Wealth of Advice, Swale House, Mandale Business Park, Durham, DH1 1TH
In this episode of the Retire Well podcast, advisers Matthew and Joe explore how retirees can build and maintain a financial plan that adapts to changing circumstances—whether it's inflation, interest rates, market volatility, or unexpected life events. The message is clear: a good retirement plan isn’t rigid—it’s resilient.
Retirement planning often begins with a cash flow model. But as Joe points out:
“A cash flow is all about looking forward… and it’s pretty much 100% going to be incorrect.”
That’s because cash flow projections rely on assumptions—about inflation, growth rates, life expectancy, and spending patterns. As soon as reality deviates from those assumptions (which it inevitably does), the model becomes outdated. The solution? Build a plan that can flex and evolve.
The base rate, set by the Monetary Policy Committee, influences borrowing and saving across the UK. It’s a key lever used to control inflation. In the 2010s, the base rate hovered around 0.5%, encouraging spending. But by August 2023, it had risen to 5.25% to combat inflation, and more recently being cut to 4%.
Higher interest rates can benefit savers but increase mortgage costs. They also impact annuity rates—making guaranteed income more attractive when rates are high.
Inflation erodes purchasing power. Retirees who planned for 2% inflation may now face higher costs.
But Matthew advises against obsessing over inflation figures, instead of rigid inflation-linked increases, many retirees adjust income based on actual spending needs. Flexible drawdown allows for this kind of responsive planning.
State Pension: Protected by the triple lock, it rises with inflation, earnings, or 2.5%—whichever is highest.
Joe adds:
“Even if your spending has gone up, your guaranteed income might have matched this increase—so you may not need to increase drawdown.”
Governments often avoid raising income tax directly, instead targeting areas like pensions and inheritance tax. Recent changes include bringing pensions into the estate for IHT purposes.
To protect against future legislative shifts, retirees should diversify across tax wrappers:
Matthew explains:
“If there were changes to rules or legislation, you could turn off one income tap and turn on another to get to the same position in a different tax-efficient way.”
Beyond tax wrappers, retirees should diversify their investments across asset classes and geographies:
Diversification helps manage geopolitical risks, such as wars, trade tariffs, or political instability.
Retirement isn’t just about finances—it’s about life. Health changes, inheritance, family dynamics, and care needs can all impact your plan.
Matthew shares:
“You don’t want to be living your life looking at every penny you’ve budgeted for. You want a plan that gives you confidence and flexibility.”
Retirement planning isn’t about predicting the future—it’s about preparing for it. A resilient plan includes:
Whether it’s inflation, interest rates, or personal changes, the best retirement plans are built to bend—not break.
If you want a better view of what your future could be, we'll have a chat and work out if we make a good fit for you and your financial picture.
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