Four Common Financial Challenges for Retirees

Planning and preparation are the keys to financial security at every stage of life. Recent research has shown that around 71% of retirees worry about outliving their pension savings, with the average pension pot providing a sustainable retirement income for just 11 years.

As times change, staying informed about the challenges that can arise in retirement is the first step to addressing them effectively and living the lifestyle you’ve worked hard for worry-free. Here are four common financial challenges that retirees are facing in 2025.

Pension Management with Multiple Pension Pots

Nowadays, auto-enrolment pension schemes are common in the workplace, so it can be easy to rack up different pots throughout your professional career. The Great British Retirement Survey found that 66% of people reaching retirement age have more than one pension pot.

It is easier to lose track of split pensions; people even forget to claim them. Merging your pension pots can make tracking your finances simpler and streamline retirement planning. If you want to manage your pots from one place, there are pension-finding services and management apps available, like Pension Bee or AJBell.

Choosing How to Access Your Pension

It used to be that you received a final salary pension or used your pension savings to buy an annuity. In 2015, the government introduced Pension Freedoms. As a result, the way you can access your pension is more flexible. With a defined contribution (DC) pension, you can choose to withdraw lump pension sums or opt for variable pension payments.

However, you also have more responsibility for managing your finances. Many retirees discuss their options with a financial advisor, who can help them create a long-term plan.

Running out of Money

People are living longer, resulting in nearly 30% of retirees having concerns about making their pension stretch. The cost of living is also high, with more people needing to re-budget and consider whether their current pension can support their lifestyle. Speaking to a financial advisor and having a robust financial plan in place allows you to prepare for any challenges that could arise and take retirement in your stride.

Tax Planning for Retirees

Wondering why did I get a tax bill after retiring? You’re not alone. Most retirees still need to pay tax on their pension income, as annual payments will sit above the standard tax-free personal allowance (£12,570). You may receive an unexpectedly high tax bill if you withdraw a lump sum from your pension. If HMRC overtaxes you, they will reimburse you. However, spreading pension payments across tax years can help prevent any unexpectedly large payments and even reduce the tax you pay long term.

Keep up With the Latest in Retirement News with Churchill Living

Churchill Living has been building homes since 1994 and is proud to be a trusted source of retirement news and supportive resources for our residents. Find out more about the benefits pensioners can claim, reducing your energy bills at home and year-round money-saving tips through the Churchill Living blog.

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