Many new retirees take a large tax-free lump sum and then settle into a fixed monthly withdrawal. That pattern can work, but it ignores years when markets fall early in retirement — the period when sequence-of-returns risk is highest.
A more deliberate approach holds a cash buffer for one to three years of planned spending, then tops it up from growth assets in stronger years. The buffer is not an emergency fund in the usual sense; it is a pacing tool for pension income.
Tax bands also shift in the first years after leaving work. Spreading taxable withdrawals across tax years, or blending them with ISA withdrawals, can keep more of your income below higher-rate thresholds without changing your lifestyle.
Our Later-Life Cashflow Planning engagements spend most of their time on these early-year decisions. Once the first five years are mapped with realistic spending, longer-term projections become far more useful.