Each of these is widely held, verifiably wrong, and expensive in a different way. Some cost you income you could have had. One costs your family a tax bill nobody planned for. We have named the source for each so you can check rather than take our word for it.
It comes from US market history in 1994, and its author has since revised his own figure to 4.7% while describing that as a worst case rather than a target. Morningstar's UK research puts the highest safe starting rate at 4.1%. The rate is not really the interesting part.
What the number actually depends on. In the same UK report, 4.1% holds for a
portfolio with roughly 30% in shares. An all-shares portfolio supports 3.4%, because a fall in the
first few years does lasting damage. Spending flexibly rather than rigidly reaches 5.7%. One report,
one country, and the answer moves by nearly half depending on assumptions almost nobody states
alongside it. A rate quoted without its equity weight, success target and time horizon is not
information.
Source: Morningstar, The State of Retirement Income UK 2026.
This is the same research read properly, and it inverts what most people assume about investing for growth in retirement. The highest safe withdrawal rate came from the portfolio with the least in shares, not the most.
Why. Withdrawing during a fall permanently removes capital that cannot take part in the recovery. Growth still matters, but volatility early in retirement is the thing that decides whether a plan survives. That is why holding a couple of years of spending in cash changes outcomes so much: it means a bad year never forces a sale.
That belief was formed after 2015, when rates were near historic lows and pension freedoms made drawdown the default choice. Rates for a healthy 65-year-old have since reached levels last seen in 2008.
What changed. Gilt yields. Every £100,000 annuitised at today's rates buys roughly
£2,900 a year more, for life, than the same £100,000 would have bought in 2021. The mainstream
planning answer is now a blend: secure the income you cannot do without, keep the rest flexible.
Rejecting annuities on 2015 reasoning is using a ten-year-old price.
Rates move; check current best-buy rates before drawing any conclusion.
A pension has been one of the most effective ways to pass wealth on, because unused funds normally sat outside the estate. From April 2027 they count towards it.
Who this catches: anyone whose estate planning quietly relied on it. Money left to a spouse or civil partner keeps the usual exemption. The full explanation is here, and the other dated changes are here.
Thirty-five qualifying years is the requirement, but years spent contracted out of the additional State Pension can leave you below the full rate even with a complete record. Research has found around three in ten people overestimate what they will receive.
What to do instead of assuming: get your State Pension forecast from GOV.UK. It is free, takes minutes, and is the only thing that tells you your actual figure. Voluntary contributions can fill gaps, and the payback period is usually measured in a few years rather than decades.
Tax-free cash can be taken in instalments over years rather than as one payment, and there is no obligation to take any of it at a particular age. Taking it does not, by itself, stop you paying into a pension either.
The trap that is real: taking taxable income flexibly, as opposed to tax-free cash on its own, permanently cuts how much you can contribute in future. That one is worth understanding before you press anything.
Property wealth is real wealth and it is not retirement income. Turning it into income means selling, downsizing or borrowing against it, and each of those costs more than people expect.
The arithmetic people skip. Downsizing carries estate agent fees, stamp duty, legal costs and moving, which together commonly run to £15,000 to £25,000 before you see a penny. Equity release charges interest that compounds, so a debt can double over a long retirement and take the inheritance with it. Neither is wrong. Both are worth costing properly rather than assuming.
Pensions are frequently the second largest asset after the home, and they are routinely left out of the arrangement entirely. Research on UK settlements has found a large majority do not address pension assets, with only a small minority of consent orders containing a pension sharing order.
Who this costs most: whichever partner built the smaller pension, which given career breaks and part-time work is more often women. And because women live longer on average, the smaller pot has to stretch further. It is worth raising even when the settlement feels done.
Whether the April 2027 change touches your estate depends what is in it. Whether the safe withdrawal rate debate matters depends how much of your plan rests on drawdown. Sonuswealth runs the current rules against your actual position and shows its working, so you can check the reasoning rather than trust the conclusion.