Financial planning guide for your 60s: Retirement plans, will prep and tax strategy

Turning 60 is a big milestone, but life at this age looks different for everyone. Some are still working and supporting adult children, while others are easing into retirement or already enjoying it. In 2021, more than half of UK adults were retired by age 66.[1] Whatever your situation, your sixties are crucial for shaping the rest of your financial future.

This is the decade when you’ll likely retire - or at least start planning for it - so it’s time to organise your savings, pensions, and investments into a reliable income. You’re likely to have paid off your mortgage by now (hurray!), but you’re also likely to be providing unpaid care for a loved one, and starting to think about putting plans in place for when your family looks after you too.[2]

To help you navigate your money must-dos in this pivotal decade, here’s a practical to-do list covering key steps for financial planning in your 60s.

1. Pin down your retirement plans

Check your State Pension forecast

First things first, work out where you stand with your State Pension. You can check your State Pension forecast online through the UK government’s website to see how much you’ll receive and when you can start claiming. If there are gaps in your National Insurance record, you may be able to make voluntary contributions to boost your payments. This could be especially worthwhile if you’re a few years short of qualifying for the full amount. Since the full State Pension is £11,502.40 per year (as at 2024-25 tax year), every extra bit you can add will make a difference to your financial security in retirement.

Round up all your pension pots

Beyond the State Pension, most people will have some combination of personal or workplace pensions too. Now is the time to take stock of all your pension pots and get a clear picture of your total savings. If you have multiple workplace pensions, consider consolidating them to make management easier- though be aware of any exit fees or loss of benefits. Some older workplace pensions have valuable guarantees, such as higher tax-free lump sums or guaranteed annuity rates, so check the small print before moving your money. Tracking down old pensions from previous employers can feel like a hassle, but for many, it’s worth the effort. The government’s Pension Tracing Service can help if you’ve lost any.

Calculate if you’re on track

Once you’ve addressed your State Pension and have a better understanding of all your pots, it’s time to find out if you’re on track for the retirement lifestyle you want – and, if not, what you can do in the years you’ve got left to close the gap. Head over to our retirement income calculator to see how much money you will need each year to match your lifestyle goals, what your current savings could afford you, and some handy pointers to help you top up your pot if you’re not quite there yet.

Decide between drawdown and annuity

Now you know what you’ve got and what sort of retirement it can afford you, you’ll need to decide how to access your funds. The two main options are drawdown and annuities.

With drawdown, you keep your pension invested and withdraw money as needed, giving you flexibility but also exposing you to investment risk. An annuity, on the other hand, provides a guaranteed income for life, offering stability but less flexibility. Some people opt for a mix of both. Consider your lifestyle, risk tolerance, and financial needs when making this decision, and explore different providers to ensure you get the best deal. If you choose drawdown, you’ll need to manage your withdrawals carefully to avoid running out of money too soon, and you’ll still need to monitor your investments for the funds left in your pot.

Annuities have fallen out of favour in recent years due to lower interest rates, but they do provide peace of mind by guaranteeing an income for life. If you’re considering one, shop around - rates vary between providers, and some offer higher payouts if you have health conditions. Hybrid solutions, where you use part of your pension for an annuity and keep the rest in drawdown, can provide a balance of security and flexibility. It’s important to get guidance before making a decision, as once you buy an annuity, you usually can’t change your mind. The government’s Pension Wise service offers free guidance, and a qualified financial adviser can help tailor a strategy to suit your specific needs – more on this below.

Check in with a financial adviser

Finally, if you’re winding down and retiring in the next few years, now is a really good time to get in touch with a financial adviser to sense-check your finances. They can review your current situation, your plans for managing your money in retirement, and offer advice and guidance tailored to your unique situation on how to make the most of it.

This is called “cash flow analysis” and is one of the most valuable services a financial adviser can offer you in the run-up to retirement, helping you ensure you have a watertight plan for how to make your money last throughout your retirement – so you don’t end up running out of funds! Whether you have annuity or you’re planning on DIYing it with your own drawdown schedule (or you’re not sure and need an expert to help you decide), an adviser can crunch the numbers on your behalf so that you can phase into retirement without worrying if you’ve made the right choice.

And have a plan B!

Planning around retirement can feel daunting. Your cash has to last you the rest of your life, and 90% of the time, it will. However, it’s worth considering a plan B just in case of, say, a pandemic or another disaster (not again!). This could be to rent out your home for a year, to defer taking your pension, or take on part-time work to keep income rolling in. You probably won’t need to do it, but it can ease the psychological burden of retirement to know there are other options. If you’re concerned that your pension isn’t going to be able to support you in retirement, a financial adviser can also help you decide what to do to boost your income if you ever find yourself in such circumstances.

2. Put a will in place

Hope for the best, plan for the worst

Thinking about a will isn’t exactly the most uplifting task, but it’s a crucial step in securing your family’s future. Without a will, your assets will be distributed according to government rules of “intestacy”, which may not reflect your wishes. A will ensures your property, savings, and possessions go to the right people and can prevent unnecessary legal complications for your loved ones.

If you have dependents, a long-term partner, or specific inheritance plans, making a will is especially important. It’s easy to put off, but sorting it out now can save your family stress and expense later. Many legal services and charities offer affordable will-writing options, making the process straightforward and accessible.

Get professional help

DIY wills may seem like a way to save money, but mistakes can lead to costly complications or even render your will invalid. Inheritance Tax (IHT) rules and property laws can be tricky to navigate, so seeking professional help ensures your will is legally sound. A solicitor or professional will-writer can guide you through the process, making sure your wishes are clear and legally binding.

The more complex your estate, the more valuable this expert advice becomes. If you own property, have investments, or want to distribute assets among multiple beneficiaries, professional guidance can help you avoid potential pitfalls. A well-structured will can also reduce the Inheritance Tax bill on your estate, allowing you to pass on more of your wealth to your loved ones - rather than the taxman!

What happens if you don't have a will?

Dying without a will means your estate will be distributed according to intestacy laws. This typically benefits only married or civil partners and direct blood relatives, leaving unmarried partners, stepchildren, and close friends out. If you have a complex family situation, intestacy laws may not reflect your intentions, potentially leading to disputes or financial difficulties for your loved ones. Taking the time to create a will now can prevent unnecessary difficulties and ensure your estate is handled as you intend.

3. Consider gifting to reduce your tax bill

Understand your Inheritance Tax liability

If you're nearing retirement, now is the time to get an Inheritance Tax (IHT) forecast. No one likes thinking about it, but without a plan, your loved ones could face a hefty tax bill, reducing the amount you leave behind. IHT is charged at 40% on anything above the threshold, which currently stands at £325,000 per person (or up to £1 million for some homeowners passing wealth to direct descendants). A forecast helps you understand what your potential liability looks like and whether you need to take action. If so, there are a few different routes available to you to reduce the size of your estate.

Consider gifting to reduce your bill

Giving money to your loved ones can be a rewarding way to share your wealth while reducing the size of your IHT bill. Each year, you can gift up to £3,000 tax-free, and if you didn’t use the allowance last year, you can roll it over for a total of £6,000. Regular gifts from surplus income are also exempt, provided they don’t impact your standard of living. This can be particularly helpful if your children or grandchildren are at key life stages where financial support could make a real difference - whether for education, a first home deposit, or simply to ease the rising cost of living.

There are plenty of smart ways to pass on wealth. You might contribute to a grandchild’s Junior ISA, giving them a financial head start, or help a child boost their Lifetime ISA savings for their first home. If you’re thinking long-term, you can even contribute to a Junior Self-Invested Personal Pension (SIPP) to give younger family members a head start on retirement savings! These options allow you to help your family in two ways – leaving them better-off and also preventing them from being landed with a hefty IHT bill.

And remember you can gift to charities too

If you’re looking to leave a legacy beyond your family, gifting to charity can be a meaningful way to support causes you care about while also reducing your Inheritance Tax liability. Any money or assets you leave to charities are completely exempt from IHT, which can significantly lower the taxable value of your estate. Additionally, if you leave at least 10% of your estate to charity, the rate of IHT on liable assets reduces from 40% to 36% - meaning more of your remaining wealth goes where you want it to.

You can make one-off donations, set up regular contributions, or leave a charitable bequest in your will. Some people also choose to establish charitable trusts to support specific causes over the long term. However you choose to give, it’s a great way to ensure that your wealth has a lasting impact beyond your lifetime.

Is it worth setting up a trust?

If you want to ensure that your gifts are used for a specific purpose, there are ways to put safeguards in place. While giving directly to an investment product like a Lifetime ISA or Junior ISA helps direct funds toward long-term savings goals, you might prefer to earmark money for something more specific, such as university fees or a future wedding. In these cases, setting up a trust could be a good option, as it allows you to control when and how the money is accessed. A qualified financial adviser can help you establish the right structure for your gifts, ensuring they’re distributed according to your wishes. Trusts can also offer additional IHT benefits, depending on how they’re set up.

Again, as with all the information in this guide, planning for the run-up to retirement can be a complex, time-consuming and – at times – mind-boggling task. If in any doubt, or even if you just want a professional to double-check your working, make sure to reach out to a qualified financial adviser to help you iron it all out.

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[1] Office for National Statistics, April 2024

[2] Office for National Statistics, April 2024