Halloween, which falls on 31 October, is a holiday of fun scares and spooky entertainment.
However, there are some frightening retirement planning mistakes you might want to avoid this season and beyond.
Unfortunately, according to Canada Life, around 40% of retired Brits have some form of regret about how they prepared for life after work.
What’s more, new research published by PensionsAge reveals that 51% of UK adults are unaware of upcoming pension policy changes that could significantly affect their retirement plans.
So, if you want to enjoy the retirement you dream of, keep reading to discover three scary planning mistakes to avoid.
1. Failing to save and invest early enough
Recent research by Which? found that the biggest regret UK retirees have, by some margin, is not setting aside more money while they were working. Almost half of those asked said they wished they’d saved more for later life.
A crucial first step towards saving enough is to understand how much money your desired retirement is likely to cost. In other words, how much is “enough”?
The Pensions UK retirement living standards estimate that a single person needs £43,900 a year for a “comfortable” retirement, while a couple needs £60,600. This is just a guide, and your actual income needs could be higher, for example, if you have big travel plans or expect a higher standard of living.
Considering that the full new State Pension is just £11,973 a year (2025/26), you’ll likely need considerable savings and investments to afford the lifestyle you desire.
Remember that your retirement could last 30 years or more, for example, if you retire at 55 and live until 85.
The simplest way to build a healthy retirement pot is to start saving and investing as early as possible. The longer your money is invested – be that in pensions, stocks and shares, property, or other assets – the more time it has to potentially grow.
Standard Life has found that starting pension contributions at age 22 could mean £40,000 more in retirement than starting at age 27. You might want to pass this valuable insight on to your children and grandchildren to help them avoid the unpleasant “jump scare” of realising too late that they haven’t saved enough.
2. Poorly planned pension withdrawals
New research by Legal & General shows that one in four people access their private and workplace pensions at 55, and one in four do so without seeking advice.
Unfortunately, taking too much too soon, or failing to consider the tax implications of withdrawals, could increase your risk of running out of money in later life.
Here are a few ways to make tax-efficient pension withdrawals:
Don’t take more than 25% as a lump sum
You can usually take up to a quarter of your pension as a tax-free lump sum once you reach 55 (rising to 57 from 6 April 2028). Withdrawals above this amount are subject to Income Tax at your marginal rate.
Remember that your 25% tax-free entitlement does not renew each year – once it’s gone, it’s gone. So, rather than taking a lump sum, you might prefer to take smaller amounts over a longer period.
Spread your withdrawals across tax years
Your pension withdrawals are taxable, just like many other sources of income. As such, taking your money out gradually over several tax years could help you avoid crossing into a higher Income Tax band.
This may be an especially useful strategy if you have other earnings, for example, if you’re still working or have an income from rental property.
Consider drawing on other sources of income first if you plan to continue working
Once you flexibly access your defined contribution (DC) pension, you might be subject to the Money Purchase Annual Allowance (MPAA). This could reduce the amount you’re able to contribute to your pension while still benefiting from tax relief.
So, if you plan to continue working in some capacity after you retire, consider drawing on other sources of income before touching your pension.
3. Not preparing for the cost of later life care
Half of those who replied to the Which? survey said they were concerned they won’t be able to afford to pay for care if they need it in later life.
These financial fears are perhaps unsurprising when you review the cost of care in the UK.
According to Lottie, the average weekly cost of living in a UK residential care home is £1,406, while the average nursing home cost is £1,558 a week (2025/26). However, this varies depending on factors such as where you live and what your specific needs are.
Without careful planning, these costs could quickly eat into your retirement savings. As a result, you may run out of money sooner than you expected. Moreover, any legacy you intended to leave to loved ones or worthwhile causes may diminish or be eroded altogether.
A financial planner can help you incorporate potential care costs into your retirement plan. This could provide valuable peace of mind for you and your family.
Get in touch
If you want to remove the fear factor from retirement planning and avoid making scary mistakes, we’re here to help.
Our financial planners can use advanced cashflow modelling software to give you a clear picture of your retirement income needs and develop strategies for achieving your goals.
To learn more about how we can help, please email hello@sovereign-ifa.co.uk or call us on 01454 416653.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate cashflow planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pensions Regulator.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Approved by Best Practice IFA Group Ltd on 13/10/25