schemes.
As highlighted in Fairstone’s early retirement planning guide, this shift means individuals are taking on more responsibility for funding their own retirement than previous generations.
For some people with low living costs, the State Pension may provide a basic income in retirement. However, for most, it is unlikely to be enough on its own.
Typical shortfalls include:
As highlighted in Fairstone’s financial planning in later life guide, understanding both income and expenditure is essential when planning for retirement.
Private pensions are designed to sit alongside the State Pension and provide additional income in retirement.
They typically work through workplace contributions, employer payments, and tax relief, all of which help boost savings over time. Investment growth can further increase the value of a pension pot over the long term.
In short, they are designed to bridge the gap between the State Pension and the income needed for a comfortable retirement.
Good retirement planning is about steady progress rather than last-minute decisions.
Fairstone’s retirement planning considerations guide highlights the importance of reviewing pensions regularly and making the most of tax-efficient saving opportunities.
Small actions such as increasing contributions or consolidating old pension pots can make a meaningful difference over time.
The State Pension and private pensions are not competing systems — they are designed to work together.
The State Pension provides a foundation level of income, while private pensions build on top of this to support lifestyle choices and financial flexibility in retirement.
Together, they form the basis of most retirement income strategies in the UK.
A financial adviser can help you understand whether you are on track for retirement, how much income you may need, and how to structure your pensions efficiently.
Fairstone’s retirement planning service supports individuals in building tailored strategies based on income needs, goals and long-term financial planning.
Get in touch with an adviser today to find out more.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions
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The State Pension is a regular payment from the UK Government that you may be entitled to once you reach State Pension age. For the 2026/27 tax year, the full State pension is £241.30 per week (around £12,547 per year), although the amount you receive depends on your National Insurance record.
Most people need 35 qualifying years of National Insurance contributions or credits to receive the full new State Pension. If you have fewer qualifying years, you may receive a reduced amount.
The State Pension provides a valuable foundation for retirement income, but for most people it is unlikely to cover the lifestyle they want. It is designed to provide a basic level of income rather than replace your earnings.
A private pension is a long-term retirement savings plan that is usually built through a workplace pension or a personal pension. Your pension grows through your own contributions, employer contributions (where applicable), tax relief from the Government, and investment growth over time.
Private pensions help bridge the gap between the State Pension and the income many people need for a comfortable retirement. They can provide greater financial flexibility and help cover everyday expenses, leisure activities and unexpected costs.
According to the Retirement Living Standards, a single person typically needs around:
For couples, the estimated annual income is:
These figures illustrate that the full State Pension alone is unlikely to provide a moderate or comfortable standard of living.
Several factors mean people are relying more on private pension savings than previous generations, including:
While some people with low living costs may be able to live on the State Pension, most retirees will need additional income.
Common expenses that the State Pension may not fully cover include:
The State Pension and private pensions are designed to work together. The State Pension provides a basic level of income, while private pensions supplement this through additional retirement savings built up during your working life.
Small, consistent actions can make a significant difference over time. These include:
The earlier you begin saving, the more time your investments have to grow. However, it’s never too late to review your retirement plans and make positive changes that could improve your future financial security.
A financial adviser can help you understand whether you’re on track for retirement, estimate how much income you may need, review your pension arrangements and develop a retirement strategy tailored to your financial goals and circumstances.
If you’re looking for a financial adviser, you’re probably facing an important financial decision.
You may be approaching retirement, deciding what to do with old pensions, investing an inheritance, planning for later life, buying a property, or simply trying to get your finances organised.
The challenge is that financial advice isn’t something you can compare on price alone. You’re choosing a person, and often a firm, that could help shape some of the biggest financial decisions you’ll ever make.
A good adviser should help you understand your options, avoid costly mistakes and build a plan around your goals. The right relationship can last for many years and evolve as your circumstances change.
Yet many people aren’t sure where to begin.
How do you know whether an adviser is properly regulated?
What’s the difference between independent and restricted advice?
Should Chartered status matter?
How do fees work?
And how can you tell whether you’re receiving genuine financial planning rather than simply being sold a product?
Working alongside financial planners, mortgage advisers and protection specialists has given me a front-row seat to the questions consumers ask most often and the factors that tend to matter when choosing an adviser.
This guide brings together the practical checks, questions and warning signs worth considering before making a decision.
| What to compare | Why it matters |
|---|---|
| FCA authorisation | Confirms the adviser or firm is authorised and regulated to provide the advice you need |
| Independent or restricted | Determines how broadly they can search the market |
| Qualifications and Chartered status | Indicates professional standards and ongoing development |
| Breadth of expertise | Your needs may span investments, pensions, mortgages and protection |
| Fees | You should understand both initial and ongoing costs |
| Minimum investment requirements | Some firms have minimum wealth thresholds |
| Ongoing service | Understand what you’ll actually receive for ongoing fees |
| Reputation | Reviews and recommendations can provide useful context |
| Personal fit | Advice is often a long-term relationship |
A financial adviser helps individuals and families make informed decisions about their finances.
| Area | What an adviser may help with |
|---|---|
| Retirement planning | Working out when and how you can afford to retire |
| Pensions | Reviewing and potentially consolidating pensions where appropriate |
| Investments | Building and managing a portfolio aligned to your goals, attitude to risk and capacity for loss |
| Tax-efficient planning | Making use of available allowances and wrappers |
| Estate planning | Considering how wealth may be passed to future generations |
| Protection | Reviewing life cover, income protection and other safeguards |
| Major life events | Planning around inheritance, retirement, divorce or business sale |
Many people assume financial advice is only about investments. In reality, the most valuable advice often takes a broader view, bringing together all aspects of your financial life into a coordinated plan.
Before choosing an adviser, think about what you’re trying to achieve.
| Your goal | Type of advice that may help |
|---|---|
| Planning for retirement | Pension and retirement planning |
| Building long-term wealth | Investment and financial planning |
| Buying your first home | Mortgage advice |
| Moving home | Mortgage and protection advice |
| Managing an inheritance | Financial planning and tax considerations |
| Protecting your family | Protection planning |
| Planning for later life | Retirement, estate and inheritance planning |
The best advisers spend time understanding what you’re trying to achieve before discussing products or recommending solutions.
Any firm or individual providing regulated financial advice in the UK should be authorised by the Financial Conduct Authority (FCA) or act as a representative of an authorised firm.
Before engaging an adviser, check the FCA Financial Services Register and confirm:
If you can’t verify an adviser or firm on the Register, don’t proceed until you’ve established their regulatory status.
Useful resource: FCA Financial Services Register
One of the most important questions consumers can ask is whether an adviser is independent or restricted.
| Independent advice | Restricted advice | |
|---|---|---|
| Advice basis | Can consider products and providers across the relevant market | May be limited by providers, products or scope |
| FCA regulated | Yes | Yes |
| Automatically better? | No | No |
| Key consideration | Breadth of market access | Understanding any restrictions |
Neither label tells you whether an adviser is right for you.
What matters is understanding how advice is provided, what options can be considered, and whether that approach suits your circumstances.
For more detail on the FCA’s rules:
Fairstone advisers provide independent financial advice and are not tied to specific product providers.
When comparing firms, it’s worth understanding whether access to the wider market is important to you and how each adviser or firm approaches its recommendations.
All practising financial advisers must meet minimum qualification standards.
Some advisers and firms go beyond those minimum standards and achieve Chartered status.
| Question | Why it matters |
|---|---|
| Are you a Chartered Financial Planner or Chartered Firm? | Indicates a commitment to professional standards, ethical conduct and ongoing professional development |
| What qualifications do you hold? | Helps demonstrate expertise and specialism |
| Do you regularly advise people in similar circumstances to me? | Relevant experience often matters as much as qualifications |
Financial decisions rarely exist in isolation.
| Your need | Areas of expertise worth considering |
|---|---|
| Retirement planning | Pension and retirement specialists |
| Investments | Investment advice and portfolio management |
| Family protection | Protection specialists |
| Passing on wealth | Estate and inheritance planning |
| Property decisions | Mortgage advice |
| Multiple priorities | Wider financial planning across specialisms |
A useful question to ask is: If my circumstances change, what other areas of advice can you help me with?
For most people, a mortgage will be one of the largest financial commitments they ever make.
Mortgage decisions can affect retirement plans, cash flow, savings capacity, protection arrangements and long-term financial goals, so they shouldn’t always be considered in isolation.
Many people spend years building wealth but devote less attention to protecting it.
Protection planning may include life insurance, critical illness cover and income protection.
A good adviser should be able to explain how protection fits into your wider financial plan rather than simply recommending products.
Investments matter, but they’re only one part of financial planning.
When speaking to an adviser, ask:
Some firms have minimum requirements relating to pensions, investments or overall wealth. Others don’t.
There is no standard industry minimum, so it’s worth asking this question early.
Transparency around fees is essential.
Advisers may charge fixed fees, hourly fees, percentage-based fees, initial advice fees, ongoing advice fees, or a combination of these.
Ask:
The FCA requires communications to be fair, clear and not misleading:
The lowest fee is not automatically the best value.
Understand:
The aim is to compare overall value, not simply cost.
Trust is difficult to measure, but most people know when it isn’t there.
A good adviser should listen carefully, explain complex issues in plain English and answer questions without pressure or jargon.
Alongside checking FCA authorisation and qualifications, it can be useful to review:
The FCA also publishes guidance on how regulated firms should communicate with consumers:
There is no fixed rule, but speaking to more than one adviser is often worthwhile.
It allows you to compare approach, expertise, fees and personal fit.
| Red flag | Why it matters |
|---|---|
| Can’t be found on the FCA Register | You may not be dealing with a regulated adviser |
| Pressures you to act quickly | Good advice should stand up to scrutiny |
| Makes promises about returns | Investment returns cannot be guaranteed |
| Is unclear about fees | Costs should be transparent |
| Recommends products before understanding you | Advice should start with your objectives |
| Cannot explain recommendations clearly | You should understand what you’re being advised to do |
Your first meeting should help both you and the adviser decide whether working together is the right fit.
You will typically discuss income, expenditure, pensions, investments, family circumstances, goals and attitude to risk.
The adviser should explain:
That depends on your circumstances.
Advice is often most valuable when you’re making significant decisions involving pensions, retirement, investments, inheritance planning or multiple financial goals at once.
The question isn’t simply ‘how much does advice cost?’ but ‘what am I receiving and is it appropriate for my circumstances?’
| Question | Why ask it |
|---|---|
| Are you independent or restricted? | Helps you understand the scope of advice and providers available |
| Are you authorised by the FCA and do you have the permissions required for the advice I need? | Confirms you’re dealing with a regulated adviser |
| What qualifications do you hold? | Provides context on expertise and experience |
| Do you regularly work with people like me? | Relevant experience matters |
| How are you paid? | Helps avoid surprises |
| What does any ongoing fee include? | Ongoing services vary significantly |
| Do you provide mortgage advice? | Property often plays a major role in financial planning |
| How do you assess protection needs? | Protection should be considered alongside other priorities |
| Do you have minimum investment requirements? | Not every service fits every client |
| How often will my plan be reviewed? | Helps set expectations |
| Sign | Why it’s important |
|---|---|
| You feel comfortable asking questions | Financial planning should be collaborative |
| Explanations are clear and straightforward | You should understand recommendations |
| Advice relates to your goals | Recommendations should reflect your circumstances |
| Fees are transparent | There should be no surprises |
| Risks are explained as clearly as benefits | Good decisions require balance |
| You feel listened to rather than sold to | Advice should start with understanding you |
Choosing a financial adviser isn’t about finding the cheapest fee or the most impressive brochure.
It’s about finding someone you trust to help you make good financial decisions over time.
Before making a decision, check the adviser is regulated, understand how they’re paid, ask about the scope of their advice and take time to compare your options.
The best advice relationships are rarely built around products. They’re built around trust, communication and a clear understanding of what matters most to the client.
| Resource | Link |
|---|---|
| FCA Financial Services Register | https://register.fca.org.uk/s/ |
| FCA Handbook COBS 4.2 | https://www.handbook.fca.org.uk/handbook/COBS/4/2.html |
| FCA Handbook COBS 6.2A | https://www.handbook.fca.org.uk/handbook/COBS/6/2A.html |
| FCA Handbook COBS 6.2B | https://www.handbook.fca.org.uk/handbook/COBS/6/2B.html |
| FCA Financial Promotions Guidance | https://www.fca.org.uk/firms/financial\-promotions\-adverts |
Chris Coulson is Marketing Director at Fairstone. Chris works closely with financial planners, mortgage advisers and protection specialists across the UK and regularly produces consumer education content on financial planning, retirement, wealth management and personal finance.
This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change.
The value of investments can go down as well as up and you may not get back the full amount you invested.
Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
