Three in five retirees regret rushing to take tax-free cash — what to consider instead

What the research found

Quilter surveyed 5,000 UK retirees and found that 57% had withdrawn tax-free pension cash ahead of the Autumn 2024 Budget, with 41% of those doing so because they feared the 25% tax-free lump sum entitlement would be reduced or capped. In the event, no such change was made. The 25% tax-free entitlement remained intact. And 61% of those who made the withdrawal now say they regret it.

How the money was spent — and why the regret matters

The research also found where the withdrawn cash went. Roughly 15% went on home renovations or improvements, 15% on healthcare and other immediate costs, 14% was gifted to family or used for education, and 14% went towards day-to-day living costs.

In isolation, none of those uses is inherently wrong. The problem was the timing. Tax-free pension cash is one of the most tax-efficient forms of retirement income — once withdrawn early, it cannot be returned. Retirees who accessed it pre-emptively and then found it was not needed, or who spent it on things that could have been funded differently, have permanently reduced a tax-advantaged resource.

Why this happens — and what it tells us

Quilter has called on the Chancellor to avoid creating similar uncertainty ahead of the Autumn 2026 Budget. The underlying issue is that retirement income decisions made under perceived urgency, or based on media rumours rather than confirmed policy, rarely reflect people’s actual long-term interests.

The same dynamic plays out across many retirement income decisions: rushing to sell a property, drawing down savings faster than needed, or making lump-sum commitments based on what might change rather than what is actually changing. Retirement income is a long-horizon problem, and decisions that feel urgent often are not — while decisions that could genuinely benefit from more time get rushed anyway.

Where property wealth fits in

For homeowners, property is often the largest single asset in retirement — and one of the most flexible. Unlike pension cash, which once withdrawn cannot be returned, equity in a home can be accessed selectively and at different points in time. Lifetime mortgages and retirement interest-only (RIO) mortgages allow homeowners to access equity without selling, and without the forced lump-sum decision that characterises pension withdrawals.

The relevance is not that property wealth is always better than pension cash — it is that having more than one source of retirement income available, and taking time to understand how each works before committing, generally produces better outcomes than rushing into any single decision under pressure.