The most pressing question for many clients is “how soon can I retire?”. While there are a fortunate few who love their work, many are in a hurry to end the responsibilities of a full-time job. To understand when someone can retire requires an understanding of whether they have enough money – and that requires an idea of their spending habits. This is proving a stumbling block for many advisers.

All advisers will be familiar with the variability of spending habits: one client’s luxury is another’s impoverishment. Perhaps more importantly, clients are consistently poor at estimating what they will need. While there are questionnaires and analysis tools, expenditure remains one of the most difficult areas to capture accurately, and yet one of the most important inputs into financial planning.

The latest research from BNY Investments and NextWealth – “Retirement Advice in the UK: Turning Insight into Outcomes” – showed advisers overwhelmingly agreed that clients do not accurately estimate how much they need for retirement. Half say clients underestimate their needs. This has one obvious side-effect: not having enough money to support their lifestyle. However, there are also risks for those who overestimate their needs, potentially leaving significant chunks of capital ready to be scooped up in inheritance tax. Under the new rules on the inheritability of pensions, leaving unused pensions may be problematic.

One adviser said: “I’d say expenditure is one of the biggest challenges. Some just aren’t interested, and you see how big of a problem it is after a few meetings. If they’re clearly big spenders, then that needs a lot more discussion and maybe a slightly more rigid retirement strategy.”

Expenditure: a difficult assessment

There are plenty of reasons why expenditure might be difficult to assess. When there is plenty of money coming in, the risks of over-spending are not as acute. Money can always be ‘remade’, or belts tightened for a few months. Plenty of people will never have had to think very hard about where their money goes and their true level of baseline spending.

Equally, it is difficult because no one quite knows what they are going to be doing in retirement. Will they be in good health? Will they continue to work in some capacity? Will they have the energy and inclination for an ambitious retirement? Or will they want to enjoy some hard-won peace? As one consultant says: “Expenditure in retirement is hard for clients to answer because they’re being asked to imagine a life they can’t yet conceptualise. Remove a central facet of life and everything else shifts. Advisers need to respect that resistance rather than assume they understand it. Clients also want to be ‘good clients’, they want to ‘come up with the goods’, so they might answer before they’re ready. Then the foundation of their retirement plan is based on something that was said to please you.” 

It is also difficult to know how a client will adjust to retirement. The transition from being a saver to a spender is a tough one, and clients have to break established habits. While regulators understandably focus on preventing people from running out of money, it is also a problem when fear of spending stops people enjoying the retirement they saved for.

Turning uncertainty into a workable strategy

Advisers are finding creative ways to solve the problem. The first is not to expect too much, letting the expenditure conversation evolve. One chartered financial planner said: “I don’t remember the last time I got a clear answer first time. It’s hard to pin clients down on what they want to spend. I say, ‘this is a rolling conversation over the next few years as you bed into retirement and get used to spending money without earning it first. As you get used to the fact you’re not Senior High Managing Director of the Universe any more’, and I’m quite open with it.”

Advisers will also need to separate what clients think they want, and what they actually need. If they want to travel the UK in a campervan, do they need £50,000 to buy one, or can they hire it? Challenging client assumptions on expenditure is likely to be an important part of the process.

Other advisers find conversations around gifting can help open up the conversation, revealing previously hidden priorities, values and assumptions. It can prompt clients to talk about real intentions: supporting children, helping with property, planning for care, or responding to future ‘what ifs’. One adviser said: “Every year we run a test of how much you could afford to give away and not run out of money – basically your gifting allowance. We know you can afford to withdraw £10,000-15,000, should the boiler break or your kids need bailing out.

“The reason we do that is when you talk to clients about it, they tell you what they’re trying to consider gifting. It informs the plan better, and when they need £20,000 out in a rush, you don’t have to rebuild the whole cash flow. You just rerun it; it’s within a tolerance; we’ve got some sense checks and it is pre-approved by compliance.”

Artificial intelligence may also be helpful. Increasingly, banking apps and other tools can help clients analyse their spending in detail. For the time being, relatively few firms (25%) are using tools such as open banking to support expenditure analysis, but this could become more commonplace. Many of the major banks will now provide monthly spending analysis, merchant insights and even comparative data, helping clients identify savings in areas such as utilities, or higher-interest-rate savings accounts.

From there, advisers will need to decide what to do with the insights they have built. For example, high spenders might need more annuity-type products so they cannot run their assets down too quickly. Once advisers have insights, they can make those decisions.

The easy part of financial planning may be building an understanding of how much money a client has. Understanding whether it will be enough to support them in the lifestyle they want is a much tougher piece of analysis, but advisers are finding ways to do it effectively.
 

Source: Research conducted by NextWealth for BNY Investments, based on responses to surveys with 207 retirement-focused financial advisers and 260 consumers of financial advice conducted in November 2025.