When it comes to income in retirement, people can be quite cautious in what they do with their retirement income, wary that they will run out of money. In a lot of cases, it means getting to the end of their life with an unfulfilled retirement and a big pot of money left to their children.
When you retire, you are fit and relatively young. This is the time to do have those experiences you talked about. Do all those long trips that you couldn’t do when you were working and had a certain amount of annual leave days. For me, I want to travel around Texas eating BBQ, go to Japan (I may do this before retirement) and maybe spend a few months travelling around Australia again. These are all places that an 80 year old me won’t be too enthusiastic about doing.
That is if I stay healthy that long. A UK advisor has said that we have 12 healthy years in retirement. That isn’t that long. If I only have that short a time to do things, I want to front load everything into the healthy years of retirement!
Too many retirees only withdraw the minimum 4% (increasing to 5% from age 71) from their ARF. Why? Because they want to maintain the value of their ARF. For what? You save into a pension all your life to have an income in retirement. Now you have retired, it is time to spend it. It is ok for it to go down in value over time, you are spending your savings. If it is for inheritance, give it away now. Your 30 year old child has a greater need for money than they will when they are 60
If you are worried about running out of money, purchase an annuity with some of the ARF money. Use it and your State pension to cover the cost of living. Use the ARF money to spend on experiences and fun.
3% of people over the age of 65 end up in a care home. Not spending money in retirement so that you have money for care home costs isn’t a good use of money. There is a small chance that you may end up in a home. Thankfully, we have a social safety net in Ireland that if you don’t have any money left, the State will step in and pay for you under the Fair Deal scheme, so you will be looked after.
Which is brings up another issue, people trying to offload assets as they age so they are not included in the calculation for the Fair Deal. Anything given away in the five years prior to applying is taken into account. So why not just spend the money and have a great time?
Steven Barrett
27 April 2026