Take tax-free cash, opt for flexible income initially, then purchase an annuity later in life
Part annuity
Purchase an annuity with a portion of your pension pot and choose flexible income for the remainder
On-demand
Withdraw some cash, leave the rest untouched for a period
Flexibility over time
Flexibility to adjust income based on changing needs over time
Growth with protection
Potential for a balanced retirement income combining investment growth with protection
Tax focused
Considerations such as income tax implications, pension tax allowances, and inheritance tax
What does mixing my options mean?
There could be lots of ways to mix and match your retirement income options.
These are just examples. It all depends on you, your personal circumstances and how much you’ve got in your pension pot.
For example, you could:
take tax-free cash, take flexible income for some years and then buy an annuity in later life
buy an annuity with some of your pension pot and take the rest as flexible income, or
take some cash, leave the rest of your pot untouched for a while, then buy an annuity or take flexible income.
Watch our short explainer to find out more.
The good things about mixing and matching
Completely tailored to you
You can have a retirement income that fits you and your circumstances.
Can be flexible if your needs change over time
For example, you might want a higher income to start with, then a lower income when you start to draw your State Pension.
Or a lower income now, with the potential for a higher income in the future to cover medical and care expenses.
You might feel like it gives you more protection
If you're a cautious kind of person, you might be happier with a 'blended' retirement income that balances:
the potential investment growth you might get by investing your money and taking flexible income...
...with more protection for your money as you get older (from a guaranteed income, for example).
Not-so-good things about mixing and matching
It only really works for bigger pension pots
If you’ve got a few smaller pension pots, you might think about bringing them together (known as ‘consolidation’) to give you a bigger pot to play with. But it’s worth checking first if any of your pensions have guarantees you’d lose if you transfer them out. MoneyHelper has guides to transferring defined benefit pensions and defined contribution pensions.
It can get complicated
There’s more to manage and consider for you and your loved ones including:
income tax implications
measuring benefits against the pension tax allowances, and
minimising inheritance tax.
It could be expensive
There might be several sets of charges involved from different providers and you'll almost certainly need to take financial advice. Fortunately, we can help with that.
What should I do next?
Find out about retirement living standards
Use our quick tool to explore how your pension pot size and age affects the type of lifestyle you can afford in retirement. You don't have to provide any personal info.
