Helen Johnson is winding down her working life on her own terms – cutting her hours to just a handful a month as she taps into a £500,000 pension pot.
The 60-year-old marketing consultant is among a growing wave of older workers rejecting the idea of an abrupt stop to their careers.
Known as phased retirement, this is a flexible, gradual transition from full-time work to complete retirement, often allowing individuals aged 55 to 75 to reduce working hours while drawing partial pension benefits.
Up to 25 per cent of each pension pot can be withdrawn tax-free. While the rest is still accessible, taking more money can lead to hefty tax bills, as Helen, from Gateshead, discovered.
She first accessed one of her private pensions last year when it was worth £176,000, taking a £44,000 lump sum – the maximum 25 per cent – and securing £550 a month.
A further £60,000 lump sum – taken slightly earlier than planned last month – left around £320,000 invested in another pension, while she initially draws £495 a month to remain tax-efficient.
This gives her £1,045 a month – £12,540 a year, just under the personal allowance threshold, the amount of income you can have before you must start paying tax.
Speaking to The i Paper, she said: “The first pension that I accessed was an old final salary pension from one of my first jobs.
“It was designed to be accessed from 60, and there was very little benefit in choosing to take it later so I had always intended to access this pension at 60.”
There was little benefit to taking it later because delaying the pension would not significantly increase the payments enough to outweigh the years of income lost by waiting.
She added: “Turning 60 coincided with the year my daughter started university, so I no longer needed to be around for lifts to school, and my mum turned 90.
“My plan was always to visit my mum more often when my daughter went to university – she lives 270 miles away.”
That timing allowed her to unlock funds that reshaped her financial position almost immediately.
The monthly payments she gets from this pension are quite small at £495, she said, but she also took out the lump sum, which cleared her mortgage and helped her daughter through her studies.
Her husband, 53, is still working as a research scientist and has yet to draw his pension, although retirement in his late 50s is likely.
She added: “My husband has a well-paid job and taking this pension meant we could live on his salary, and this pension if necessary. And I could begin to run the business down.”
Across her pensions, she has built up significant savings, with just over £500,000 in total.
It also gave her more time to focus on building her podcast, Happier Grey, which features women who are embracing later life.
Before stepping back, Helen had spent five years running a marketing consultancy for e-commerce firms which offered flexibility, but she rarely switched off.
Rather than quitting outright, she allowed her workload to shrink naturally, from around 60 hours per month to just five today, with plans to reduce that even further.
“After April, my plan is to only work with one client, for a few hours a month. We’ve worked together for five years.
“I will take an initial lump sum, to replace our cars and do some building work. I’ll only be taking a small monthly amount out of this pension for now, so that my combined income will stay just below the income tax threshold.
“I will increase the amount I take out when my husband retires – we haven’t finalised when that will be yet.”
Her approach highlights one of the lesser-known challenges of what’s called a phased retirement – managing withdrawals to avoid tax bills.
By keeping her income just below the current personal allowance threshold of £12,570 she is maximising what she keeps while preserving flexibility for later.
Her experience underlines the importance of planning ahead, particularly when juggling pensions, business income and tax thresholds.
In terms of advice, she said: “I’d say definitely don’t do it at the last minute. I have taken advice from both my financial advisor and my accountant, in terms of exiting the business and how best to access my pensions. I’d highly recommend doing that.”
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