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Financial Planning After 60: What You Need to Review (UK)

· 16 min

Note: The following scenario is fictional and used for illustration.

Margaret, 62, always assumed she'd sorted her finances. She'd paid into her workplace pension for 30 years and owned her home outright. But when her sister suddenly passed away at 64, leaving behind a complicated estate and an outdated will from 1998, Margaret realized she needed to take stock.

Her pension provider estimated she'd get £18,000 annually, but she'd never calculated what she'd actually need. Her will was written before her second marriage and didn't mention her grandchildren. She had no lasting power of attorney.

According to the Pensions and Lifetime Savings Association, a single person needs £13,400 annually for a minimum retirement lifestyle in 2025—but 41% of people aged 40-75 have "no idea" how much income they'll need in retirement.

This article provides a comprehensive financial planning checklist for anyone aged 60 or over, covering pensions, inheritance tax, estate planning, healthcare costs, and the crucial decisions you need to make now.

Table of Contents

Why Financial Planning at 60 Is Different

Financial planning in your 60s requires making irreversible decisions that will affect you for the next 20-25 years. Males aged 66 live 19.2 more years on average; females 21.8 years, according to 2025 projections. This isn't theoretical planning anymore—it's practical action.

The decisions you make now become permanent. Once you take a pension lump sum, choose an annuity over drawdown, or gift assets for inheritance tax planning, you can't easily reverse these choices. This decade transforms retirement from "someday" to "now."

Private pensions become accessible from age 55, rising to 57 in April 2028. The State Pension starts at 66, rising to 67 between 2026 and 2028. You're entering the window where you must decide whether to access pension funds early or wait.

The median expected retirement age is 66, but the median desired age is 60—44% expect to retire before State Pension age. Yet 45% of fully retired people only started planning in their 50s, with just 21% starting earlier. Many start too late.

Estate complexity intensifies in your 60s. You've likely accumulated significant assets—property that's appreciated substantially, pension pots from multiple employers, savings and investments. The number of people aged 85+ is expected to increase by 189% over the next 50 years, from 1.8 million to 5.1 million by 2075. Long-term care planning isn't optional.

Confidence in retirement lifestyle has dropped significantly. The mean confidence score fell from 5.8 out of 10 in 2020-21 to 4.7 out of 10 in 2024. This anxiety stems from uncertainty about whether savings will stretch far enough.

David, 61, assumed he'd work until 66. When his employer offered voluntary redundancy with a £45,000 package, he had 48 hours to decide. Without clear knowledge of his pension options, State Pension forecast, and income needs, he couldn't evaluate whether early retirement was viable. Having this knowledge before decisions arise is critical.

Some options carry deadlines. Topping up your State Pension by filling National Insurance gaps typically has a six-year window. Missing these deadlines can cost thousands in lost retirement income.

Review Your Pension Options and Income Sources

Understanding every pension source you have is your first priority. 75% of people aged 40-75 have a private pension, and many have multiple pots from different employers they've worked for over decades.

Private and workplace pensions can be accessed from age 55, rising to 57 from April 2028. You can take 25% as a tax-free lump sum, with the remaining 75% taxed as income. This flexibility was introduced in 2015 through pension freedoms.

Your State Pension becomes payable at age 66, rising to 67 between 2026 and 2028. The full State Pension for 2025-26 is £230.25 per week, which equals £11,973 annually.

You have several options for taking your private pension income. An annuity provides guaranteed income for life but offers no flexibility once purchased. Drawdown allows you to take flexible amounts while your pot remains invested, but carries investment risk and requires management. You can leave your pension invested if you have other income sources, or take full cash withdrawal (though 75% will be taxed, potentially at 40% or higher rates).

Use the government's Pension Tracing Service to find old pensions from previous employers. Many people have lost track of small pots worth thousands of pounds.

Consider booking a Pension Wise appointment—a free government service for anyone over 50. Call 0800 138 3944 to arrange your session. An impartial guidance specialist will help you understand your options.

Don't access your pension just because you can. Withdrawals are irreversible. Taking money out early could leave you short in later years when you can no longer work.

Beware pension scams promising "early access" before age 55. These are almost always illegal and result in a 55% tax charge from HMRC, plus the loss of your pension savings to fraudsters.

Consider tax implications carefully. Taking a large lump sum in one tax year could push you into a higher tax bracket. Spreading withdrawals across multiple years might save thousands in tax.

Here's a comparison of your main options:

Option Pros Cons Best For
25% tax-free lump sum + annuity Guaranteed income for life, simplicity, no investment risk No flexibility once purchased, inflation risk unless indexed, lower income if you die early Those wanting certainty, no investment management burden, poor health (get higher rates)
Pension drawdown Flexibility to adjust income, potential growth from investments, can pass remaining pot to beneficiaries Investment risk, could run out, requires active management, no guaranteed income Those comfortable with investment risk, want flexibility, have other guaranteed income
Leave invested Pot continues growing, preserve all options, pension death benefits favorable No immediate income, market risk, inflation erodes buying power if not growing Those with other income sources, good health, want to maximize estate
Full cash withdrawal Immediate access to all funds, clear out small pots 75% taxed as income (could be 40%+ rate), pot depleted immediately Emergency situations only or very small pots under £10,000

Emma, 60, has three pension pots: £85,000 from her first employer, £120,000 from her second, and £65,000 from her current workplace. She didn't realize she could consolidate these or that each charges different annual fees—0.5%, 1.2%, and 0.7% respectively.

By consolidating into one low-cost drawdown option at 0.4% annually, she could save over £900 per year in fees. Over a 20-year retirement, that's more than £18,000 saved—money that stays invested and continues growing for her.

Protected pension ages apply to some schemes. If you're in the armed forces, police, firefighters, or have protected rights from before November 2021, you may be able to access your pension before age 55. Check your specific scheme rules.

Check Your State Pension Forecast and National Insurance Record

Your State Pension forms the foundation of your retirement income. A full State Pension requires 35 qualifying years of National Insurance contributions. You need a minimum of 10 qualifying years to receive anything at all.

Check your forecast immediately at gov.uk/check-state-pension. You'll need a Government Gateway login. The forecast shows what you'll get with your current record, what you'd get at State Pension age if you continue contributing, and how to increase it.

Gaps in your National Insurance record can occur from years not working, self-employment with low profits, living abroad, or taking time off for caring responsibilities that weren't properly recorded.

You can pay voluntary contributions to fill gaps. This typically costs £824 per qualifying year for 2025-26, though you should verify the current rate. Each qualifying year you add increases your State Pension by roughly £6 per week, or £312 per year.

Generally, you can only go back six years to fill gaps. However, special rules existed post-2016 allowing longer look-back periods. Check your specific situation on the government website.

Your forecast is personal to you. The full State Pension of £11,973 annually falls short of even the minimum living standard of £13,400 for a single person. You'll need additional income from private pensions or other sources.

National Insurance credits are available in certain circumstances. If you're caring for someone, unemployed and claiming qualifying benefits, or doing jury service, you may receive credits automatically. Check whether you're receiving all credits you're entitled to.

Under the new State Pension system (for those reaching State Pension age after 6 April 2016), you can't inherit your spouse's full State Pension. However, some inheritance from the old system may apply if you or your spouse paid in before 2016.

If you delay claiming your State Pension past State Pension age, it increases by 1% for every nine weeks deferred—equivalent to 5.8% per year. This can be valuable if you're still working or have other income sources.

James, 63, checked his State Pension forecast and discovered he'd only receive £9,200 annually instead of the full £11,973. He had 27 qualifying years instead of the required 35. Five years were missing because he worked abroad, and three years showed low profits during self-employment.

By paying £4,120 in voluntary contributions for those five missing years (5 × £824), he could increase his State Pension by £1,560 per year. Over a 20-year retirement, that's £31,200 in additional income—a 756% return on his investment. Few financial products offer such guaranteed returns.

Calculate How Much Income You'll Actually Need

Most people have never calculated their actual retirement income needs. This is a critical gap that leads to either over-saving (and unnecessarily restricting your current lifestyle) or under-saving (and facing financial stress in retirement).

The PLSA Retirement Living Standards for 2025 provide helpful benchmarks. For a single person, you need £13,400 annually for minimum, £31,300 for moderate, and £43,100 for comfortable. For a two-person household, the figures are £21,600 for minimum, £43,100 for moderate, and £59,000 for comfortable.

These standards assume you're mortgage-free or rent-free. If you still have housing costs, add these on top of the standard amounts.

The minimum standard covers basic needs plus some enjoyment—a UK holiday, eating out monthly, affordable leisure activities. The moderate standard provides more security and flexibility—an overseas holiday, long weekends in the UK, takeaway weekly, eating out a couple of times monthly. The comfortable standard adds extra spontaneity—more long weekends, day trips, and social activities.

Don't rely on guesswork. 41% of people aged 40-75 have "no idea" how much income they'll need in retirement. This uncertainty creates anxiety and poor planning.

Create a detailed retirement budget. List all expected costs: utilities, council tax, food, transport, leisure, holidays, gifts, home maintenance, buildings insurance, and healthcare (dental, optical, chiropody).

Costs often increase in early retirement. More leisure time means more spending on hobbies, travel, and entertainment. You're finally free to do things you've been deferring for decades.

Costs may decrease in later retirement as you become less active. However, healthcare costs typically rise. Budget for both phases.

Don't forget irregular expenses. Car replacement every 10-15 years, major home repairs (roof, boiler, windows), helping adult children with house deposits, contributing to grandchildren's education, family weddings, and funerals all require funding.

Healthcare costs matter even with the NHS. Prescriptions become free at age 60 in England (earlier in Scotland, Wales, and Northern Ireland), but you'll still pay for routine dental care, opticians, chiropody, and potentially private treatments the NHS doesn't cover.

Build in inflation of 2-3% annually. £13,400 today will need to be £18,000 in 15 years to maintain the same buying power. Your retirement could last 25 years or more.

Here's a realistic retirement budget for Sarah, a single person targeting a moderate lifestyle:

Housing costs: £3,000/year

  • £0 mortgage (paid off)
  • £1,200 buildings insurance
  • £1,800 maintenance fund (roofing, boiler, decorating)

Utilities and services: £2,400/year

  • Energy, water, council tax, broadband, phone

Food and household items: £4,800/year

  • £400/month for groceries and household essentials

Transport: £2,000/year

  • Car insurance, fuel, maintenance (no commuting costs)

Leisure and holidays: £8,000/year

  • One overseas holiday, UK breaks, cinema, meals out, hobbies

Clothing: £800/year

Gifts and charity: £1,500/year

  • Grandchildren's birthdays, Christmas presents, charitable donations

Healthcare: £600/year

  • Dentist, optician, chiropody not covered by NHS

Total needed: £21,900/year

State Pension: £11,973

Gap to fill from private pension: £9,927/year

If Sarah has a £200,000 pension pot, she could take £21,000 tax-free (25%), leaving £179,000 invested. At a 4% sustainable withdrawal rate, that provides approximately £7,160 annually. Combined with her State Pension of £11,973, her total income would be £19,133—still £2,767 short of her needs.

This calculation reveals Sarah needs either a larger pension pot, reduced spending expectations, or other income sources like part-time work or rental income.

Use the MoneyHelper budget planner to create your own detailed budget. Review your last 12 months of bank statements and credit card bills to see your actual spending patterns. Many people underestimate their real costs.

Add a 15-20% buffer for unexpected expenses. Retirement will bring surprises—some pleasant (spontaneous trips to visit grandchildren), others less so (emergency home repairs, helping family members financially).

Calculate for two phases: active retirement (60-75) with higher leisure spending, and later retirement (75+) with lower activity but higher care-related costs.

Clear Debts and Optimize Your Financial Position Before Retirement

Entering retirement with high-interest debt is financially devastating. Paying 15-40% interest on credit cards while drawing 3-5% income from your pension makes no mathematical sense.

Priority one: Clear all high-interest debt—credit cards, personal loans, car finance—before retiring. Use savings, bonuses, or pension lump sums strategically to eliminate these obligations.

Mortgages require careful consideration. Being mortgage-free by retirement is ideal, but if that's not possible, consider your options. Overpay aggressively while still working and earning. Downsize to a cheaper property to clear the mortgage entirely. Or extend the term, though this risks not clearing it before death, reducing your estate.

Over-50s hold around £5 trillion in property equity across the UK. This is often your largest asset, but it's illiquid unless you act intentionally.

Maximize tax-efficient savings while you still can. ISAs allow £20,000 per year in completely tax-free savings and investments. This is a use-it-or-lose-it annual allowance that doesn't roll over. Every year you miss is permanently lost.

Your investment strategy should shift as you approach retirement. Move from growth-focused equities toward income and stability—bonds, dividend-paying stocks, balanced funds. You can't afford a 30% market crash the year you retire. You no longer have time to recover from major losses.

Check for unnecessary expenses. Payment protection insurance you don't need, endowment policies paying into old mortgages, bank accounts with monthly fees you never use, subscriptions to services forgotten years ago.

Close or consolidate old accounts. Multiple bank accounts and credit cards complicate your financial life. Simplify now while you're capable of managing these changes.

Review all insurance. Do you still need life insurance once your mortgage is cleared and children are independent? Maybe, but for inheritance tax planning rather than income replacement. Term life insurance can fund the inheritance tax bill so your beneficiaries don't need to sell assets.

Shop around annually for home insurance, car insurance, and utilities. Loyalty rarely pays in modern markets. Switching can save hundreds of pounds yearly.

Consider National Savings & Investments (NS&I) Premium Bonds for your emergency fund. They're backed by the UK government, offer instant access, and prizes are tax-free. The average prize rate is currently 1.4%, though you're not guaranteed any return.

Use your £3,000 annual gift exemption for inheritance tax planning. You can give £3,000 per year to anyone without it counting toward your estate. If you're married, that's £6,000 combined. Over 10 years, that's £60,000 moved out of your estate completely.

Make pension contributions in your final working years if you're a higher-rate taxpayer. You get 40% tax relief on contributions. A £10,000 contribution only costs you £6,000 from your net income.

Michael, 61, has £8,000 in credit card debt at 21.9% APR. This costs him £1,752 annually in interest. He has a £185,000 pension pot.

His option: Use his 25% tax-free lump sum (£46,250) to clear the debt entirely, with £38,250 remaining. He invests this conservatively at 4%, generating £1,530 annually. He immediately saves £1,752 per year by eliminating interest payments.

The net benefit: Instead of paying £1,752 in interest, he's receiving £1,530 in investment income—a £3,282 annual swing in his favor. Over 20 years, this single decision saves him over £65,000.

Never withdraw from your pension just to give gifts to family members for inheritance tax purposes. Pension pots are usually inheritance-tax-free anyway when left to beneficiaries. Money is better inside your pension, where it grows tax-free and avoids inheritance tax, than gifted prematurely and spent.

Review Your Will and Estate Planning After 60

Your 60s is the most common decade for creating or significantly updating your will. Major life changes cluster in this period: retirement fundamentally shifts your financial picture, you may receive inheritances from aging parents, grandchildren are born, second marriages occur, and property downsizing releases equity.

If your will is more than five years old, it's almost certainly outdated. If it was written before retirement, it doesn't reflect your current asset values or how pension death benefits should be handled.

Asset values need reviewing. Has your property appreciated from £180,000 to £420,000? Have you accumulated additional savings or investments? Have you consolidated or accessed pension pots? All of these changes affect your estate planning.

Beneficiaries may have changed. New grandchildren born. Children divorced (should their ex-spouse benefit?). Charities you now support. Specific gifts of jewelry, heirlooms, or personal items that matter to you.

Executors require reassessment. Are your siblings still capable and willing? Have they moved far away or developed health problems? Would a professional executor be more appropriate for a complex estate?

Inheritance tax considerations become critical in your 60s. The nil-rate band is £325,000, and the residence nil-rate band is £175,000 if you're leaving your home to direct descendants. Combined, that's £500,000 for an individual or up to £1 million for married couples.

These thresholds are frozen until 2030-31, meaning inflation and property price increases are dragging more estates into the inheritance tax net. An estate worth £450,000 that was below the threshold 10 years ago may now exceed it due to property appreciation alone.

Ensure your will structure uses these allowances efficiently. Nil-rate band discretionary trusts can be appropriate in some situations. Residence nil-rate band claims must be correctly documented. Spouse exemption should be used strategically.

Have you nominated beneficiaries for your pension? This is separate from your will. You must complete a beneficiary nomination form with your pension provider. Without this, the provider decides who receives your pension pot.

Joint property ownership affects inheritance. If you own property as "joint tenants," it passes automatically to the surviving owner regardless of your will. If you own as "tenants in common," your share passes according to your will. This matters particularly in second marriages.

Consider life interest trusts if you're in a second marriage and want to provide for your current spouse while protecting your children's inheritance from your first marriage. These trusts allow your spouse to live in your property or receive income from your estate during their lifetime, with the capital passing to your children after.

Review funeral wishes, organ donation preferences, and digital assets. Who should inherit your photographs, social media accounts, and online storage? These are increasingly valuable and personal.

Executor choice matters enormously. You need someone trustworthy, organized, and capable of handling financial and legal matters. Consider appointing a professional executor if your estate is complex or family relationships are difficult.

Several strategies can reduce inheritance tax:

Gifting: Use your £3,000 annual exemption. Make unlimited gifts from income if they don't reduce your living standard. Give small gifts of £250 per person per year to as many people as you like.

Seven-year rule: Larger gifts become completely free of inheritance tax after seven years. Taper relief applies between three and seven years if you die during this period.

Spending: Simply enjoying your money reduces your estate size. Spending on holidays, experiences, and your own quality of life is perfectly sensible and inheritance-tax-efficient.

Pension death benefits: Pensions usually pass outside your estate, avoiding inheritance tax entirely. Before age 75, beneficiaries receive pension pots tax-free. After age 75, they pay income tax but not inheritance tax.

Life insurance in trust: A policy written in trust pays out directly to beneficiaries without forming part of your estate. This can fund the inheritance tax bill without forcing beneficiaries to sell the family home.

Patricia, 64, wrote her will in 2003 when her home was worth £180,000. It's now worth £420,000. She has £110,000 in savings and a £95,000 pension pot. Her total estate: £625,000.

Her will leaves everything equally to her two children. The problem: Her estate exceeds the combined nil-rate band and residence nil-rate band of £500,000 by £125,000. At 40%, that's a £50,000 inheritance tax bill.

By making annual gifts of £3,000 to each child (£6,000 total per year) and using her pension to fund retirement spending (reducing savings), she could bring her estate below the inheritance tax threshold within five years. This strategy saves her children £50,000.

Your will isn't just about who inherits—it's a sophisticated tax planning tool. Proper structuring can save tens of thousands of pounds in inheritance tax.

Set Up Lasting Powers of Attorney While You Have Capacity

A lasting power of attorney (LPA) is a legal document allowing someone you trust to make decisions about your finances or health if you lose mental capacity. This isn't theoretical planning for distant old age—it's practical protection that could become essential tomorrow.

Over 1.3 million LPA applications were made in 2023-24, representing a 28% increase from previous years. More people understand how critical these documents are.

Over 1 million people in the UK are projected to have dementia by 2025. Strokes, accidents, and sudden illness can remove capacity at any age. Without LPAs in place, your family faces expensive and time-consuming court processes.

Timing is absolutely critical. You must create LPAs while you have mental capacity. Once you've lost capacity—even temporarily—it's too late. Your family would need to apply for Court of Protection deputyship, which costs £800+ just to apply, takes six months or longer, and requires annual supervision fees of hundreds of pounds.

There are two types of LPA. The Property and Financial Affairs LPA allows your attorney to manage your money, property, bills, and investments. The Health and Welfare LPA covers medical treatment decisions, care home placement, and life-sustaining treatment choices.

The cost is £92 per LPA from November 2025, increased from £82. That means £184 total for both types—a small price for essential protection.

Processing takes an average of 48 days, including a mandatory 28-day cooling-off period. Plan ahead. Don't wait for a crisis.

55,053 LPA applications were rejected in 2025, costing families approximately £5 million in lost fees. Most rejections result from technical errors—signatures not dated correctly, information in wrong sections, improper witnessing.

Choose your attorneys carefully. They must be at least 18 years old, trustworthy, organized, and genuinely willing to act. Consider appointing a professional attorney if no suitable family member exists.

Appoint replacement attorneys. If your first choice can't act—because they die, lose capacity themselves, or simply refuse—you need alternatives named in advance.

The Property and Financial Affairs LPA can be used immediately if you choose, or only when you lack capacity. Many people register it but keep it for emergency use. The Health and Welfare LPA can only be used once you lack capacity.

Include preferences and instructions in your LPAs. How do you want attorneys to act? What's important to you? Do you want to remain in your home as long as possible? Are there family members who should be consulted about major decisions?

Register your LPAs before you need them. Processing takes six to eight weeks. Don't wait until you're facing surgery or declining health.

Common rejection reasons include signatures not dated correctly, information written in the wrong section, witnesses not meeting requirements (they can't be attorneys or family members of attorneys), and forms not completed in the correct order.

Linda, 68, suffered a stroke that temporarily prevented her from communicating. She had no LPA in place.

Her husband couldn't access her bank account to pay bills. He couldn't make decisions about her medical treatment. He couldn't sell their jointly-owned property to fund adapted care. He couldn't even speak to her doctors about her condition due to medical confidentiality.

He had no choice but to apply for Court of Protection deputyship. The application cost £800, took six months to process, and requires annual supervision fees of £800. During those six months, bills went unpaid and critical decisions were delayed.

An LPA would have cost £184 and solved everything immediately. Linda's stroke occurred without warning—exactly why these documents must be in place while you're healthy.

Set up both types of LPA (Property and Financial Affairs plus Health and Welfare). Use the government online service or paper forms if you prefer.

Tell your attorneys and family where your LPAs are stored. Registered LPAs are recorded by the Office of the Public Guardian, but physical copies should be accessible.

Review your LPAs every five years or after major life changes—divorce, an attorney dying, relationship breakdown with an attorney, or moving to residential care.

Plan for Healthcare and Long-Term Care Costs in Retirement

The NHS provides free healthcare at the point of use for UK residents, covering GP appointments, hospital treatment, and emergency care. However, many costs aren't covered, and long-term care represents the largest financial risk most retirees face.

Prescription charges become free at age 60 in England. They're already free in Scotland, Wales, and Northern Ireland regardless of age. But you'll still pay for routine dental care, optical services, chiropody, and hearing aids unless you meet specific criteria for NHS provision.

Budget £600-£1,200 annually for private healthcare that the NHS doesn't cover—regular dental checkups, new glasses, chiropody, and over-the-counter medications.

Private medical insurance becomes expensive at 60+, typically costing £1,000-£3,000 or more annually. Insurers often exclude pre-existing conditions. Evaluate whether the cost justifies the benefit for your circumstances.

Long-term care funding is the most expensive and most overlooked retirement cost. Nearly one in seven people in the UK is now over 75, and this proportion is set to rise sharply over the next two decades.

Average care home costs run £1,000-£1,500 per week—£52,000-£78,000 annually—for residential care. Nursing care costs more. Many people need care for two to five years. That's potentially £150,000-£300,000 from your estate.

Care funding is means-tested. If your assets exceed £23,250 in England (different thresholds apply in Scotland, Wales, and Northern Ireland), you pay full costs until your assets deplete to that level. Your home is included in the means test unless your spouse still lives there.

Social care is chronically underfunded. Local authorities have long waiting lists. Most people end up self-funding care entirely.

Protecting your home from care costs is challenging. If you need residential care and your spouse doesn't live in the property, it may need to be sold. Options include life interest trusts or property protection trusts, but these must be set up now, not after care needs arise. Retrospective asset transfers can be reversed by local authorities as "deprivation of assets."

Deferred payment agreements allow you to delay selling your home until after death. The local authority effectively loans you care fees, secured against your property. Interest accrues, reducing the inheritance for your family.

Attendance Allowance provides £72.65 per week (lower rate) or £108.55 per week (higher rate) if you're 65 or older and need help with personal care. This benefit is not means-tested—claim it even if you have significant savings. It's designed to help with care costs.

The average three-year care home stay costs £156,000-£234,000. This will consume most people's estates substantially. If leaving an inheritance matters to you, discuss expectations with family now.

Options include family members providing care instead of paid professionals, building a granny annexe for multigenerational living, downsizing to release equity specifically earmarked for care, or equity release to fund care costs while staying in your home longer.

Robert, 77, developed dementia and needed residential care costing £1,200 per week (£62,400 annually). His assets totaled £425,000: a £380,000 house and £45,000 in savings. He had to pay full care costs with no local authority support.

After five years in care, he'd spent £312,000 on fees. His estate was worth £113,000. His two children had expected to inherit around £200,000 each. They'd never discussed care costs or planned for this scenario. The inheritance they counted on had vanished.

Research local care home costs even if you don't expect to need care soon. Knowledge is power. Understanding realistic costs helps you plan.

Claim Attendance Allowance if you're eligible (65 or older and need help with personal care). Many people don't realize they qualify.

Consider care home fee payment plans or insurance products, though options are limited and expensive in the UK. Some people find peace of mind worth the cost.

Discuss expectations with family openly. Talk about willingness to provide care, inheritance priorities versus care funding, and what quality of care matters to you.

Include care planning in your will. Life interest trusts can protect some assets while still providing for your spouse. Professional advice is essential for complex care planning.

Consider Property Decisions: Downsizing vs. Equity Release in Later Life

Over-50s hold around £5 trillion in property equity across the UK. For many, property represents their largest asset—yet it's completely illiquid unless you take action.

You have two main options to access this wealth: downsize by selling and buying a smaller property, or equity release by borrowing against your home's value.

Downsizing offers several advantages. You release substantial equity to boost retirement income. You reduce ongoing costs—energy bills, maintenance, council tax. Managing a smaller property becomes easier as you age. You might move closer to family.

However, downsizing has significant disadvantages. Stamp duty costs buyers on properties over £125,000 in England. Moving costs include solicitors, estate agents (typically 1-2% of sale price), and removals. Emotional difficulty leaving the family home can be profound. Finding suitable smaller properties in your preferred area may prove impossible.

The equity release market saw homeowners extract 32% more wealth in Q1 2025 than the previous year. In Q4 2025, over 15,000 customers unlocked £622 million, a 16% increase year-on-year.

The average equity release customer is age 69, with an average home value of £319,809, borrowing 18.9% of their property value initially.

Equity release advantages: You stay in your home. No monthly repayments required. You receive a tax-free lump sum or regular income. You still own your home and can leave it to beneficiaries (minus the debt).

Equity release disadvantages: Interest compounds because you make no monthly repayments, so debt grows substantially. Your inheritance reduces significantly. Early repayment charges apply if you change your mind. Your eligibility for means-tested benefits may be affected. Setup costs run £2,000-£3,000.

The dominant motivation for equity release in 2025 is mortgage repayment, reflecting the burden of monthly costs for retirees who didn't clear their mortgages before retirement.

Other common uses include debt repayment, supporting family financially, home improvements (stairlifts, wet rooms, disabled access adaptations), and topping up insufficient pension income.

By 2040, 51% of homeowners aged 60 or older could benefit from accessing housing wealth, potentially drawing down £23 billion annually across the UK.

The key blocker remains lack of knowledge and social stigma—equity release isn't currently seen as a mainstream financial option despite its growing use.

Only use Equity Release Council member providers. They offer crucial consumer protections: no negative equity guarantee (you'll never owe more than your home's value), the right to remain in your home for life, and fixed or capped interest rates.

Get independent financial advice before proceeding. Equity release is complex and expensive. Professional guidance ensures you understand all implications.

Consider alternatives before committing. Could you downsize instead? Could you improve your home's accessibility (wet room, stairlift, ground-floor bedroom) and stay longer without releasing equity?

Here's a comparison:

Factor Downsizing Equity Release
Upfront costs High (stamp duty, estate agents, moving costs, solicitors) Medium (advice fees £2,000-£3,000, valuation, legal costs)
Ongoing costs Lower (smaller property means less maintenance, energy, council tax) Interest compounds continuously (debt grows if not repaid)
Inheritance impact Equity released upfront, can be gifted to family immediately Debt reduces inheritance significantly over time
Flexibility Can move anywhere, full control of released equity Must stay in this property, early repayment charges apply
Emotional impact Difficult leaving family home and familiar area Stay in familiar home with neighbors and community
Best for Those ready to move, wanting lower running costs, who can find suitable property nearby Those determined to stay in current home, need income top-up, comfortable with growing debt

Sheila, 66, owns a £400,000 home mortgage-free but has only £14,000 annual pension income. She's considering her options:

Option 1—Downsize: Sell for £400,000, buy a £250,000 bungalow nearby. Costs: £2,500 estate agent fees, £7,500 stamp duty, £3,000 moving costs, £2,000 solicitors = £15,000 total. Net equity released: £135,000. Invested conservatively at 4%, this generates £5,400 per year. Total income: £19,400.

Option 2—Equity release: Borrow £100,000 (25% of property value) at 5.5% fixed rate. Setup costs: £3,000. Net received: £97,000 to invest. At 4% return, she receives £3,880 annually. However, her debt grows. £100,000 at 5.5% compounding becomes approximately £210,000 after 15 years, substantially reducing her estate.

Option 3—Do nothing: Manage on £14,000 annually, leave the full £400,000 estate to family.

Sheila's decision depends on her priorities: income needs now versus inheritance preservation, willingness to move versus attachment to her home, and health and mobility (a single-story bungalow may be easier long-term).

Frequently Asked Questions

Q: What are the most important financial priorities after age 60?

A: The most important priorities are reviewing your pension options (you can access private pensions from age 55, rising to 57 in 2028), checking your State Pension forecast, clearing debts before retirement, updating your will and lasting power of attorney, and ensuring you have adequate healthcare and care funding provisions. With life expectancy at 66 now around 19-22 years, thorough planning is essential.

Q: How much income do I need for retirement in the UK?

A: According to the Pensions and Lifetime Savings Association's 2025 Retirement Living Standards, a single person needs £13,400 annually for a minimum lifestyle, £31,300 for moderate, and £43,100 for comfortable. The full State Pension provides £11,973 per year (2025-26), so most people need additional private pension income to meet even minimum standards.

Q: Should I access my pension at 60 or wait until State Pension age?

A: This depends on your circumstances. You can access private pensions from age 55 (rising to 57 in 2028), taking 25% tax-free. However, accessing too early can reduce your long-term income. The State Pension starts at 66 (rising to 67 by 2028). Consider your health, other income sources, and how long your pension needs to last—potentially 20+ years.

Q: Do I need to update my will after 60?

A: Yes, absolutely. Major life changes common in your 60s—retirement, receiving inheritances, downsizing property, grandchildren being born—all require will updates. If your will is over 5 years old or written before significant life changes, it needs reviewing to ensure it reflects your current wishes and maximises inheritance tax allowances.

Q: What is inheritance tax and how can I reduce it?

A: Inheritance tax is charged at 40% on estates over £325,000 (nil-rate band), or £500,000 if leaving your home to direct descendants. Married couples can combine allowances for up to £1 million tax-free. Strategies to reduce IHT include making gifts (£3,000 annual exemption), spending down assets, setting up trusts, and ensuring your will is structured to use all available allowances.

Q: Should I downsize my home in retirement?

A: Downsizing can release property equity to boost retirement income and reduce maintenance costs. However, consider stamp duty costs (buyers pay on properties over £125,000 in England), moving costs (solicitors, estate agents, removals), emotional attachment, proximity to family, and whether alternative options like equity release might be more suitable. Over-50s hold around £5 trillion in property equity across the UK.

Q: What is a lasting power of attorney and why do I need one?

A: A lasting power of attorney (LPA) allows someone you trust to make decisions about your finances or health if you lose mental capacity. Over 1.3 million LPA applications were made in 2023-24. Setting one up costs £92 per LPA (from November 2025) and should be done while you have full capacity—waiting until after capacity is lost is too late.

Conclusion

Key takeaways:

  • Review all pension sources now: Get statements from every provider, check your State Pension forecast at gov.uk/check-state-pension, and calculate your combined income against the PLSA Retirement Living Standards to identify any shortfall.
  • Update your will if it's over 5 years old: Retirement, grandchildren, property value changes, and inheritance tax planning all require your will to reflect your current situation and maximize available allowances.
  • Set up lasting powers of attorney immediately: Both types (Property and Financial Affairs, Health and Welfare) cost £184 total and must be created while you have capacity—waiting until after a health crisis is too late.
  • Calculate a realistic retirement budget: Use the MoneyHelper budget planner, include healthcare costs, add a 15-20% buffer for unexpected expenses, and remember the State Pension alone (£11,973) falls short of even minimum living standards (£13,400).
  • Make property decisions thoughtfully: Whether downsizing or considering equity release, get independent financial advice and involve family in discussions about inheritance expectations versus current income needs.

Financial planning in your 60s isn't about restrictions—it's about freedom. When you know your pension will cover your needs, your will protects your family, and your lasting powers of attorney are in place, you can enjoy retirement without the anxiety that kept Margaret awake at night. The peace of mind from thorough planning is worth far more than any investment return.

Need Help with Your Will?

Now that you understand your full financial picture—pension income, asset values, inheritance tax implications, and care costs—it's time to ensure your will reflects this reality. If your will was written before retirement or more than 5 years ago, it likely doesn't maximize your nil-rate band, account for your current asset values, or reflect your wishes for how your estate should support your family.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete will (legally binding when properly executed and witnessed) plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer: This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

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