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Managing money in retirement

When approaching retirement, we all want to make sure that we won’t run out of money during our retired years. After all the years of working, this is the time to spend the money on what we enjoy and go on the holidays we have always wanted to go on. But sometimes unexpected costs occur, putting a stop to these plans. This can be seen through the events of this past winter, with an increase in the cost of living, causing more people to hold onto their money rather than spending.

The way people retire has changed over the past few decades. Rather than working full time one week to entering full retirement the next, many pensioners prefer to enter phased retirement, decreasing their work hours and making a slow transition.

Managing money in retirement


This can be useful to get a feel of how much they are likely to spend in retirement. If their goals are looking unaffordable, they may decide to keep up their part time working hours for longer than they originally intended. The best way to determine if retirement is affordable for you is to have a plan, and to make sure that plan is sustainable in a number of different scenarios.

Many people face financial difficulties leading up to and during retirement which can cause a lot of stress, and prevents some people from looking at their retirement prospects all together because it is too stressful! There are many reasons why people run out of money in retirement; the main reasons are explained below

 Insufficient Savings: One of the primary reasons people run out of money in retirement is that they didn’t save enough during their working years. Many people don’t start saving for retirement until later in life or don’t save enough.

 Market Downturns: Another reason why people run out of money in retirement is that the market downturns can reduce the value of their investments. This can happen if you are heavily invested in stocks, which can be volatile

 Unexpected Expenses: Medical emergencies, home repairs, and other unexpected expenses can quickly eat up retirement savings, leaving retirees with little to live on.

Longevity: People are living longer than ever, which means they need more money to support themselves in retirement.

Although the outlook can sometimes look worrying, there are some things you can do to help prevent running out of money in retirement including:

Start Saving Early: The best way to prevent running out of money in retirement is to start saving early.

Diversify Investments: Diversifying your investments can help reduce the risk of losing money due to market downturns. This means spreading your money across different types of investments such as stocks, bonds, and real estate.

 Create a Retirement Budget: Creating a budget for your retirement years can help you control your spending and avoid overspending. Be sure to factor in all your expenses and leave room for unexpected costs.

 Delay Retirement: If you’re not financially ready to retire, consider delaying retirement. This will give you more time to save and reduce the number of years you’ll need to support yourself in retirement.

Running out of money in retirement is a common problem, but it’s not inevitable. By taking the right steps to save and manage your money, you can avoid this uncertainty. Remember to start saving early, diversify your investments, create a retirement budget, and consider delaying retirement or taking on part-time work if necessary. With the right planning and preparation, you can enjoy a comfortable and worry-free retirement. You can speak to a financial advisor to help you make all the relevant preparations to help you enjoy your well-earned retirement.

Written by: Jemma Long

Date: 14 April 2023

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