Reaching 100 years old is a more realistic prospect now than ever before for UK savers.
The Office for National Statistics (ONS) reported that there were 16,600 centenarians living in the UK in 2024. This number is only expected to increase in the coming years.
With a longer life comes the need for a more resilient retirement plan, designed to provide lasting financial support, so you have peace of mind about your security and quality of life.
Create a retirement budget and calculate your 100-year life savings goal
A retirement budget can help you plan how much you expect to spend in retirement and, consequently, how much wealth you will need to build.
Your budget will be composed of essential and lifestyle costs.
Essential costs refer to those you need to sustain yourself in retirement, such as:
- Weekly food shops
- Utilities
- Outstanding debt (including a mortgage, loans, and credit cards)
- Long-term care (should you need it)
Your lifestyle costs – how you choose to enjoy life in retirement – might include:
- Holidays
- Dining out
- Hobbies
- Streaming subscriptions
- Socialising
- Gifting
Combined, these costs will give you an idea of what you will likely spend in an average year of retirement. Alternatively, you can use the benchmarks provided by the Retirement Living Standards, but remember that your idea of what defines a “comfortable” lifestyle may be different from the average.
Estimates about your annual spending can then be used to calculate how large your retirement fund will need to be to support you for a 100-year life.
Use cashflow modelling to reassure you that your retirement wealth will last
Cashflow modelling software assesses your current financial situation and maps out how it is likely to change in the future.
Moving past guesswork, it models how a range of complex variables, such as inflation and investment growth, will affect your finances over time. This can help you visualise the potential growth of your investments over the course of your retirement, even while you are drawing an income from them.
In the context of a 100-year life, cashflow modelling can be used to predict whether your current financial plan will build sufficient wealth to cover your extended life.
This will either:
- Reassure you that your current savings and investment plan is adequate
- Identify a potential shortfall, which you can close by increasing contributions to savings and investments or amending your planned spending.
Whether action is or isn’t needed, cashflow modelling can help you find peace of mind that your wealth will last.
Design a sustainable pension withdrawal strategy
As most of your retirement wealth will likely be tied up in your pension, it is vital that you have the right withdrawal strategy in place to achieve your retirement goals and provide a lasting income.
There are two main ways you can withdraw from your pension.
| Feature | Annuity | Pension drawdown |
| How it works | You purchase an annuity with your pension wealth in exchange for a guaranteed income for life or for a fixed period. | You flexibly withdraw from your pension wealth, either regularly, in instalments, or as lump sums. |
| Pros | • Security, as income is guaranteed • Inflation protection (if it is an inflation-linked annuity) • No investment risk | • Pension remains invested, so it can continue to benefit from compound growth • Flexible access |
| Cons | • Will not benefit from investment growth • Lack of flexibility with payments • Usually no death benefits (however, a joint-life annuity will pay out a regular income to your surviving partner) | • Investment risk means you run the chance of losing money • Sequencing risk – poor withdrawal timing means you might sell at a loss • Uncertainty about whether wealth will beat inflation |
Either strategy can provide you with a long-term retirement income. You can also blend both to receive the benefits of each.
For instance, if you are particularly risk-averse, you might find more peace of mind knowing that your income is guaranteed with an annuity.
Yet, keeping your pension wealth invested also means you can continue benefiting from compound growth, which might increase the amount of wealth you hold in retirement and enhance your overall spending power.
Ultimately, which approach is better suited depends on your personality and goals. A financial planner can help you discover your ideal pension withdrawal strategy.
Keep track of your spending through regular reviews
Your financial plan offers clarity and peace of mind before you enter retirement, knowing how your wealth will be withdrawn, held, and put to use.
However, ongoing oversight is important to make sure your carefully laid plans aren’t impeded by unexpected events.
The future is uncertain: care costs, a changing Inheritance Tax landscape (learn more in our previous article), and market volatility can all have an impact on your wealth and that which you wish to leave behind.
Regularly reviewing your retirement plan, particularly with professional support, can help you:
- Keep track of your spending
- Update protections to safeguard your wealth
- Find confidence in the integrity of your plan.
Rather than treating your plan as set-and-forget, reviews can help you stay confident about the future or facilitate discussions about any necessary changes you need to make to preserve your retirement security.
Get in touch
At Milsted Langdon, we can help you decumulate with confidence, using a bespoke plan tailored to your needs and goals.
Please get in touch or email us at advice@mlifa.co.uk for more information today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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.
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 value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.