This content was reviewed and approved by Tamlin Russell.
Explore your retirement options: make the most of your pension choices, savings and income.
Do you know what your options are when the time comes to retire?
Our latest Wealth and Wellbeing Research Programme report reveals a lack of retirement knowledge among Gen X (those aged 44-59), who are now the closest to retirement. Of the UK adults we surveyed*:
- Almost seven in ten (69%) of Gen X adults are unsure whether they’ll have enough money to fund their retirement, underlining just how crucial it is to make informed pension decisions as soon as possible.
- There’s also widespread confusion about eligibility for the State Pension, with two-thirds of non-retired adults unsure of when they can begin claiming it.
- Among those actively saving for retirement, one in five workplace pension holders don’t know how much they’re actually contributing - making planning for the future challenging.
Choosing what to do with your pension is one of the most important financial decisions you’ll ever make, so understanding your options has never been more important.
What are my pension options at retirement?
As you approach retirement age, you'll need to consider your pension options and how best to turn your savings into a reliable income. You’ll usually be able to access 25% of your pension pot tax-free. If you decide to do this you’ll need to decide what to do with the remaining 75%. Here are a few options for you to think about:
- Leave your pension invested - If you don’t need to use your pension pot to give yourself a regular income, you can leave it invested. This means you can continue to save and your pension pot may grow. But, as with all investments, there’s a risk that the value can go down as well as up.
- Take your pension as a lump sum - If you take your whole pension pot in one go, while 25% of your pot would be tax-free, you will pay tax on the rest of it at your highest tax rate for that tax year. This means you could end up with a big tax bill.
- Take it bit by bit - You could take money from your pension pot a bit at a time over a number of years, this is referred to as ‘Pension Drawdown’. With this option you will still be able to get to your savings but have more flexibility. You’ll need to make sure that your savings can keep giving you an income for as long as you need them to.
- Buy a guaranteed income (annuity) - You could give all of your pension pot(s) to an annuity provider in exchange for a guaranteed regular income. Or you can take your 25% tax-free cash first, and then use the other 75% of your pot to buy a guaranteed income. This guaranteed income can be paid to you for as long as you live or for a number of years that you choose at the start, and make personal budgeting easier. Try our Annuity Calculator to help predict your monthly income.
- Combine your pension options. For example, you could use some of your pension pot to buy a fixed term annuity which usually lasts between 3 and 25 years and would give you a guaranteed income for that period of time. You could then save or invest the rest of your money to make decisions at a later date. Our Fixed Term Annuity Calculator provides up-to-date results based on current annuity rates.
When choosing what to do with your pension savings, some decisions may be irreversible or contain levels of certainty or risk. We’d recommend you get expert help and financial advice.
When will I receive my State Pension?
The earliest age at which you can begin receiving your State Pension payments is based on your date of birth:
| Date of birth | State Pension age | Approximate year you qualify |
| Before 6 October 1954 | 65 or under | Already reached |
| 6 October 1954 - 5 April 1960 |
66 | Between 2020-2026 |
| 6 April 1960 - 5 March 1961 |
Gradually rises from 66 to 67 | 2026-2028 |
| 6 March 1961 - 5 April 1977 |
67 | 2028-2044 |
| 6 April 1977 - 5 April 1978 (proposed) |
Gradually rises to 68 | From 2044 onwards (not yet law) |
| After 6 April 1978 (proposed) |
68 | 2046 or later (subject to change) |
The State Pension is regularly reviewed, so some of this data is subject to change.
Get impartial retirement & pensions advice
Make your pension work harder. Speak to one of our friendly advisers today and have a commitment-free chat about your retirement plans.
Getting specialist retirement advice
Getting advice on your pension could see you significantly better off. By taking advice on your pension, you'll be able to:
- Get the best option or combination of options for your needs. Speaking to an adviser will help you understand the choices available and find the right one for you.
- Maximise your pension savings. If some of your pension savings remain invested, a pension specialist will be able to manage the investment to maximise its growth at a risk level you are comfortable with.
When reviewing the best options for you, your adviser will look at the most tax efficient way for you to take money from your pension. Paying less tax will mean you’re better off.
At LV= we’ve been specialising in providing trusted and regulated retirement advice for over 25 years. Our expert advisers will get to know you and find out what you want your retirement to look like. They’ll help shape your options to help you meet your goals and enjoy a safe, secure retirement.
Learn more about how our pension advisers can help you plan for retirement and get your pensions ready for the retirement you want to enjoy. Browse our extensive collection of pensions and retirement guides, or request a call back from one of our friendly advisers today.
Alternatively you can find an adviser by using unbiased.co.uk.
FAQs on retirement options
What are the three types of pension?
In the UK, there are three main types of pension, each offering tax benefits and helping you to save for retirement.
The State Pension is paid for by the government based on National Insurance contributions paid throughout your working life. Workplace Pensions are set up by your employer and include contributions from you, your employer and the government (via tax relief) – you can have multiple workplace pensions, or choose to consolidate into a single pension.
Finally, the Personal Pension is commonly set up by the self-employed or those wanting to boost their savings separately.
What is the 4% rule for pensions?
The 4% rule (also known as the ‘safe withdrawal rate’) is a common guideline for withdrawing a maximum percentage of money from a pension that ensures your savings last for at least 30 years. Retired financial advisor William Bengen determined that if a person took less than 4.2% of their pension in their first year of retirement, and then continued (adjusting the amount for inflation), there is a 90% chance that their savings would last for 30 years.
It's a general rule and may not suit everyone, especially in today’s economic climate so seek independent financial advice before making any decisions on your retirement.
How many pensions can I have?
There is no limit to the number of pensions a person can hold in the UK, and many savers collect multiple workplace pensions from changing jobs, as well as personal pensions such as SIPP or stakeholder pensions.
Consolidation, where multiple pensions are combined into a single pension, is popular due to its simplicity, however it’s worth weighing up how it affects the fees you pay. You also want to consider how it could impact any benefits (such as final salary scheme perks) and protected tax-free amounts.
Can I retire at 60 with £300k?
It’s possible, but requires careful planning to make sure it lasts. It depends completely on your expected lifestyle, spending and other sources of income, and assumes no outstanding debts or significant unexpected costs.
You won’t receive your State Pension until at least 66-67, so you will need to rely on savings, investments or other sources of income until then. Inflation and market performance can impact your pension pot, even if you withdraw cautiously so it’s worth seeking independent financial advice from an expert.
Report data source information
*LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in September 2024.
View the Autumn/Winter 2024 Edition of the LV= Wealth and Wellbeing Research Programme.
