Should you take your pension at 55?

19 May 2025

Professional mountaineers often attest to the fact that while the ascent is challenging, coming down from the mountain is the part that will really test their resilience.

In a way, your career and retirement follow a similar trajectory. You tirelessly climb the mountain (pay into a pension) while you are working, and once you reach the top, you begin to descend (or rather, decumulate). Both journeys come with their own hardships, but you could find that the decumulation phase is surprisingly challenging.

As of the 2025/26 tax year, you can begin to draw from your private pension(s) at the age of 55. This is known as “normal minimum pension age” (NMPA), and it will rise to 57 in 2028.

If you are standing on top of your retirement mountain – in other words, you have reached 55 and can start taking your pension now – should you sit back and enjoy the view, or start making your way down straight away?

Here’s what to consider if you are at this crossroads.

Before taking your pension, you need to understand your wealth situation in full

This might sound like simplistic advice. But the truth is, according to an Standard Life study, 79% of those aged 55 – 64 can’t put a number on what their pension is worth.

If you’re within this age group and want to start drawing from your defined contribution (DC) pension pot – a workplace pension, self-invested personal pension, or similar scheme – knowing how much it is worth is essential.

Once you understand what your pension is worth, it helps to do the same for your other sources of retirement income.

These include:

• Your State Pension. Check your State Pension forecast on the government website to understand how much you can claim once you reach State Pension Age, which is 66 in the 2025/26 tax year and is set to rise to 67 by 2028.
• Your Individual Savings Accounts (ISAs). ISA wealth is a great source of retirement income as you won’t pay any tax when you withdraw money from them.
• Cash savings. You may have a pot of cash you plan to strategically draw from, in addition to your pensions, savings, and investments.
• Property or business income. These assets could be structured to provide you with a steady income stream once you stop working.

Getting to grips with your wealth as a big picture, rather than solely focusing on your pension, could help you to determine whether taking your pension at 55 is a good idea.

The below tips may allow you to understand your situation even more clearly.

Is your pension sustainable? 10 questions to consider

Focusing back on your pension, there is one question you should try to answer before taking it: “Is my pension sustainable?”

According to a report from the Actuarial Post, 67% of over-55s underestimate their longevity and are at risk of outliving their retirement savings. The earlier you draw the money, the longer you need to make it last.

These 10 questions could prompt you to look carefully at your pension wealth and discover whether it is sustainable.

1. What is my pension worth today?
2. What is my desired annual retirement income?
3. If I began drawing my pension today, could I live my desired lifestyle for the rest of my life?
4. How much could my pension grow if I continue working for longer and leave it invested?
5. How much will inflation erode the value of my pension during my retirement?
6. What is the level of investment risk that my pension currently taking on, and would a stock market dip affect my retirement?
7. Can I afford to use my pension funds to support my wider family if needed?
8. Combined with my other forms of retirement income, how much tax will I pay when drawing my pension?
9. What fees am I paying on my pensions, and are these higher than they need to be?
10. Am I confident about when and how is best to draw my pension?

Cashflow modelling can help to map out your retirement

When perusing the above list of questions, you could find yourself feeling daunted. The answer to one, or several, might be, “I don’t know.”

Indeed, once you start looking into your retirement situation closely, you might find yourself overwhelmed and straying even further away from answering the question, “Can I retire at 55?”

One specific tool might help you obtain a clearer picture. When you work with an independent financial planner, you will be able to access professional software known as “cashflow modelling”.

Using the information you provide, this software helps to map out your future, including:

• How long your savings and investments may last when you retire
• The impact of inflation on your wealth
• How investment market fluctuations could affect your income
• Financial gifts you plan to give to loved ones, such as helping your child buy their first home
• The amount you want to leave in your will or in trust, to benefit the next generation
• The tax you might pay on your private pension, State Pension, and other crucial forms of income
• Any windfalls you expect to receive, such as trust income or an inheritance
• The later-life care options you can afford to look into.

With these projections to hand, you and your financial planner can form a data-driven plan that helps you pursue the future you desire, while remaining realistic about what you can and cannot afford.

Speak to us today

If you are approaching retirement and are unsure of your options, we can help you regain control and enter the next chapter with confidence.

Email info@depledgeswm.com or call 0161 8080200.

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.

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.

Workplace pensions are regulated by The Pension Regulator.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.