3 valuable ways to create a guaranteed income in retirement

According to a September 2025 Financial Planning Today article, 39% of people say a guaranteed income is their main priority in retirement. Knowing how much income you’ll receive from certain sources can provide the certainty you need to enjoy retirement with greater confidence.

There are several ways you might create a guaranteed income in retirement – here are three common options.

1. State Pension

While the State Pension often isn’t enough to cover all of your retirement spending, it can provide a reliable base income.

The new full State Pension pays an income of £230.25 a week in 2025/26. To qualify for the full amount, you’ll need to have 35 qualifying years on your National Insurance record. If you have fewer years, you’ll usually receive a portion of the full amount.

You can use the government’s State Pension forecast tool to understand how much you could receive and when you can claim it.

As well as providing a regular income from State Pension Age until you pass away, the State Pension is valuable because, under the triple lock, it’s guaranteed to rise by at least 2.5% each tax year. This annual increase helps maintain your spending power in retirement.

2. Defined benefit pension

If you have a defined benefit (DB) pension, also known as a final salary pension, it will provide you with a guaranteed income from the scheme’s pension age until you die.

The way your income is calculated varies between schemes, but it’s often linked to your average salary and how long you’ve been contributing to the pension. Usually, the income is linked to inflation, so the amount you receive will increase annually.

Compared to other pension schemes, DB pensions are often generous, and the guaranteed income they provide could put your mind at ease if you’re worried about financial security in retirement.

In addition, DB pensions may offer other valuable benefits. For example, some schemes will continue to provide a guaranteed income to your spouse or civil partner if you pass away first.

3. Annuity

If you have a defined contribution (DC) pension, you’ll have a pot of money you can use to create an income once you reach 55 (rising to 57 in 2028).

There are several ways you might access the money held in a DC pension, including purchasing an annuity if you value a guaranteed income.

Once purchased, an annuity will provide an income for the rest of your life. The income it provides will depend on annuity rates at the time of purchase. Rates can vary significantly between providers, so shopping around could help you get the most out of your money.

You can select an inflation-linked annuity so that your income rises each year, or a joint annuity, which would continue to pay a reliable income to your partner if you pass away first.

Income flexibility may suit your retirement lifestyle

There are benefits to creating a reliable income in retirement, but it isn’t the right option for everyone.

Indeed, in the survey featured in Financial Planning Today, 7% of people said they wanted the flexibility to take a higher income when needed. Even if a guaranteed income is a priority for you, you might still want to draw a flexible income to supplement it.

For example, if you have a DC pension, you might use half of the total amount to purchase an annuity. If the income it delivers is enough to cover your essential outgoings, this could provide financial peace of mind.

You could leave the remaining half of your pension invested and access it flexibly as and when you choose. You could withdraw sums to pay for a holiday, give to loved ones, or increase your disposable income in your early years of retirement.

A retirement plan that blends a guaranteed and flexible income could suit your lifestyle goals while still providing certainty.

Get in touch to talk about your retirement plan

We can work with you to create a retirement plan that’s tailored to your financial circumstances and lifestyle goals. Whether a guaranteed income is a priority or you’d prefer flexibility, please contact us to arrange a meeting with one of our financial planners.

Please note: This blog 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.

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. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.