Retirement is a significant life transition. Some of the financial habits that served you well during your working life might no longer suit your retirement lifestyle.

Sticking to your current financial habits could mean you miss out on opportunities to enjoy your retirement, or even mean you risk using up your savings too soon. Read on to find out why.

The shift to depleting assets can be difficult for some retirees to manage

As you retire, you’ll often move away from earning an income and building wealth towards depleting your assets.

If you’ve established a good money habit of regularly saving or investing during your working life, it might be difficult to now spend your wealth. It’s something retirees might feel nervous about because they may worry they won’t have enough for later life.

Indeed, according to an Aviva survey (12 May 2025), only half of mid-retirees aged between 65 and 75 who do not pay for financial advice are confident they’re on track to make their pension savings last for life.

Holding on to the habit of limiting your spending could mean the retirement you’ve worked hard to secure doesn’t live up to your expectations, even if you’re financially secure enough to pursue your aspirations.

Alternatively, if you continue with your current money habits and spend as though you have a salary coming in, you might risk withdrawing too much from your pension.

Retirement could also affect what’s appropriate in other areas of your financial plan.

For example, if you continue to invest in the same manner, you might be taking too much risk if you plan to access the money soon. Similarly, if you have debt, how you manage repayment might shift if you don’t have a guaranteed income in retirement.

Balancing different priorities and goals in retirement can be tricky, but a long-term plan could help you adjust your financial habits to suit your short- and long-term needs.

A cashflow model could give you confidence in your retirement finances

A key challenge when managing your retirement finances is that you need to consider how your assets and income needs could change over time. If you retire in your 60s, you might need to create a retirement plan that spans several decades.

A cashflow model could help you visualise your wealth and how it might change.

Your financial planner will start by inputting data about your current finances, and then make certain assumptions to show how your finances could change. These assumptions might include your income needs based on average inflation, your plans, or expected investment returns.

You can then start to test different scenarios to assess how they’d affect your long-term financial security. So, as you prepare to transition into retirement, you might use your cashflow model to help answer questions like:

• What income could I afford to withdraw from my pension each year?
• Could I withdraw lump sums during retirement to tick off items on my bucket list?
• If I increase my income in early retirement, could I risk depleting my pension fund too soon?

With this information, you may feel more comfortable adjusting your money habits, such as using assets to create an income that allows you to get the most out of retirement.

It’s important to note that while a cashflow model can be a useful tool as part of your long-term plan, the outcomes cannot be guaranteed.

In addition, a cashflow model relies on accurate data. So, you should regularly update it to reflect changes to your finances, overall circumstances, or goals.

Talk to us about your retirement plan

If you’d like to talk about your retirement finances and how we could support you as you transition into the next stage of your life, please get in touch.

Please note:

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

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

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

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

The Financial Conduct Authority does not regulate cashflow modelling.