Flexi-retirement is an increasingly popular strategy, allowing you to have greater control over the shift from work to retirement.

Even so, it’s important to make sure that it’s the right choice for you financially before you arrive at this point of your career.

So, here’s what you need to know if you’re thinking about exploring flexi-retirement.

Slowly winding down to retirement

In essence, flexi-retirement involves slowly winding down to retirement, rather than completely stopping work.

Previously, the latter of the two was more common. People would work until the State Pension Age, set a date to retire, finish work on a Friday, and wake up retired on the following Monday.

By contrast, as the name might suggest, flexi-retirement means taking a more flexible approach.

Many people now choose to reduce their working hours in the twilight of their careers, perhaps working part-time or taking on a consultancy role before stopping work completely.

Similarly, individuals who own a business may move into a legacy position, offering support to a successor or taking a seat on the board while other individuals take responsibility for the day-to-day operations.

Whatever it looks like for you, flexi-retirement can be an effective way to transition into later life.

Organising your finances for a flexi-retirement

Naturally, there are some additional financial considerations you should take into account if you’re aiming for some form of flexible retirement.

After all, while it may not be as steep as if you retired entirely, your income is still likely to drop when you cut back on your work.

So, it’s important to be careful when working out how you’re going to supplement your income at this stage.

There are three main areas you may want to consider to help you do this: your pensions, savings, and other investments.


Firstly, you may want to consider accessing your pension if you’re over 55 (rising to 57 in 2028). For example, you could choose to take your 25% tax-free lump sum from your pension to provide an income alongside your reduced salary.

A popular option for many retirees at this stage is to go into what’s called “flexi-access drawdown”.

By going into drawdown, you can start withdrawing a portion of your fund while leaving the remainder invested in the market to potentially continue growing.

This means you can use some of your pension to fund your lifestyle and also potentially generate a return on the rest of it.

In fact, you are able to go into drawdown and continue making pension contributions from the earnings you’re still generating from your work.

That means you can continue to benefit from tax relief on your earnings, while still having access to your retirement fund.

However, it’s important to note that you may be subject to the Money Purchase Annual Allowance (MPAA) if you start flexibly withdrawing from a defined contribution (DC) pension scheme.

In this case, your pension Annual Allowance (that is, how much you can contribute to your pension in a single tax year while still receiving tax relief) may be reduced to just £4,000.

Make sure you speak to a financial expert to find out how the MPAA might affect you.


Aside from your pension, you could use money held in savings to provide an income.

This may be a sensible choice in the current climate where interest rates are low compared to the rate of inflation.

Data provider Moneyfacts registered the best interest rate on an easy-access savings account to be just 1.5% on 18 May, far lower than the Office for National Statistics recording of 9% inflation in the 12 months to April 2022.

So, rather than leaving your money to stagnate and even lose real value in your account, your savings may be able to support you before you retire and fully access your pension.

The main factor to bear in mind when thinking about using your savings is that it may be prudent to keep an emergency fund of cash.

That way, you have money you can fall back on if you need it.


Rather than using your savings, you may have a separate investment portfolio that you designed to provide returns in retirement.

As a result, you may be thinking about accessing the value tied up in stocks, shares, bonds, funds, or any other investments you hold.

There are two major considerations that you might want to factor in, if you’re thinking about liquidating investments to provide yourself with an income:

1. You may not continue to benefit from compound returns. Once you liquidate investments and take them out the market, you won’t benefit from the growth-on-growth that you did previously.

2. There may be tax to pay. If your investments have risen in value since you bought them (which they ideally will have done) then you may owe Capital Gains Tax (CGT) on your profits. This will also depend on whether these profits exceed the CGT annual exempt amount and whether they are held in an ISA.

It’s vital to speak to an expert before you start liquidating your portfolio to make sure it’s an appropriate choice for you.

Are you choosing a flexi-retirement?

The key thing to note here is whether flexi-retirement is a choice you’re making, or something you feel cornered into to meet your life goals.

Some rather worrying research, from savings and insurance giant abrdn and published by Professional Adviser, found that two-thirds of individuals who intended to retire in 2022 will now continue to work in some capacity.

There are many factors at play here, but the common theme appears to be the cost of living crisis currently facing UK residents. In short, prospective retirees are concerned they’re going to run out of money if they don’t continue working and earning.

So, if you’re considering flexi-retirement, it may be worth asking yourself whether this is a choice you’re making, or if it’s something you feel you must do to have enough money.

While it’s a perfectly valid choice to make, you ideally shouldn’t view flexi-retirement as a necessity. Indeed, if this is the case for you, it may be worth speaking to a financial planner sooner rather than later.

A financial planner can help you mathematically assess whether you’re on track to meet your retirement goals and provide guidance and solutions if ends don’t quite currently meet.

Crucially, they can do this with your life goals in mind. By basing these solutions on what you want out of life, you can be confident that the advice your planner provides is personalised and suitable for you and your family.

Speak to us

No matter what kind of retirement you’re interested in, Cordiner Wealth can help.

If you’d like to have the reassurance that you’re on track to reach your retirement goals, please get in touch with us.

Email hello@cordinerwealth.co.uk or call 0113 262 1242 to speak to an experienced adviser.

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The value of your investment 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.

This article is for information only. 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.