You may no longer have to retire at 65 – or even at 66, the new the retirement age – but when you have reached your sixties, retirement is probably now in sight, even if you have not crossed the line that marks the end of work and entry into a new life of leisure.
If everything has gone to plan with your pension and investments, you should be ready to concentrate on enjoying that life to the full. There are several ways to make your pension pot, and your investments provide the kind of secure income you need.
But you may not be ready to stop being an investor just yet.
Paying into your pension in your sixties
Of course, you will not want to take any risks at this stage, and you will probably want to ensure that your pension pot is managed for secure growth until you are ready to use it.
If you have not yet retired, and particularly if you feel that your pension pot is not as large as you would wish, it is time to top it up.
Remember, you can make up to £40,000 of total contributions (this is the annual allowance on which tax relief is allowed in tax year 2020/2021) to your pensions each year (assuming you earn £40,000 or more each year). You can make additional contributions if you have not used your full allowance in previous years. Remember, thanks to the very attractive tax relief provided by the government, it could be the most rewarding investment you ever make, and even a few years of saving into a personal pension now could make a big difference to the size of the pot you can call on to fund your retirement plans.
Check the performance of your company pension scheme, and if you not happy with the funds it offers, you may be able to use a personal pension to work alongside your employer’s plan to help your retirement prospects. Remember, retirement no longer has to be an all or nothing decision. You may want to cut down the number of days you spend at work, and you may need to look at how this will affect your income, and the amount you are able to put into your pension pot.
You should still be an investor
Retired or not, you should still probably be an investor. By the time you’re in your later 60s, retirement investing takes over and the priority is on income and protection.
Your investment goals will probably change from growth to a secure income. This can be easy to achieve and you can still use your £20,000 ISA entitlement (as per tax year 2020/2021) to avoid giving your money to the taxman.
Your investment needs may change, however. Growth may no longer be the objective, but income could be.
Even if your goal is now income rather than growth, with more and more people living well into their 80s and beyond, you may still need to grow your investments in retirement so you don’t risk running out of money.
As at every other stage of your investing life, expert advice will be essential.
What should you do?
At Continuum we have prepared an infographic on the different ages of investment here. It shows how your needs and solutions may change through life. We look at each stage in more detail in this series of articles, but we can help you find solutions for your investments or pension, whatever your age, and whatever your plans for the future.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.
The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.
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