This year gave economic forecasters plenty to revise. In April, the IMF cut its UK growth forecast to 0.8% for 2026, down from 1.3% just three months earlier, after the conflict around the Strait of Hormuz pushed energy prices sharply higher. By late summer the picture had settled somewhat: the economy grew 0.4% in the three months to June, and the British Chambers of Commerce’s September forecast put growth for the year at a steadier 1.0%. The UK isn’t in recession. But the swing between those two numbers is the point worth sitting with – forecasts moved a long way in a matter of months, and retirement plans need to be built to withstand that kind of year, not just the calm ones.
Why timing matters more once you’re drawing an income
While you’re still building your pension, a market fall is rarely something to worry about – you have years, often decades, for markets to recover before you need the money. Once you start drawing an income from it, the maths changes. Selling investments to fund your income while their value is down means you’re locking in a smaller pot permanently, in a way a later recovery can’t fully undo, because there’s less of it left to recover. This is what the FCA calls sequencing risk, and its own review of retirement income advice makes it a specific requirement: firms are expected to stress-test a client’s plan against a market fall happening right at the start of the withdrawal period, not just model steady average growth throughout.
A cash buffer isn’t overly cautious – it’s structural
Research from Hargreaves Lansdown, surveying over 10,000 UK adults, found that 46% of retirees have nothing set aside for unforeseen costs, and that most who do have far less than they think – 8% could cover under a month of essential expenses from savings alone. The general guidance among advisers has settled on holding somewhere between one and three years of essential income needs in cash or near-cash, replenished from growth assets in the years markets perform well. Research published by BNY Investments in July, surveying over 200 UK financial advisers, described this as “bucketing” – its real purpose isn’t to maximise returns on that portion of the money, it’s to make sure you’re never forced to sell your investments at a low point just to pay this month’s bills.
Reviewing risk as you approach and move through retirement
A risk profile set five or ten years before you stopped working rarely fits once you’re actually drawing an income from it. The FCA’s most recent guidance on good practice in retirement income advice, published in June 2025, points to the same pattern in both directions: plans that only model to average life expectancy, understating how long the money may actually need to last, and plans that never get revisited once the client retires, running on assumptions that were reasonable at outset but were never checked again. Both are avoidable with a periodic review rather than a one-off plan filed away and forgotten.
The shocks that have nothing to do with the stock market
Markets are only one source of risk to a retirement plan. Illness tends to bring costs that weren’t budgeted for – additional heating, appointments, eventually perhaps care – on top of whatever income you’d planned to live on. Losing a partner changes the picture in a different way: a single-life annuity stops paying entirely on death, and even a joint one usually drops to a reduced percentage, which is worth knowing well before it becomes the reality rather than after. And plenty of people find themselves wanting to help adult children or grandchildren financially at exactly the point their own income has become fixed, which is a generous instinct but one that’s easy to act on without checking what it actually does to your own plan first.
Where your own numbers come into this
The full new State Pension currently provides £241.30 a week, or £12,547.60 a year, as a guaranteed floor beneath whatever your own pension and savings provide – useful to know as the baseline your wider plan is actually built on top of. We’ve written separately about how withdrawal decisions affect how long your pension actually lasts, and about how a cashflow model can stress-test a plan against exactly this kind of scenario before you’re relying on it for real – both worth reading alongside this if a downturn like this year’s has made you want to check your own position rather than the general picture.
Let’s stress-test your own plan
We work with clients across Poole, Bournemouth and the wider Dorset area to build retirement income plans that hold up against a genuinely difficult year, not just an average one. If 2026’s swings have made you want to check how your own plan would cope, get in touch and we’re happy to have a no-obligation conversation.
This article is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only. All information is correct at the time of writing (September 2026) and is subject to change in the future.
The value of your investments (and any income from them) 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.
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.