The top 5 things to do with your money in your 60s.
The top 5 things to do with your money in your 60s.
If your 50s are for making the final preparations to retire, your 60s are about finally retiring and making the most of your new life. These are our top 5 recommendations for what to do with your money in your 60s.
1. Find out exactly what your retirement income will be.
If you have spent decades saving for retirement, you should have an idea of how much income your capital will be able to produce (or possibly not). Once you are into your 60s and it’s time to start accessing that capital, it is a great idea to sit down with your financial adviser and make a plan for the income. There are many options to choose from, depending on your individual circumstances and could include anything from lump-sum withdrawals and fixed income products to stock market dividends and income funds.
One of the most important considerations is the preservation of capital as you may need to allow for the costs of long term care in the future or perhaps you wish to leave a capital sum for your loved ones in the future. A financial adviser will be best placed to help you work out a suitable drawdown programme to ensure that your capital will last. You can use our Life Expectancy Calculator to get an idea of how long your retirement fund will need to last.
As ever though, things are never 100% simple. For example, your drawdown strategy may change if you decide to stop working in your early 60s before any state pension becomes available in your late 60s. What’s important though is that you have a clear idea of how much income you will have versus what you need.
2. Plan out your future capital needs.
As part of establishing your retirement income, your financial adviser will ask you if you have any big capital expenditure planned over the next few years. This may include a wedding gift, helping out a family member with a house deposit, buying a new car or going on a world cruise.
Once you have made a plan for retirement with a known capital sum, large withdrawals of cash could severely impact your ability to retain the overall capital value or reduce the level of income you receive each month. So think long and hard before making any decisions and work with your financial adviser to plan out any major capital expenditure in retirement.
3. Make a monthly retirement budget and regularly review it.
Once you have an income and capital plan, the next thing to do is make sure you have a budget and then stick to it each month. Just as you may have done when employed, it’s always worth setting funds aside each month for holidays, emergencies and motoring costs so that you can avoid going into debt and reducing your disposable income each month.
Essentially, money-in should always be greater than money-out and you should still be able to set some money aside each month. You can read our article on how to create a budget and then use our budget planning tool to easily create a household budget for your retirement. We also have an article that includes a guide to the income you will need in retirement, which will really help you to put some figures together.
What to do if the number just don’t add up?
Life can throw all sorts of curveballs at us and it may often be the case that a pension fund just doesn’t create enough income. We speak at length on a blog about side hustles (formerly known as part-time jobs!) that are a great way of earning extra money each month. Not only that, they are a great way to add purpose to your retirement and, depending on what you do, it may also allow you to get involved in things you weren’t able to before.
Have a look at our article on how a side hustle could change your life for some ideas on how to get started.
4. Review your legacy plans.
As you enter retirement, it’s a great time to review your legacy plans and face some of the harder questions in life. We’ve written an article on why we all need a Legacy Folder and what needs to be included. As a quick recap, everyone should have a Legacy Folder that includes all the key documents and information a friend or relative will need to administer your estate when you are gone.
Your Legacy Folder will need to contain:
Covering letter
Medical preferences
Final wishes and funeral plans
Will
Final letters to your loved ones
Details of insurance policies
Financial account details
Tax accounts
User names and passwords
It’s a bit of a depressing topic, but perhaps you could choose a rainy day outside to sit down and sort it all out. Many of our clients feel so much happier when they have as it gives great peace of mind.
5. Invest in a hobby.
With more time on your hands in retirement, it is crucial that you have a focus for your days. Whether you finally buy that classic sportscar to restore, renovate your house or travel the world, you’ve spent decades waking up to the alarm clock to go out and do a job and there’s a lot of time to fill each day. Your retirement is the perfect time to spend your time doing exactly as you wish, with the people that you care about.
Hobbies don’t need to cost much either; you can join walking groups, cookery clubs, volunteer at a National Trust house or garden - the list really is endless and getting out of the house a few days each week will help you to meet new friends and give you a sense of purpose each day.
Conclusion.
Your 60s are when all those decades of diligent planning and saving finally come into their own. It’s time to set your financial plans in place, get on top of your budget, make any big capital investments you may need and try new things.
What’s next?
If you need advice on pensions or how you can invest for the future, you can get in touch with one of our advisors for independent financial advice. We offer a free initial consultation and although we are based in Tunbridge Wells, we advise clients across the UK.
Don’t forget, this article offers information about financial planning and investing and should not be taken as personal advice. Remember that investments and pensions can go up and down in value, so you could get back less than you put in. Tax rules can change and the benefits depend on individual circumstances.