4 expert tips to make your retirement money last
Written by Boring Money
7 July, 2025
Making your retirement money last isn't just about how much you've saved - it's about how it's managed. Yet, Boring Money research found that 9% of retired people and 16% of semi-retired people are struggling to meet their basic financial needs or facing serious financial difficulties.[1] Here are four practical ways to help your pension and savings go further.
1. Invest to outpace inflation
Inflation
may have cooled from the dizzying heights of 2022, but it’s still a slow burn on your savings. If your savings aren’t keeping pace, your purchasing power erodes over time. In other words, that £10 note might still look the same in 2030, but it’ll likely buy you less.This can have a big impact on longer-term finances such as retirement savings. The cumulative effect of many years of inflation can erode thousands of pounds off the value of your cash, so it’s really important to plan ahead if you want to make your pot last as long as possible.
What can you do? Leave only what you think you'll need at a pinch in cash as your emergency fund (more on this later). As for the rest - get investing. This way your savings won’t sit idly in a cash account losing value, but instead can take advantage of stock market growth and (if all goes well) earn you some returns
too.Don’t leave excessive amounts of money shrivelling up in bank and building society accounts where they have absolutely no hope of maintaining value over 5 or more years.
Of course, as always there’s the risk that the value of your investments can go down as well as up. However, if you’re worried about having enough money to last through your retirement, the eroding effect of inflation might be more of a concern to you than short-term market wobbles.
2. Build an emergency fund
Think of your emergency fund as a shock absorber for your finances. It’s not exciting, but it is essential - especially in retirement, when it's often not as easy as picking up a few extra shifts to patch over a financial hit.
If your boiler goes bust, the car gives up, or you suddenly need to fly abroad for a family emergency, that cost has to come from somewhere. And unless you’ve got an emergency pot to raid, you could end up dipping into your pension or selling investments. Even worse, you might have to sell at a loss if markets are down (this is the dreaded "forced seller
" scenario).The rule of thumb here is to have an emergency fund big enough to cover 3-6 months of committed spending – so food, bills and contractual payments – not holidays and takeaways! Also anything you need to spend in the next 5 years that is not covered by income. But if you keep more than this in cash, it’s a big mistake and you are getting poorer... see the prior point about inflation.
Even if you're already retired, it's not impossible to build an emergency fund, but you may have to be more disciplined about managing your money in the meantime.
This is where budgeting makes all the difference. It may take you a few years to build your pot, but with the help of different budgeting apps and tools, you can calculate a sensible amount to save regularly and track your spending to stay consistent.
3. Understand all your income options
Your pension might be your financial headliner, but it shouldn’t be the whole show.
Besides your pension pot, you may also have other sources of income you can draw from after retirement, from dividends and cash savings to rental property. These alternatives can help to supplement your living costs and ensure you're not running out of money in real time.
Here are some common income sources that can keep cash flowing in retirement:
If you hold investments such as shares or equity income funds, you may receive dividends
– a portion of a company’s profits paid out in cash to shareholders. These can be a handy income stream in retirement, particularly if you’ve built a sizeable investment portfolio.In the 2025-26 tax year, the first £500 of dividend income is tax-free thanks to the annual Dividend Allowance. Beyond that, you’ll pay tax at the following rates:
8.75% as a basic-rate taxpayer
33.75% if you're a higher-rate taxpayer
39.35% at the additional rate
While the allowance has been slashed in recent years, dividends can still offer relatively low-tax income if managed carefully - especially when combined with wrappers like ISAs where your dividend earnings are protected from the taxman.
Cash savings can provide a steady stream of interest income, and with rates still relatively high by recent standards, it's worth making the most of them.
Interest earned on savings is covered by the Personal Savings Allowance, which is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers (additional-rate taxpayers don’t get an allowance). This means a good chunk of your savings interest could be tax-free.
Interest earned on cash within a Cash ISA is also completely tax-free - you can check out the best rates on the market here.
If you own a buy-to-let property or rent out a second home, rental income can be a valuable – and often consistent – supplement to your retirement income.
It’s treated as taxable income and must be reported through Self Assessment. However, you can deduct allowable expenses such as letting agent fees, property maintenance, insurance and even wear and tear, which helps reduce your overall tax liability.
Property does come with admin and costs, but it also provides the benefit of inflation-linked income (rents tend to rise over time) and a physical asset that could grow in value or be passed on. It can be a smart source of retirement income if you have the means to do it.
Just because you’re retired doesn’t mean you have to stop working entirely. Many people choose to take on part-time jobs, freelance gigs, or turn hobbies into small businesses. It’s a flexible way to top up your income and stay mentally and socially active.
Any earnings from employment or self-employment count as taxable income, but you still benefit from the £12,570 annual Personal Allowance (before Income Tax starts to kick in). If you haven’t already used it up with pension or other income, you might pay little or no tax at all.
Part-time work can also delay the need to draw from your pension, giving your savings more time to grow.
4. Claim all eligible benefits
There are a number of benefits available to retired people that many aren’t aware of or believe they’re not eligible for. In fact, up to £1.7 billion of available Pension Credit went unclaimed in 2020. On average, this amounted to around £1,900 per year for each family that didn't claim.[2]
If you’re not sure which (if any) benefits you're eligible for, you can use a free and anonymous benefits calculator online to check what you qualify for and how much money this could save you. Check out the three links below:
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