Coaching the retirement mindset from saver to spender

1. Introduction

After decades of disciplined saving, many clients could face a new challenge in retirement: adjusting to spending their accumulated wealth responsibly and according to their means.

It’s a shift that’s not just financial – it’s deeply behavioural. And for advisers, it’s an opportunity to add real value, particularly in the light of proposed changes to the inheritance tax treatment of pension funds.

Unlike previous generations who could rely on defined benefit pensions for guaranteed income, today’s retirees must manage their own retirement from defined contribution pots. This shift places greater pressure on individuals to make complex financial decisions – often for the first time – and heightens both the emotional and practical challenges of spending in retirement.

This article explores the emotional and practical barriers that make spending in retirement challenging, the implications of recent UK Inheritance Tax reforms (IHT), and how solutions like PruFund and the  Prudential Guaranteed Income Plan can help support confident, well-structured decumulation strategies.

The value of your investment can go down as well as up so you might not get back the amount than you put in. And the value will be less than you put in if you take out more than the amount it’s grown by.

2. The behavioural barrier: why clients struggle to spend

Many retirees struggle with the psychological shift from accumulation to decumulation. After years of budgeting and saving, spending – even responsibly – can feel uncomfortable and even cause real anxiety.

Behavioural experts highlight common hurdles:

• Fear of running out: Even with ample resources, clients worry about longevity risk and market volatility.
• Loss of identity: Retirement can trigger a sense of disconnection, especially for those whose self-worth was tied to their working life.
• Regret risk: Many retirees reach their later years with most of their wealth untouched, only to realise they could have lived more fully. Under changing IHT rules, this could now come at a financial cost to the beneficiaries, who inherit that wealth, and the deceased person's estate.

Advisers are uniquely positioned to help clients reframe spending as purposeful and aligned with life goals.

By combining behavioural coaching with structured financial planning and the use of cashflow modelling tools, advisers can help guide clients through one of the most emotionally complex phases of their financial lives.

3. The practical cost of inaction

Proposed UK IHT reforms have added real urgency to the retirement spending conversation by significantly reducing the attractiveness of pensions as an estate planning tool.

From 6 April 2027, most unused pension funds and death benefits will be included in a person’s estate for Inheritance Tax purposes.

Pensions were traditionally left untouched for as long as possible because of their favourable inheritance tax treatment, but proposed reforms mean they may now need to be considered earlier in a client’s retirement income strategy. Advisers will play a vital role in helping clients consider a more proactive approach to drawing down their pension wealth responsibly as part of their overall retirement planning, given the potential impact of proposed inheritance tax changes.

With IHT thresholds frozen, HMRC estimates that thousands of estates will newly incur IHT, with significant increases in tax liability. This means delaying pension drawdown could now increase tax exposure depending on individual circumstances and current tax rules.

Advisers can help clients balance lifestyle needs with legacy planning, encouraging strategic spending and saving into other vehicles such as trusts. This will not only help to reduce future tax burdens but also encourage retirees to make the most of their retirement years.

“For many years advisers could plan out someone's retirement in the knowledge they could ignore the pension when considering the wider IHT planning considerations. But upcoming changes to inheritance tax, means this will no longer be the case. With unused pension funds potentially generating 5 or 6 figure IHT bills Advisers will need to help clients think differently and deal with the dual task of ensuring a comfortable retirement while maximising the wealth transferred to the client's loved ones.  There are many ways to mitigate IHT and advisers are best placed to find the options best suited to their clients' circumstances.” Les Cameron, M&G Head of Technical

4. Why the cost of inaction is especially high for women

Women are set to play a growing role in the transfer and management of wealth not just through inheritance, but by building significant assets independently. This dual dynamic presents a unique financial challenge: Women have long played a significant role in creating wealth and frequently inherit assets, particularly as they often outlive men. This dynamic continues to grow in importance, making thoughtful planning and support essential.

M&G’s latest research report*, The Untapped Potential of Women’s Wealth reveals that 31% of women expect to inherit most of their partner’s wealth, compared to just 17% of men. But inheritance is only part of the picture. While women have always accumulated wealth, an increasing number are doing so independently - through careers, property, and investments - alongside any assets they may inherit. Despite this, many still feel underprepared to manage these resources confidently.

Women currently approaching retirement, and those already retired, often have greater wealth than previous generations, but many remain underserved by traditional advice models. The challenge for advisers is to engage early, build trust, and support women in making empowered, timely decisions about both inherited and self-made wealth.

More than half of women surveyed (53%) say they’ll need advice to feel secure about managing an inheritance, but only 43% have spoken to an adviser, compared to 69% of men.

This advice gap is compounded by emotional barriers: 49% of unadvised women feel uncomfortable discussing inheritance with family, and 50% say resolving financial matters after a partner’s death would be challenging.

These behavioural hurdles often lead to delayed or avoided decision-making particularly around spending or gifting wealth. And with pensions soon falling within the scope of inheritance tax, holding on to pension assets too long could result in unnecessary tax exposure.

For advisers, this presents a clear opportunity: to support women in moving from cautious savers to informed and confident spenders and estate planners.

That means offering behavioural coaching, building structured income strategies, and creating space for timely, values-based conversations about legacy planning.

5. PruFund: supporting confident retirement planning

For many clients approaching retirement, emotional security can feel just as important as market performance. The journey from saving to spending is rarely linear, and clients need support not just at the destination, but throughout the transition.

PruFund is designed to support that journey, aiming to protect clients from some of the short-term ups and downs of direct stock market investments by using an established smoothing mechanism and globally diversified multi-asset portfolios.

“Retirement isn’t just a financial milestone – it’s an emotional shift. With PruFund, we help clients feel confident not just about what they’ve saved, but how they’ll use it. Through a unique combination of Scale, Structure and Smoothing we aim to mitigate against the risk of market volatility and support structured income drawdown. This enables advisers to guide clients from cautious savers to purposeful spenders. And with the proposed inheritance tax changes, helping clients make timely decisions about their pension wealth has never been more important.” Kirsty Wright, M&G Director of PruFund Proposition

PruFund helps supports this behavioural shift seeking to grow investors’ money over the medium to long term (at least 5-10 years), helping investors stay on track especially during periods of market uncertainty that could derail their long-term plans.

With over £65 billion under management, PruFund combines multi-asset diversification, access to private markets and a smoothing mechanism that helps reduce the impact of short-term market volatility.

How PruFund supports the saver-to-spender transition:

• Dampens volatility and sequencing risk, helping protect capital during early retirement income drawdown.
• Improves investor composure, making it easier for clients to stay invested and spend steadily through market ups and downs.
• Adds diversification and balance, complementing traditional multi-asset strategies and reducing hidden risks like unduly high market-weighted index concentration in certain areas like the US.

As part of this journey, advisers can also help clients distinguish between different types of spending in retirement. Essential spending, such as household bills and everyday living costs, can be covered by the Prudential Guaranteed Income Plan, offering predictable income and peace of mind.

Meanwhile, discretionary spending, for example for holidays, hobbies, or later-life healthcare, can be supported by PruFund, which offers growth potential and flexibility. This layered approach helps clients feel more secure and purposeful in how they use their wealth.

For advisers, PruFund can offer a practical way to bridge the emotional and financial gap many clients face, supporting not just the outcome, but the journey from cautious saver to confident spender.

It’s important to remember, that while funds remain invested, their value can go down as well as up, so clients might not get back the amount they put in.

6. The Prudential Guaranteed Income Plan: certainty with flexibility

For clients seeking predictable income without committing to a lifetime annuity, Prudential's Guaranteed Income Plan offers a flexible, time-bound solution backed by the £130 billion With-Profits Fund.

Key features:

• Guaranteed income for 5 to 15 years.
• Minimum investment of £10,000.
• Options for income, lump sum, or both.
• Designed to integrate with PruFund for blended solutions.

This plan is ideal for clients who want predictable income without committing to a lifetime annuity – especially in the early years of retirement.

7. Five ways advisers can support the transition

The shift from saving to spending in retirement is rarely just about numbers – it’s about mindset. Advisers who understand the emotional complexity of this transition are well placed to guide clients with empathy, structure, and clarity.

Here are five ways advisers can support clients in navigating this phase:

1.  Start early
Initiate conversations about spending attitudes and emotional readiness well before retirement begins. This isn’t about forecasting figures – it’s about understanding how clients feel about using their wealth.
2.  Frame spending positively
Help clients see spending as a reward for their discipline, not a risk to their security. Linking spending to personal values and life goals can make it feel purposeful and empowering.
3.  Use structured income solutions
Options like PruFund and Prudential's Guaranteed Income Plan can provide the predictability clients need to feel confident. Advisers can blend these with growth strategies to match both emotional and financial needs.
4.  Review estate implications
With proposed Tax reforms reshaping IHT exposure, advisers can help clients make informed decisions about drawdown timing, gifting strategies, and legacy planning without overwhelming them with technical detail.
5.  Stay adaptable
Retirement is not a fixed destination. Advisers who remain flexible and responsive to changing client needs – both financial and emotional – can build deeper, longer-lasting relationships.

8. Conclusion: retirement is a mindset, not just a milestone

Helping clients move from saving to spending isn’t just a technical challenge – it’s a human one. It requires empathy, insight, and the right tools.

Solutions like PruFund and Prudential’s Guaranteed Income Plan can form part of a broader framework that advisers use to help clients feel more confident about their retirement plans and make informed, purposeful decisions.

Because in the end, retirement isn’t just about having enough money. It’s about knowing how to use it well and having the confidence to do so.

To explore how M&G can support your clients' retirement goals, request a call back.

* We surveyed 1,000 men and women, aged 26 and over, with £150,000 or more in investable assets or who expect an inheritance of £300,000 or more. The survey was carried out by Censuswide and was in the field between 31.01.25 and 11.02.25.