Financial planning in your 70s: Your guide to post-retirement money management
By Boring Money
13 Feb, 2025
Reaching your 70s is a significant milestone - one that brings both newfound freedom and fresh financial responsibilities. By now, you've spent decades building your wealth and planning for retirement, but managing your money doesn’t stop here. In fact, this decade is all about finding ways to make your money work harder for you. You want to achieve financial stability while also enjoying the lifestyle you've saved up for over a lifetime.
Reaching your 70s is a significant milestone - one that brings both newfound freedom and fresh financial responsibilities. By now, you've spent decades building your wealth and planning for retirement, but managing your money doesn’t stop here. You want to achieve financial stability while also enjoying the lifestyle you've saved up for over a lifetime.
If you’re in your 70s, you’ve likely been retired for a number of years already. The average age of retirement in the UK has been steadily rising since the 1980s, with both men and women now retiring on average at the age of 64 – just a handful of years before the State Pension kicks in (currently 66). Women's retirement age, in particular, has increased recently, rising by seven years in the last 3 decades alone.[1]
Those in their 70s who have fully retired may be living off their retirement savings, while those who’ve chosen to continue working may be supplementing part-time income with some of their pension income. Or perhaps you’re one of those folk still full-time employed!
Either way, managing your finances in your 70s and beyond is rather different than earlier in life. It’s all about maximising what you’ve got, learning to live within your means, and planning ahead to make things easier for your loved ones when you’re no longer around. With all this in mind, here’s a quick start guide with some vital steps to getting the most out of your finances if you’re aged 70 or older.
1. Maximise your income
Match your investments to your needs
This is particularly relevant to those who have opted to go down the pension drawdown route, whereby some of your retirement savings remain invested until you trigger a withdrawal.
You don’t need to be checking the markets every day, but it’s worth making sure that the mix of investments left in your pension are still relevant for your age and ambitions. Your seventies are typically your peak bucket list years, so you may want to focus on income-generating investments, for example. Equity income funds focusing on companies with higher dividend payments can be a good option. Infrastructure or commercial property are other possible options.
Those in their 70s will also want to minimise volatility and risk with their investments. You don’t want to end up in a situation where the stock market takes a tumble, your pension plummets in value and you end up losing thousands just as you need to withdraw your funds. Though there is always a degree of risk when it comes to investing, older investors should consider prioritising low risk assets such as bonds, money market and equity funds, and cash-like products in their portfolio to limit the damage should markets crash.
Consider some part-time/freelance work
Continuing part-time or freelance work in your 70s can offer several advantages beyond supplementing your income. Engaging in work provides mental stimulation, a sense of purpose, and opportunities for social interaction, all of which contribute to overall well-being. Moreover, the additional income can help preserve your savings, allowing for greater financial flexibility.
In the UK, the trend of working later in life is notable. As of April to June 2022, there was a significant increase in employment among individuals aged 65 and over, driven primarily by part-time roles. Part-time employees in this age group increased by 17.7%, while part-time self-employment rose by 28.7%.[2]
Make sure to claim all available benefits
Beyond your State Pension, there are additional state-funded benefits out there that can help boost your income in retirement and beyond.
Pension Credit is an important one, but you may also be entitled to Attendance Allowance if you have a long-term illness or disability, and a Council Tax Reduction if you have a low income. Additionally, you may qualify for help with heating costs through the Winter Fuel Payment or Cold Weather Payment. These benefits are not always automatically applied, so it’s worth checking with the government website or Citizens Advice to see what you can claim.
Even if you feel comfortable with your retirement income, it’s a good idea to see what you may be entitled to should your circumstances change in the future. Check out the article below to see a list of benefits retirees can claim, including eligibility criteria and helpful links to get you started.
Don’t withdraw too much, too soon
One of the biggest risks in retirement is withdrawing too much from your pension or savings too early. Many people underestimate their life expectancy, leading to financial shortfalls later in life.
A common guideline is to withdraw no more than 4% of your pension pot each year to sustain your income over the long-term. There is a concept called “mortality drag” (not as horrible as it sounds) which refers to the idea that the longer you live, the longer you are likely to live. So a 60 year old might have a life expectancy of 85 and will plan their finances accordingly, while a 70-year-old may be more likely to live to 90. As such, your finances need to be a bit flexible.
Keeping a close eye on your spending, having a realistic budget, and reviewing your withdrawals regularly can help prevent running out of money in later years. Consider speaking to a financial adviser about “cashflow analysis”, which will help you to understand how you can split your retirement savings across your estimated lifespan to ensure it sustains your lifestyle without abruptly running out.
2. Pin down your inheritance plans
Decide how to divide your assets
No one likes to contemplate death, but this is the time to start having conversations with your family about how you are going to divide your assets when you’re no longer around. They don’t say “the only certainties in life are death and taxes” for nothing. It may be better to have the arguments now than be cursed by your warring family from beyond the grave!
Remember, if you don’t have a will, the state will decide how your assets are dished out according to the rules of “intestacy”, so if you don’t have one already, get one set up with a financial adviser immediately. A well-structured will can also reduce the Inheritance Tax (IHT) bill on your estate, allowing you to pass on more of your wealth to your loved ones - rather than the taxman. It’sa no-brainer.
The Free Wills Month charity initiative takes place in March and October every year and gives anyone aged 55 and over the chance to have their will written or updated for free. Worth checking out if you need to get started or make adjustments.
Understand your Inheritance Tax status
If you haven’t already, 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, such as gifting.
Use your gifting allowance
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.
This can be a rewarding way of helping the ones you love while also minimising your future tax bill. For example, you may want to chip in to help your children or grandchildren with the cost of education, a house deposit, or just the rising cost of living with your gifting allowance. 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.
And gifting doesn’t just stop at immediate family. You can also leave a legacy behind to a chosen charity, allowing you to support causes you care about while also reducing your IHT 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 the standard 40% to 36% - meaning less of your remaining wealth goes to the taxman.
Inheritance Tax is notoriously complex, so if you’re unsure about anything or want an expert opinion, it’s wise to contact a qualified financial adviser to sense-check your decisions before you act.
3. Factor in the cost of care
Understand the potential costs
The statistics on care costs can be alarming. While estimates vary, the consensus suggests that around two-thirds of over 65s will need some form of care at some point in their life.[3] Horrifyingly, the average weekly cost of residential care if you are a self-funder is £1,160, while the average nursing home cost if you are funding your own care is £1,410 per week across the UK.[4]
You won’t necessarily have to pay for it all by yourself (the state will occasionally pick up some of the tab), but it is expensive if you do, so it is an eventuality worth considering – and the sooner, the better.
For most people, it’s not realistic to have a pot of £500,000 sitting around “just in case”. However, it is good to have an idea how you will pay for it if the time comes. That may involve pursuing equity release on your home, an insurance policy, letting out your main home to topping up your pension.Your local council may also be able to offer you some financial support towards the cost of your care, once you have received what's known as an “assessment of needs”.
Look into equity release
For homeowners, equity release can be a way to fund long-term care without selling up. By releasing equity from your home through schemes like lifetime mortgages or home reversion plans, you can access a lump sum or regular income without having to sell your property or move out.
While equity release offers financial flexibility, it's crucial to carefully consider the implications, such as reduced inheritance for beneficiaries and potential impact on means-tested benefits. Consulting with a financial adviser who specialises in later-life planning can help you make an informed decision that balances your care needs with your long-term financial security.
Consider long-term care insurance
Alternatively, long-term care insurance provides coverage for personal and medical care needs in later life, with policies typically offering benefits for care at home, assisted living facilities, or nursing homes. Those who purchase these policies in their 50s or 60s generally secure lower premiums, though coverage can still be obtained in your 70s – although typically with higher costs.
This insurance is designed to protect your retirement savings from being depleted by substantial care expenses. However, it’s worth browsing the market and comparing available options early, as you might be able to nab yourself a better deal today than if you wait around for another year or two.
Investigate potential benefits
Depending on your income and assets, you may qualify for financial assistance with care costs. Some local authorities provide means-tested funding for home care and residential care, and Attendance Allowance can help cover extra costs if you require help with daily activities. Always check eligibility criteria carefully and consider seeking guidance from an independent financial adviser if you’re not sure what options are available to you.
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[1] Phoenix Group, November 2024
