Most money guidance is about spending too much. For some people, often those who saved well, the problem is the opposite.
We see couples in their seventies with several million and no debt, living entirely on the state pension because they will not touch the investments. Retired people who won't put the heating on in February. People who have not taken a holiday in a decade because spending the money feels wrong, although they can afford it.
Where it comes from
It often comes from fear, learned early and never revisited. Someone watched a parent get caught out, or grew up where money genuinely ran out, and concluded that the only safe amount is more. That belief helped build the savings, and it has not changed now that the risk has passed.
Inheritance tax
Money that is not spent stays in the estate, where some of it may be taxed at 40%.
Worked example — illustrative figuresA widow of 78 owns a house worth £600,000 and holds £600,000 in cash and investments. She will leave everything to her two children. She lives on the State Pension, has not been abroad since 2014, and keeps the heating off until December.
Her allowances: the nil-rate band is £325,000, and her late husband's unused band transfers, giving £650,000. The residence nil-rate band is £175,000, and his transfers too — another £350,000 — because she is leaving the home to direct descendants. Total allowances: £1,000,000.
Her estate is £1.2m. The £200,000 above the allowances is taxed at 40%, so £80,000 goes to HMRC.
The nil-rate band, the residence nil-rate band and the £2m taper threshold are all fixed at those levels up to and including the 2030 to 2031 tax year, so house-price growth pushes more estates over the threshold. Above £2m the residence band tapers away by £1 for every £2 of estate value, so larger estates lose it entirely. And leaving 10% or more of the net estate to charity cuts the rate on the rest from 40% to 36%.
From 6 April 2027, most unused pension funds and pension death benefits will count as part of the estate for inheritance tax — legislated in the Finance Act 2026, which received Royal Assent on 18 March 2026. Death-in-service benefits from a registered scheme, and dependants' scheme pensions from defined-benefit or collective money-purchase arrangements, are excluded. HMRC's own estimate is that of roughly 213,000 estates with inheritable pension wealth in 2027 to 2028, about 10,500 will face an inheritance tax bill that would not previously have arisen, and around 38,500 will pay more than they otherwise would.
Gift allowances
These are rules, not recommendations — whether any of them suits you depends on your circumstances and your will, which is a conversation for an accountant or a solicitor rather than a website.
- £3,000 a year can be given away free of inheritance tax. Unused allowance carries forward one tax year only, so a couple who have used none can move £12,000 between them in a single year.
- £250 per person, to as many different people as you like, provided you have not used another allowance on that same person.
- Wedding gifts of £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to anyone else.
- Normal expenditure out of income has no limit at all, provided the gifts are regular and you can afford them from income after your usual living costs, for example helping with a grandchild's rent.
- The seven-year rule. Larger gifts fall out of your estate entirely if you live seven years. Between three and seven years, taper relief reduces the tax by 32%, 24%, 16% and 8% across the bands — but only where the total gifts exceed £325,000.
Gifts during your lifetime are allowed within these rules. Wills and the financial admin nobody enjoys covers the paperwork.
Heating the home
The NHS recommends heating the rooms you regularly use to at least 18°C, and links cold homes not just to colds and flu but to heart attacks, strokes, pneumonia and depression.
The Winter Fuel Payment is worth between £100 and £300 for winter 2026 to 2027 if you were born on or before 27 June 1960. If your total income is over £35,000, HMRC takes it back. A benefits check may be worth doing even if you expect not to qualify; MoneyHelper and Citizens Advice both do one free.
Signs of underspending
- You could afford something you would enjoy, and you keep not buying it.
- You know what everything costs, including things you could buy a hundred times over.
- You have put off dental work, a hearing test or new glasses to save money you have.
- The idea of spending down any capital, ever, feels wrong rather than merely uncomfortable.
- Your family has told you more than once to enjoy some of it.
A question to ask yourself
What would have to be true for you to feel safe enough to spend some of it? If you cannot answer, the feeling may not be about the amount.
The fear is usually will I run out? A lifetime cashflow plan answers it with your own numbers, including the bad scenarios.
A permission budget
A permission budget is a set amount to spend each year. Once a year:
- Pick a figure that must be spent, not saved. Start with a number you would find uncomfortable, then halve it twice. It is an amount to reach.
- Give it a deadline. It expires at the end of the year and does not roll over.
- Spend it on things that expire. The knee that needs doing, the trip while you can still manage the airport, the grandchild who is seven now and will not be seven again.
- Write down what you expect to go wrong before you start, and read it back in twelve months.
- Do the dental work first. If you have deferred health spending — teeth, hearing, eyes, a knee — that comes out of the first year's budget before anything else.
Repeat it the following year with a slightly larger figure.
Where coaching ends and advice begins
Everything above is coaching: understanding the pattern, knowing the rules exist, deciding what you want the money for. Several of the decisions it leads to are not. How much you can sustainably draw from a pension or an investment portfolio, when to take benefits, how to structure an estate, and whether any particular gift makes sense in your situation are regulated advice or legal work. Buzz Money Coach does not give regulated financial advice and is not authorised to. Where you need it, we will say so and can introduce you to Equity & General, authorised and regulated by the FCA (No. 474163) — entirely optional, with no obligation. Coach or adviser? sets out which of the two you need. MoneyHelper is government-backed, free and impartial.