Pension tips: What to do in your 60s
Following our posts on how to plan for retirement in your 20s, 30s, 40s and 50s, this entry looks at what can be done in your 60s.
Retirement may be on your mind as you enter your 60s, so this would be a good time to start considering what retirement option you'd like. An annuity promises a guaranteed income for life, and income drawdown lets you stay in control of your pension pot and pass it to beneficiaries as part of your estate. There are multiple options, and the big pension news this year was the March Budget, which announced new pension freedoms that come into effect in April 2015.
The Budget acknowledged that there is not a one-size-fits-all product for retirement, and different people will be better off with specific products. However, this also reaffirms the need for professional advice, to minimise the risk of choosing the wrong product and possibly losing a lot of money or being locked into an inappropriate annuity.
One of the big fears people in their 60s have is that their pension fund is too small. If you have never had a pension review, which can help to avoid this situation, then it is worth having one now, as there are still options to increase your retirement income. Whether it's saving aggressively for a few years, retiring later, deferring your State Pension (which currently grows by 10.4% for each deferred year, but will decrease to 5.8% from April 2016) or buying more State Pension if you're allowed, there are things you can do if you're worried your fund is too small.
There are also further options for women, as it used to be the norm for women to be stay at home mums or share their husbands' pensions. Changes in society and a higher divorce rate mean that this has put many women at a disadvantage. Women are more likely to work lower paid or part-time jobs, and take time out of work to look after young children, so they typically have smaller pensions than men. As we explained in part three of our Challenges Facing Women in Retirement series, married women that lack credits for a State Pension are able to claim up to 60% of their husband's pension, and widowers can claim the full 100%. Women that were denied access to a workplace pension can also claim for backdated pension rights through the Employment Tribunal, provided they claim either while still at the job or within six months of leaving.
A pension review will also tell you if it's also possible your fund will provide more than you anticipated, or how simple changes to your retirement lifestyle expectations can make the money go further.
If you do plan to retire in your 60s, the main thing to remember is that this is the time to enjoy the rewards of so many years of working and saving hard.
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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new
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