Three ways to make your money last as long as you need

This article was originally published in The Times on 9 November 2026 in which Charlotte Ransom explores how thoughtful investment choices, tax planning and keeping costs under control can help make retirement savings last longer, while considering the trade-offs between guaranteed income and investment flexibility.

With careful choices, you can select the retirement that best suits your circumstances, but you do have to make some decisions.

Looking through a list of some of Britain’s fastest-growing businesses, I was struck by the emergence of companies serving an accelerating market: longer lives. The point was brought home last weekend on a visit to a mobility shop with an elderly relative. Its warehouse had effectively sold out. Demand, they said, was unlike anything they had experienced before.

The demographic direction is clear. The DWP State Pension Age Review projects five million more pensioners by 2070, but only one million more people of working age. The uncomfortable financial reality is that longer lives need funding and, collectively, we are not well prepared.

Government inevitably has a role. But there is a danger that people feel their own outcome is determined by Westminster, markets or the economy. Let’s help society get better at understanding the powerful financial levers within our control. Levers which, over decades, have significant consequences.

The first is what we do with our money

We cannot control inflation or markets, but over long periods we should seek investment returns above inflation. This will typically require accepting some equity investment risk and riding any painful falls in order to earn inflation-beating returns. Money that is intended to fund a decades-long retirement can play this role and is very different from money required in the shorter term. Cash can cover the more immediate needs, but excessive cash holdings carry a considerable opportunity cost over long periods and will almost certainly not keep up with inflation. The key is matching investments, and their associated risks, to needs and time frames.

The second lever is making use of tax allowances

The annual Isa allowance is £20,000 for adults and £9,000 per eligible child and the standard pension annual allowance is £60,000, subject to individual circumstances. If we can accumulate compounding equity-orientated investment returns without unnecessary tax drag, year after year, it materially changes eventual outcomes. Investment performance matters, but so does the simple rule of making full use of available tax allowances, both as individuals and across a family. This may all sound obvious, as should replenishing these allowances at the start of the tax year, not left to the last minute. But the marketing frenzy ahead of each tax-year-end suggests that there is distinct room for improvement.

The third lever is cost

Take a £100,000 pension invested for ten years and assume, for simplicity, a 10 per cent annual return before fees. With no fees, it would grow to approximately £259,000. If annual fees reduce that return to 9 per cent, the same investment grows to approximately £237,000. A seemingly innocuous 1 per cent difference has reduced the final pot by almost £23,000 in just ten years.

Over 20 years the effect is even more extreme. At 10 per cent, the original £100,000 grows to approximately £673,000. At 9 per cent, it reaches roughly £560,000. The difference is more than £112,000, simply from removing the equivalent of 1 per cent of annual return. There will always be costs associated with investing. What matters is understanding them and ensuring they represent value, because charges compound just as returns do.

Then comes another question: at what cost certainty? When you retire, you can choose between an annuity and remaining invested and taking an income through what is known as drawdown, and today’s numbers make the trade-off interesting. Hargreaves Lansdown’s best-buy comparison shows that a 70-year-old with £100,000 could buy a level, single-life annuity paying just over £9,000 a year for life (clearly actual income will depend on personal circumstances and the options selected).

The attraction is obvious. Nobody knows how long retirement will last and an annuity transfers much of that longevity risk to an insurer. But certainty comes at a price. With a basic single-life annuity, payments typically end on the owner’s death. A joint-life annuity can continue paying a proportion of the income to a surviving spouse or partner, but extra protections will reduce the income.

The government’s recently announced “guided retirement plan” may be another option. More detail is still to come on this annuity-like pension plan; however, it suggests no control for the pension owner and much is still to be understood about the proposed investment strategy, charges and flexibility. The risk is that consumers will be shepherded towards this solution without fully understanding other options.

Meanwhile, pension freedoms allow us to stay invested through drawdown and present almost the opposite characteristics from annuities. The pension remains invested and withdrawals are flexible, providing the opportunity for future investment growth which might far exceed annuity income. But its value can fall and the income is not guaranteed.

So, the choice becomes certainty versus flexibility, longevity protection versus investment benefit and guaranteed income today versus the possibility of future growth and something left for the next generation. For some, there may be logic in using part of a pension to provide a guaranteed income, while leaving the balance invested for flexibility and growth. The choice will depend on individual circumstances as we plan for longer lives, and choice should remain.

The objective is to grow the retirement pot appropriately and turn accumulated wealth into the right combination of income, security and flexibility for life ahead. There are many things we can’t control. But how we invest, how well we use tax allowances, the charges we pay and how we eventually turn accumulated savings into retirement income are all substantially within our control. Let’s hope that continues.

Longer lives should be something to celebrate. We just need to get smarter at paying for them.

This article is for informational purposes only and does not constitute financial advice. This is the opinion of Charlotte Ransom as of 9 November 2026 and if you are unsure as to whether disinvesting or investing is suitable for you, please seek advice.