At 60, retirement is either here or imminent. Whether you’re still working, recently retired, or planning your exit, this is when retirement planning becomes retirement reality. This guide covers everything you need to know about money at 60 in the UK.
Where You Should Be Financially at 60
Key Benchmarks
| Category | Target | Notes |
|---|---|---|
| Pension savings | 7x final salary | £350,000 if earned £50,000 |
| Net worth | 7x salary | Including property |
| Emergency fund | 12-24 months expenses | More conservative buffer |
| Mortgage | Clear or nearly clear | Ideally £0 by 60 |
| Debt | £0 | No debt at all |
At 60, you should have clarity on:
- Your sustainable retirement income
- How long your money needs to last
- Your State Pension entitlement
- Tax-efficient withdrawal strategy
The 7-Year Countdown to State Pension
State Pension Basics
| Factor | Details |
|---|---|
| Age | 67 (check your specific age at gov.uk) |
| Full amount | ~£11,500/year (2024/25, triple-locked) |
| Qualification | 35 years NI contributions |
| Minimum years | 10 years for any State Pension |
Check your forecast: gov.uk/check-state-pension
Filling National Insurance Gaps
If you have gaps in your NI record:
| Action | Cost | Benefit |
|---|---|---|
| Voluntary Class 3 contributions | ~£907/year (2024/25) | Increases State Pension |
| Each year added | Variable | ~£329/year pension |
| Payback period | ~3 years | Often highly worthwhile |
Deadline: You can usually fill gaps from the past 6 years. Current extension allows filling gaps back to 2006 until April 2025.
Retirement Income at 60
What Income Do You Need?
| Lifestyle | Annual Income | Monthly |
|---|---|---|
| Minimum | £14,400 | £1,200 |
| Moderate | £31,300 | £2,608 |
| Comfortable | £43,100 | £3,592 |
| Affluent | £60,000+ | £5,000+ |
PLSA Retirement Living Standards 2024, single person.
Building Your Retirement Income
| Source | Amount | When Available |
|---|---|---|
| Private pension drawdown | Variable | Now (from 55) |
| State Pension | ~£11,500/year | Age 67 |
| ISAs | Tax-free | Anytime |
| Workplace DB pension | If applicable | Scheme rules |
| Other savings/investments | Variable | Anytime |
Example: Retirement Income at 60 vs 67
£400,000 pension pot at 60:
| Phase | Strategy | Annual Income |
|---|---|---|
| 60-66 | Drawdown 4.5% | £18,000 |
| 67+ | Drawdown 3% + State Pension | £12,000 + £11,500 = £23,500 |
Note: Drawing more before State Pension means less later. Plan the transition.
See our pension drawdown guide.
Tax-Efficient Retirement Income
Personal Allowance Strategy
Take advantage of the tax-free personal allowance:
| Income Source | Tax Treatment |
|---|---|
| First £12,570 | Tax-free (Personal Allowance) |
| £12,571-£50,270 | 20% (Basic rate) |
| £50,271-£125,140 | 40% (Higher rate) |
Strategy: If not working, draw pension income up to personal allowance tax-free, then supplement from ISA (tax-free) if needed.
ISA First Strategy
| Phase | Strategy | Benefit |
|---|---|---|
| 60-66 | Draw from ISA | Tax-free, preserve pension growth |
| 67+ | State Pension + pension drawdown | ISA depleted or preserved |
Why this works: ISA withdrawals don’t affect your tax situation. Using ISA first allows pension to continue growing tax-sheltered.
Beware the 60% Tax Trap
If income exceeds £100,000:
| Income Level | Effective Rate |
|---|---|
| £100,000-125,140 | Up to 60% |
| Why | Personal allowance withdrawn £1 per £2 |
Solution: Keep income below £100,000 if possible, or accept the higher rate.
See our 60% tax trap guide.
Key Decisions at 60
1. Still Working or Retired?
| If Still Working | Considerations |
|---|---|
| Continue full-time | More contributions, delay drawdown |
| Reduce hours | Draw partial pension, work-life balance |
| Stop work | Begin full retirement phase |
Working beyond 60 benefits:
- Additional contributions
- Growth on existing pot
- Fewer years of drawdown
- Each year adds ~10% to retirement income
2. Drawdown or Annuity (or Both)?
| At Age 60 | Consideration |
|---|---|
| Drawdown preferred | Flexibility, potential for growth, death benefits |
| Annuity rates | Not typically optimal at 60 |
| Combined approach | Often best — annuity for base income later |
Common strategy:
- Age 60-70: Drawdown for flexibility
- Age 70-75: Consider partial annuity for guaranteed income
- Age 75+: Annuity rates better, security more valued
3. Taking More Tax-Free Cash?
If you haven’t taken your full 25% tax-free:
| Option | When Sensible |
|---|---|
| Take remainder now | Specific need, better use outside pension |
| Leave invested | Don’t need it, prefer tax-sheltered growth |
| Take gradually | Phased approach, maintain flexibility |
4. Downsizing Property?
| Downsize If | Consider Carefully If |
|---|---|
| House too large | Strong attachment |
| Need to release equity | Market poor |
| Want to reduce maintenance | Other options exist |
| Moving closer to family | Disruption to social network |
Equity release alternatives:
- Downsize (most cash released)
- Lifetime mortgage (stay in home, debt grows)
- Home reversion (sell share, stay in home)
Benefits and Entitlements at 60
Age-Related Benefits
| Benefit | Age | Details |
|---|---|---|
| Free prescriptions (England) | 60 | Apply for exemption certificate |
| Free eye tests | 60 | NHS entitled |
| Winter Fuel Payment | State Pension age | £100-300 |
| Free bus pass | 60 (varies by area) | Local authority specific |
| State Pension | 67 | Check your specific age |
| Free TV licence (over 75) | 75 | If receiving Pension Credit |
Often Overlooked
| Entitlement | Check If |
|---|---|
| Pension Credit | Low income in retirement |
| Council Tax reduction | Single occupancy or low income |
| Attendance Allowance | Health/disability needs (from 65) |
| Carer’s Allowance | If caring for someone |
See our benefits in retirement guide.
Health Costs and Planning
NHS at 60+
| Service | Cost |
|---|---|
| Prescriptions | Free from 60 (England) |
| Eye tests | Free |
| Dental | NHS charges apply (unless exempt) |
| GP/Hospital | Free (NHS) |
Private Healthcare Considerations
| Factor | Consideration |
|---|---|
| NHS wait times | May be long for non-urgent |
| Private insurance | £100-250/month at 60 |
| Self-fund option | Build healthcare reserve |
| Existing conditions | May not be covered |
Budget suggestion: £2,000-5,000 annual reserve for health costs not covered by NHS.
Long-Term Care Planning
| Factor | Reality |
|---|---|
| Likelihood | ~1 in 4 will need care |
| Care home costs | £35,000-60,000/year |
| Home care costs | £25,000-45,000/year |
| Funding threshold | Over £23,250 assets (England) |
Options:
- Self-fund from savings
- Immediate needs annuity (if care needed)
- Long-term care insurance (limited availability)
- Property as asset (may need to sell to fund care)
Sample Budgets at 60
Retired at 60 with £450,000 Pension + Mortgage-Free Home
Drawing £20,000/year pre-State Pension:
| Category | Monthly | Annual |
|---|---|---|
| Income (drawdown) | £1,667 | £20,000 |
| Home maintenance | £150 | £1,800 |
| Bills & utilities | £200 | £2,400 |
| Council Tax | £180 | £2,160 |
| Groceries | £320 | £3,840 |
| Transport | £180 | £2,160 |
| Healthcare/dental | £100 | £1,200 |
| Insurance | £100 | £1,200 |
| Leisure/hobbies | £250 | £3,000 |
| Holidays | £200 | £2,400 |
| Remaining | ~£150 | ~£1,800 |
At 67 (State Pension + reduced drawdown):
| Income Source | Monthly | Annual |
|---|---|---|
| State Pension | £960 | ~£11,500 |
| Drawdown (reduced) | £750 | £9,000 |
| Total | £1,710 | £20,500 |
Couple at 60, £700,000 Combined Pensions
Drawing £35,000/year combined:
| Category | Monthly | Annual |
|---|---|---|
| Income | £2,917 | £35,000 |
| Home maintenance | £200 | £2,400 |
| Bills & utilities | £280 | £3,360 |
| Council Tax | £200 | £2,400 |
| Groceries | £500 | £6,000 |
| Transport | £300 | £3,600 |
| Healthcare | £150 | £1,800 |
| Insurance | £150 | £1,800 |
| Leisure | £400 | £4,800 |
| Holidays | £400 | £4,800 |
| Remaining | ~£337 | ~£4,000 |
Investment Strategy at 60
Asset Allocation in Retirement
| Approach | Allocation |
|---|---|
| Cautious | 40-50% equities, 50-60% bonds/cash |
| Balanced | 50-60% equities, 40-50% bonds/cash |
| Growth-oriented | 60-70% equities, 30-40% bonds/cash |
Key consideration: You may live 25-30+ years in retirement. Some equity exposure is usually needed for growth.
The Bucket Strategy
| Bucket | Purpose | Holdings | How Much |
|---|---|---|---|
| 1 | Short-term (0-3 years) | Cash, money market | 3 years expenses |
| 2 | Medium-term (4-10 years) | Bonds, conservative | 7 years expenses |
| 3 | Long-term (10+ years) | Equities, growth | Remainder |
How it works: Draw from Bucket 1, replenish from Bucket 2, let Bucket 3 grow.
Estate Planning at 60
Critical Documents
| Document | Status |
|---|---|
| Will | Current and comprehensive? |
| Pension nominations | Match current wishes? |
| LPAs (both types) | Registered with OPG? |
| Letter of wishes | Details for executors? |
Inheritance Tax Planning
| Threshold | Amount |
|---|---|
| Nil-rate band | £325,000 |
| Residence nil-rate | £175,000 (to direct descendants) |
| Combined individual | Up to £500,000 |
| Combined couple | Up to £1,000,000 |
Planning options:
- Regular gifts from income (exempt)
- £3,000 annual gift exemption
- Potentially exempt transfers (7-year rule)
- Trusts for control and efficiency
- Life insurance written in trust (covers IHT bill)
See our inheritance tax guide.
Making Your Money Last
Sustainable Withdrawal Rates
| Withdrawal Rate | Likely Outcome (30 years) |
|---|---|
| 3% | Very safe, money likely grows |
| 4% | Traditional “safe” rate |
| 5% | Higher income, some risk of depletion |
| 6%+ | Risk of running out |
Longevity Risk
| At Age 60 | Life Expectancy |
|---|---|
| Men | Average 83, many reach 90+ |
| Women | Average 86, many reach 90+ |
| Couple | Good chance one reaches 95+ |
Plan for longevity: Consider that your money may need to last 30-35 years.
Sequence of Returns Risk
| Risk | Impact |
|---|---|
| Poor returns early in retirement | Can devastate portfolio |
| Withdrawing in down market | Locks in losses |
Protection: Keep 2-3 years expenses in cash to avoid selling in down markets.
Common Situations at 60
If You’re Behind on Retirement Savings
| Action | Impact |
|---|---|
| Work longer | Each year significantly helps |
| Reduce expected lifestyle | Lower income needs |
| Downsize now | Release capital |
| Delay State Pension | ~5.8% increase per year delayed |
If You Have More Than Enough
| Consider | Options |
|---|---|
| Retire earlier | If not already |
| Spend more | You’ve earned it |
| Gift to children | Help them sooner |
| Charitable giving | Tax-efficient ways |
| Legacy planning | Structured giving |
If Health Becomes an Issue
| Consideration | Action |
|---|---|
| Attendance Allowance | Apply if daily care needs (from 65) |
| Income needs may change | Medical costs up, activity costs down |
| Life expectancy impact | May affect withdrawal strategy |
| Annuity rates | Poor health may improve rates (enhanced annuity) |
Your Financial Checklist at 60
Essential Now
- State Pension forecast checked
- NI record reviewed and gaps filled
- Sustainable withdrawal rate determined
- Tax-efficient drawdown strategy in place
- Mortgage cleared
- Will and LPAs current
By 65
- State Pension claim planned
- Retirement budget stress-tested
- Healthcare provisions in place
- Estate planning complete
- Long-term care considered
- Attendance Allowance checked (if applicable)
By 67 (State Pension Age)
- State Pension claimed
- Income adjusted for new reality
- Full retirement budget operating
- Annual review system established
- Longevity risk addressed
Summary
At 60, you’re in the implementation phase of retirement. Whether just retired or preparing to stop work, the decisions you make about income, tax-efficiency, and sustainability will shape the next 25-30 years.
Key priorities:
- State Pension optimisation — Check forecast, fill gaps before deadlines
- Tax-efficient income — Use personal allowance, coordinate ISA and pension
- Sustainable withdrawal — Don’t draw too much too early
- Healthcare planning — Budget for increasing costs
- Longevity planning — Your money may need to last 30+ years
The single most impactful thing at 60: Ensure your State Pension record is maximised and plan the transition to combined State + private pension income at 67.
For more guidance: