Across the UK and Europe, life expectancy has been steadily rising. Medical advances, healthier lifestyles, and better living conditions mean that many of us can now expect to live well into our 80s and 90s — and increasing numbers are going beyond. While a long and healthy retirement is something to celebrate, it also presents a major financial challenge: how do you make your pension last as long as you do?
At Blacktower, we work with clients who want their wealth not only to sustain a long retirement but also to support the life they want to live along the way — whether that’s travelling, helping family, or leaving a meaningful legacy.
This guide explores how to prepare your finances for a longer life expectancy and create a plan that aim to provide both security and flexibility.
At a Glance
- Life expectancy is rising: Many retirees today may spend 25–35 years in retirement.
- Pensions must stretch further: Planning when and how to access your savings is crucial.
- Lifestyle and care costs matter: Retirement planning is about more than daily living — it must account for healthcare, later-life care and inheritance.
- Financial advice can make a difference: Ongoing reviews, tax-efficient strategies and personalised plans can help making wealth last across decades.
Why Longevity Changes the Retirement Equation
Previous generations often planned for 10–15 years of retirement. Today, it is not unusual for retirement to last three decades or more.
This shift has two main consequences:
- Your money needs to last longer – A pension pot that might have been sufficient 30 years ago may now risk running out too soon.
- You need to plan for changing needs – Your spending habits may shift over time, from active pursuits and travel in your 60s and 70s to healthcare and care costs later in life.
Recognising this reality early gives you the best chance to plan effectively.
Step One: Understand Your Retirement Income
The foundation of any retirement plan is knowing what you have. Key actions include:
- Check your State Pension forecast: This can be done easily from the relevant government or official pension website (e.g. gov.uk).
- Review workplace and personal pensions: Use a pension calculator to see whether you are on track.
- Include other assets: Property, savings, ISAs, investments and inheritances should all be factored into your retirement plan.
A holistic view of your wealth is essential.
Step Two: Increase Your Contributions Where Possible
One approach you may wish to consider for preparing for a longer life expectancy is to boost your pension contributions during your working years. Even a modest increase can grow significantly over time.
For example:
- Increasing contributions by 1–2% of your salary after a pay rise
- Taking advantage of employer matching schemes
- Directing bonuses or windfalls into your pension
Starting earlier gives your money more time to grow, but even later in life, additional contributions can help reduce the risk of a shortfall.
Step Three: Decide When and How to Retire
Choosing your retirement age is a critical decision. Retiring later gives you more time to save and reduces the period your pension must cover.
Alternatively, many people now choose phased retirement: gradually reducing hours or moving into part-time work. This allows you to:
- Maintain an income stream
- Continue contributing to your pension
- Transition smoothly into retirement
This flexible approach can help plan your finances while keeping your lifestyle options open.
Step Four: Plan How to Access Your Pension
When retirement arrives, deciding how to draw your pension becomes the central question. The main options include:
- Drawdown – Your pension remains invested, and you withdraw funds as needed. This offers flexibility but requires careful management to avoid depleting your pot too quickly.
- Annuities – You exchange your pension pot for a predictable income for life. This removes uncertainty but can reduce flexibility and leave no residual funds for inheritance.
- A blended approach – Combining drawdown and annuities can provide balance. For example, securing essential expenses with an annuity while keeping other funds invested for growth and discretionary spending.
Each option has pros and cons, and the right choice depends on your lifestyle, goals, and risk tolerance.
Step Five: Tax-Efficient Withdrawals
Making your pension last isn’t just about how much you take out — it’s also about how you take it. Being tax-efficient can add years to the life of your savings.
Key considerations include:
- 25% tax-free allowance: Most pensions allow you to take a quarter of your pot tax-free. Instead of withdrawing this as one lump sum, you could spread it across multiple withdrawals to maximise efficiency.
- Income tax planning: Structuring withdrawals to stay within lower tax bands can help preserve wealth.
- Using other assets: Drawing from ISAs or other tax-efficient investments alongside pensions can reduce overall tax liability.
Strategic planning across all your assets often results in a significantly higher after-tax income.
Step Six: Factor in Healthcare and Care Costs
Living longer often means facing higher healthcare or long-term care expenses in later life. These can be substantial, especially for those without state support or who wish to maintain a certain standard of care.
Planning ahead allows you to:
- Allocate funds specifically for care costs
- Consider insurance or savings vehicles designed for later-life healthcare
- Ensure your retirement income is not fully consumed by unforeseen needs
Step Seven: Leave Room for Legacy Planning
For many, providing for loved ones remains a priority. Longer life expectancy can complicate inheritance planning, particularly if pensions and assets are heavily drawn upon during retirement.
Options to consider include:
- Trusts – for control and protection of family wealth
- Life insurance – to provide liquidity for heirs
- Cross-border inheritance planning – especially important for expats who may be subject to multiple jurisdictions’ rules
A professional adviser can ensure your legacy is structured tax-efficiently and in line with your wishes.
The Role of Professional Advice
Retirement planning is not a one-off exercise. With longer life expectancy, ongoing reviews and adjustments are essential. Markets change, tax rules evolve, and personal circumstances shift.
At Blacktower, our advisers help you:
- Potentially maximise pension contributions and investment growth
- Create tax-efficient withdrawal strategies
- Balance income with legacy planning
- Prepare for healthcare and long-term care costs
- Adjust your plan regularly to ensure it remains fit for purpose
Final Thoughts
Living longer is something to celebrate — but it requires financial resilience. By planning for a 30–40-year retirement, you give yourself the best chance of enjoying the lifestyle you want while ensuring your wealth lasts as long as you do.
The earlier you begin, the more options you could have. But even if retirement is already on the horizon, it’s never too late to review your strategy.
At Blacktower, we’ve been helping clients protect, preserve and grow their wealth since 1986. Speak to us today to create a personalised plan that supports you through every stage of a long and fulfilling retirement.
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This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
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