When can I retire and drawdown my pension?
- Reeves Independent
- Oct 8
- 7 min read
When can I retire?
It’s the golden question , usually sparked somewhere between feeling fed up with the daily grind and dreaming of sipping cocktails on a sunny beach (or whatever your ideal retirement looks like).
Whether you’re eagerly counting down the days or just starting to explore life after work, understanding when you can retire - and how pension drawdown fits into the picture - is key to turning those dreams into a financially secure reality.
So, when can I retire?
As mentioned, this is the all-important question - and it can feel overwhelming. Retirement looks different for everyone - there’s no one-size-fits-all approach. It depends on a range of factors, from how much you’ve saved and the kind of lifestyle you want to lead, to your personal goals and knowing when you’re truly ready to step away from your career. However, by breaking it down into four key areas, it becomes much easier to understand and, ultimately, to answer for yourself with clarity and confidence.
What will retirement cost me?
Before you can plan your retirement, it helps to picture it so that you can have a better understand of when you can retire. Are you dreaming of frequent travel, a new hobby, or just more time with loved ones? Whatever your vision, it comes with a price tag - and working out how much you’ll need is the first step.
Tools like the Retirement Living Standards from Pensions UK can give you a ballpark figure for different lifestyles, whether you’re aiming for the basics or something more luxurious. Keep in mind, your spending won’t stay the same forever. You might be more active (and spend more) in the early years, then slow down as time goes on. And don’t forget to factor in things like long-term care or helping out family — whether it’s contributing to a grandchild’s education or supporting a loved one in need.
Where will my retirement income come from?
Figuring out how you’ll pay for life after work is just as important as deciding when to stop working. While the State Pension offers a helpful foundation, it’s not available until at least age 66 (rising to 67 by 2028). Currently, the full new State Pension provides around £11,973 per year. You can easily find out how much you’re likely to receive by visiting the government’s official website.
If early retirement is on your radar, you’ll need to plan for income from other sources.
For most people, the bulk of retirement income will come from private or workplace pensions. You can usually start accessing these from age 55 - though that’s shifting to 57 from April 2028. In some rare cases, earlier access may be possible, but it’s not the norm.
Beyond pensions, many retirees also lean on other income streams - things like rental properties, ISAs, or investment portfolios. The key is to take stock of all your potential income sources so you can build a retirement plan that’s both flexible and sustainable.
How will I pay the bills once I stop working?
Retirement isn’t just about stopping work - it’s about making sure you have enough money coming in to support the lifestyle you want. And that means knowing where your income will come from once the monthly pay checks stop.
The State Pension can help, but it’s unlikely to be enough and, as mentioned, you cannot claim it until your mid-60s. So, if you’re dreaming of an earlier exit from work, you’ll need to bridge the gap using other resources.
This is where personal and workplace pensions come in. These usually form the backbone of your retirement income. But they’re not the only option. You might also have savings, investments, or property that generate extra income - and for some, these play just as big a role in funding retirement.
The bottom line? Retirement income isn’t a one-glove-fits-all solution - it’s often a mix of different pots, tailored to your own circumstances and goals.
Keep in mind, if you’re relying on your pension savings to fund retirement, withdrawing too much too quickly could leave you short down the line. It’s important to understand the different options available for accessing your pension so you can make your money last.
Also, don’t forget to regularly review your other savings and investments to see how they’re performing and whether any adjustments are needed to keep your retirement plan on track.
Am I ready to retire?
Deciding when to retire is a deeply personal choice, and feeling confident about that decision is crucial. For some, work remains a source of enjoyment and purpose, offering social connections and a sense of routine that supports their wellbeing.
Others may be eager to step away from their career to focus on family, hobbies, or experiences they’ve put off while working full-time.
Retirement doesn’t have to mean a full stop, either. Many choose to scale back their hours, blending part-time work with pension income to ease the transition. Just be aware that withdrawing from your pension while still making contributions can trigger the ‘Money Purchase Annual Allowance,’ which carries tax considerations.
And remember, retirement isn’t always permanent. Some people find themselves returning to work later on - whether in their previous field or exploring entirely new opportunities.
What is pension drawdown?
Retirement marks a big life moment - it’s when all those years of saving finally start working for you. But how do you turn that pension pot into a reliable income? While annuities were once the standard route, many people now prefer pension drawdown for the freedom and flexibility it offers. So, what is pension drawdown, and how does it work?
Pension drawdown allows you to keep your pension invested while taking money out as and when you need it. Unlike an annuity - which provides a fixed income for life - drawdown gives you greater control and flexibility. You can choose to withdraw lump sums or take regular income payments, depending on your needs.
Key features of pension drawdown
Flexi-Access Drawdown
Available from age 55 (rising to 57 from April 2028), flexi-access drawdown starts with ‘crystallising’ your pension. This means designating part or all of your pension for drawdown, checking it against your allowance, and then accessing funds -either as a lump sum or as income.
Transferring Defined Benefit pensions
If you have a defined benefit (final salary) pension, you may be able to transfer it into a private pension scheme to access flexi-access drawdown. This can offer more control over how and when you take your pension income. However, defined benefit pensions often carry valuable guarantees, which are lost on transfer. For this reason, it’s essential to seek advice from a qualified defined benefit specialist, such as one of Reeves’ partner firms, before making any decisions.
Benefits of pension drawdown
Flexibility
You decide how much to withdraw and when - perfect for managing around other income sources, such as a partner’s pension starting at a later date.
Investment control
Your pension stays invested, giving you the potential to grow your fund further, depending on market performance.
Inheritance Tax efficiency
Unused pension funds can usually be passed on to your beneficiaries and may be free from inheritance tax, depending on the circumstances.
Death Benefits
Unlike defined benefit pensions, where payments often stop after you and your spouse pass away, drawdown pensions can be inherited by your beneficiaries, offering greater legacy planning options.
Tax considerations
Pension savings follow the Exempt-Exempt-Taxed (EET) structure:
Contributions go in tax-free.
Growth is free from capital gains tax.
Withdrawals are taxed as income.
When you crystallise your pension, you can typically take up to 25% of the fund tax-free, subject to your Lump Sum Allowance. For most, this allowance is currently £268,275. You can take this as a one-off sum or gradually crystallise parts of your pension to manage your tax efficiently while drawing income over time.
Tax treatment depends on individual circumstances and may change in future.
Things to consider
Market volatility
Since your pension remains invested, it’s exposed to market ups and downs. A dip in the market shortly after crystallisation can reduce the value of your fund and impact your income.
Risk of depleting funds
Without careful planning, it’s possible to withdraw too much, too soon - leaving you short later in retirement.
Ongoing management needs
Pension drawdown requires regular reviews to stay on track. You may also want to appoint a Power of Attorney to manage your pension if you're no longer able to make decisions in later years.
Making retirement work for you
Retirement is a milestone that comes with big decisions - and big opportunities. From understanding how much income you’ll need, to choosing the right way to access your pension savings, every step plays a part in shaping the life you want after work.
Pension drawdown offers flexibility, control, and the potential to grow your retirement income - but it also comes with risks and responsibilities. Whether you’re considering when to retire or how to structure your income, having expert guidance can make all the difference.
That’s where Reeves Independent come in. Our team of independent financial advisers and retirement specialists work closely with you to create a personalised retirement plan that fits your lifestyle, ambitions, and financial goals. We can help you understand your options, manage your pension efficiently, and make informed choices that give you confidence - not just for when you retire, but for the years that follow.
Retirement should be a time to enjoy the life you've worked hard to build. Let Reeves help you get there. Book your free, no-obligation retirement review today to start your journey towards achieving your retirement goals!
