The top 5 things to do with your money in your 70s & beyond.

The top 5 things to do with your money in your 70s & beyond.

If your 60s are about getting to grips with retirement, finding out what your new life looks like and staying on top of your retirement income, your 70s and beyond are when you can settle in a rhythm and plan for the future. These are our top 5 recommendations for what to do with your money in your 70s and beyond.

1. Continue to review the risk of your investments.

Once you are into your 70s, you will likely have been retired for a while and you will have a handle on your income and your expenses. If the last couple of years have been anything to go by, the market can be volatile at times and those that were used to receiving dividends as an income stream will have been shocked to see how quickly companies cut their pay to shareholders in tough economic times. Additionally, the government also outlawed tenant evictions which may have exerted an even greater impact on landlords that relied on rental property as a source of income. These are both great illustrations of why you need diversification in your portfolio both in terms of the type of investments and the nature of the income received.

Nonetheless, all forms of investment are subject to risk. Typically one expects that the lower the interest rate on the investment is, the greater the security of income should be. However, a healthy person in their 70s may live for another 20-30 years, so there’s always the creeping erosion of inflation to stay ahead of. Indeed, at the time of writing, prices of everything from cars to fuel, homes and food are all steeply on the rise. As a result, gross annual returns need to be above 10% just to stay ahead of fees, charges and inflation.

With this in mind, you may wish to talk to your financial adviser about your portfolio and how switching the asset allocation between a mixture of fixed-income products to cover your living expenses and market investments for growth could keep your finances on track.

2. Talk to your Financial Adviser about reducing inheritance tax (IHT).

An unfortunate part of everyone’s financial plan should be to consider what you want to happen to your assets when you are gone - we’ve talked about creating a legacy plan in detail in previous articles. However, once you are into your 70s, depending on your state of health, it may be time to start taking action as certain activities are time-dependent.

Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died if the value of the estate is above the £325,000 threshold. Some of your options for reducing inheritance tax include leaving everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club, giving away cash gifts, utilising equity release products or purchasing various forms of life insurance - your Financial Adviser is best placed to review your situation and suggest tax-efficient solutions.

3. Keep your legacy plan up to date.

Following on from the above, if you and your Financial Adviser have made plans to reduce an inheritance tax liability, it’s important to keep your legacy plan updated to reflect the latest advice. This includes making sure your will is current, your lists of accounts is up to date and that your financial adviser is kept in the loop of any action you take outside of the agreed plan (such as giving cash gifts to your children that are above the allowances) as there may be a knock-on effect to other parts of your IHT plan.

Be sure to read our in-depth guide on legacy planning for more information.

4. Review your plans to fund healthcare services.

If you’ve been keeping an eye on the news, you will be well aware that NHS waiting lists are at an all-time high at 5.3 million people in May 2021 and a recent report from the Institute for Fiscal Studies considers whether the backlog could reach 13 million people as the backlog of appointments are processed. With a National Health Service that’s already under strain, anyone that has the means to go private probably should consider it as swift action often results in better outcomes.

NHS Waiting Lists.

Additionally, there is also the cost of long term care to consider, which itself can be hugely expensive. We’ve taken an in-depth look at the cost of care in another article, which should give you some idea of the financial implications of needing care in the future.

Whichever way you look at it, your health should be your number one priority as you reach your later years and having the financial reserves to tackle any health issues is often a better bet than saving every last penny in inheritance tax. Again though, your Financial Adviser is best placed to offer advice that’s pertinent to your individual circumstances.

5. Set some money aside for once in a lifetime experiences.

It’s important to remember though that retirement and later life is not all doom and gloom and that it’s important to live life to the full and do as many of the things that make you happy. This may even include setting some money aside for once in a lifetime experiences such as going on safari, taking a world cruise, hiring a Ferrari for a week or going skydiving. There’s no prize for accumulating the most and although any beneficiaries of your estate will be grateful for your gift, it’s often the case of ‘easy come, easy go’ and a large number of inheritances are squandered pretty quickly. If you spent your life working hard, saving diligently and living within your means you absolutely deserve to spend as much as you can enjoying yourself, once you’ve got items 1 to 4 in place.

Conclusion.

Financial matters in your 70s and beyond tend to start with an initial focus on estate planning, funding your healthcare and reducing risk in your portfolio so you can then live a fulfilling life and make the most of every day.

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 Well, 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.