How do I turn a pension pot into a retirement plan?

Picture of pale green leaves against bright blue sky, for my post about how to turn a pension pot into a retirement plan

Blue sky thinking needed

Ever wondered how you will spend your pension? Not just dreams of cruises and kitchens but the nitty gritty of how much you’ll spend when?

Mindset shift from saving to spending

I’ve spent decades squirrelling money away in assorted pensions, and grabbing any tax relief or employer contributions that came my way.

It’s all been safely locked up in my mind as ‘don’t touch: only for retirement’. A bit like buying Easter eggs in advance or Christmas goodies, only with the government to stop you scoffing it early.

But this year I turned 50 (presents welcome).

Suddenly, being able to whip money out of my pension at 55 is no longer ridiculously far in the future, but actually pretty close.

And actually pretty scary.

More on What is a pension and why you should care

Fine in theory, but how do I put it into practice?

Pension freedoms means it’s up to me, post 55, what I withdraw when. Get it right, and I can skip off into a more comfortable retirement. Get it wrong, and the money could run out before I do – which doesn’t sound very appealing.

Sure, I know my options in theory. 

I could ignore it and leave it untouched until later. I could just withdraw my 25% tax-free lump sum. I could do different things with different pension pots, from drawdown and annuities to the stunningly-named Uncrystallised Funds Pension Lump Sum (UFPLS). Heck, if I wanted to, I could cash in my entire life savings and stick them under a mattress, although that would be pretty stupid given the government would take a ton of money in tax, and inflation would tear the value to pieces.

Further dire warnings in Don’t lose money by cashing in your pension!

When do I want to retire?

Tied up with these decisions is when and how I might like to retire.

Right now, I’m pretty happy pottering along, working from home as a freelance personal finance journalist and money blogger.

My husband and I are lucky enough to have a tangle of different types of pensions and investments, plus a bit of income from a buy to let property. Defined benefit, defined contribution, ISAs and property: all with different reliability and tax implications.

Our state pensions won’t kick in until we reach 67 – but thanks to our assorted savings, maybe we could dial down on work earlier than that?

How much money do we need in retirement?

Planning to fund retirement also involves plucking figures out of the air about how much income we’ll want. One meeelllion pounds? The square root of bugger all? Something more sensible based on our current expenses, bumped up for uni costs for the kids, dialled down for them leaving home, plus extra if we want to go travelling? As someone who took time out from paid work when my children were first born, I’m only too aware that has reduced my pension savings.

More on How much will I get from my pension?

I spend my life writing about personal finance, and even I’m not sure how much more I should pay into my pensions, what to take out and when.

I need a plan

After all these years of saving, I need to plan how to spend it. Work out how to turn a pension pot into a retirement income. Most retirement calculators I’ve seen seem to assume a set income kicking in from a set age, rather than the reality of different pensions kicking in at different times, with perhaps decreasing income from work and the potential to top up from other investments.

To help come up with ideas, here are some of the things I’m intending to do:

  • Book a free appointment with PensionWise, the government pension service that can provide guidance on your pension options.
  • Talk to an independent financial advisor (find an adviser near you via Unbiased)
  • Play around with some pension calculators
  • Try some cashflow modelling
  • Trial a new app, designed for people pursuing FIRE (Financial Independence, Retire Early)
  • Read up on blogs and books such as ‘Your Retirement Salary for ideas on how to invest my pension pot
  • See what it’s like living on the state pension, in a fun challenge with Mrs Mummypenny (start and results)
  • Investigate a safe withdrawal rate
  • Narrow down ideas of how much we’d like to live on
  • Tot up how much more we need to save

I don’t pretend to have the answers right now, but I figure I can start finding out, and let you know how I get on.


Now – over to you. What have you found helpful in planning how to spend your pension money? Do share in the comments, I really would love to hear.

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  1. 15th September 2021 / 1:45 pm

    Great post and I found your to-do list very interesting. I have to say that I hadn’t really thought of what I’d like to live on when retired, I’ve just been using a number I thought sounded good when I started saving towards early retirement but which isn’t far from the guidance from this website: – this could be either too much or too little, I need to figure it out!

    I don’t have an actual plan of how I will be withdrawing from my various pensions, ISAs etc – I’ll be trying to do it in the most tax efficient way, hopefully paying no tax (ie staying under the income threshold) until my state pension kicks in. Whether I’ll be able to achieve this will be a different matter!

    I was considering making an appointment with PensionWise but are you only allowed one free appointment? I don’t know whether to have one now or later, if you’re only allowed one?

    • Faith
      18th September 2021 / 12:32 pm

      Hi Weenie,
      Top tip about the Retirement Living Standards site, very helpful.
      Re PensionWise: I’m not sure if you can go back for more than one appointment. You can check out the kind of guidance they give online ( ) but basically it’s very general, outlining the overall options, rather than making concrete suggestions to suit your individual circumstances. I’d actually suggest talking to them sooner rather than later so you know how much help it is, rather than perhaps expecting more in future.

  2. Jordan White
    15th September 2021 / 6:54 pm

    Basically pension freedoms is bloody dangerous. There are too many options and tax-grabbing ways of reducing your net pension income with you being none the wiser until it’s too late.

    In all honesty, going it alone is pretty tricky. Sound advice is needed.

    First place to start is budgeting. Figure out roughly what you’ll need to live off comfortably. From there you can figure out how much to take and in what form.

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