How much is the State Pension 2026?

The full new State Pension from April 2026 is approximately £230 per week (£11,960 per year). You need 35 qualifying years of National Insurance contributions for the full amount. If you have 10–34 years, you receive a proportional amount. You can check your State Pension forecast at gov.uk/check-state-pension.

What benefits can I claim at 60 UK?

At 60 you may be eligible for free prescriptions (with a 60+ certificate from your GP), and depending on your income and circumstances, Pension Credit (from State Pension age), Winter Fuel Payment (from State Pension age, now means-tested), Council Tax Reduction, Attendance Allowance (if you need help due to a disability), and free bus travel (varies by region, often from 60 or State Pension age).

Do I pay tax on my pension UK?

You can usually take 25% of your pension tax-free as a lump sum. The remaining 75% is taxable as income. The State Pension is also taxable, though it is paid without tax deducted — if your total income exceeds $12,570 (Personal Allowance), you will owe tax on the excess. Your pension provider or HMRC adjusts your tax code accordingly.

Should I downsize in retirement?

Downsizing can release significant equity from your home to boost retirement income or savings. However, consider the costs of moving (stamp duty, estate agent fees, legal fees — typically £10,000–£30,000+), the emotional impact, and whether you will actually save on running costs. For some, equity release may be an alternative to downsizing.

Financial Planning for Over 60s UK — Complete Guide | PocketWise

If you are mapping retirement targets, contribution strategy, and consolidation decisions together, use the Pension Planning Hub as your central guide.

Your 60s bring important financial decisions — from accessing pensions and planning retirement income to estate planning and benefit entitlements. Here is a practical guide to managing your money in this life stage.

Retirement Income Sources

Source	Typical amount	When available
State Pension (full)	~£230/week (£11,960/year)	State Pension age (currently 66, rising to 67 by 2028)
Workplace pension	Varies — average £6,000–£15,000/year	Usually from 55 (57 from 2028)
Private pension (SIPP)	Depends on pot size	From 55 (57 from 2028)
ISA savings	Tax-free withdrawals	Any time
Downsizing/equity release	Lump sum	Any time
Part-time work	Varies	Any time
Rental income	Varies	Any time

State Pension

Detail	Information
Full new State Pension	~£230/week from April 2026
Qualifying years needed	35 for full amount, 10 minimum
State Pension age	Currently 66, rising to 67 (2026–2028)
Can you defer	Yes — pension increases by ~5.8% for each year deferred
Taxable	Yes — but paid gross (tax collected via other income)
How to check	gov.uk/check-state-pension

Filling Gaps in Your NI Record

Situation	Action
Less than 35 qualifying years	You may be able to buy voluntary NI contributions (Class 3)
Cost per year	~£900 for a full year (2025/26 rate)
Worth it?	Each year adds ~£330/year to your State Pension — payback in under 3 years
Deadline	Currently extended deadline to fill gaps back to 2006 — check gov.uk for current cut-off

This is one of the best financial returns available — check your forecast and consider filling gaps.

Pension Access Options

Option	How it works	Tax treatment
25% tax-free lump sum	Take 25% as cash, keep rest invested	Tax-free
Flexible drawdown	Take income as needed from remaining 75%	Taxed as income
Annuity	Buy guaranteed income for life	Taxed as income
UFPLS (Uncrystallised Funds Pension Lump Sum)	Take lump sums with 25% tax-free and 75% taxable each time	Mixed
Leave pension untouched	Let it grow — useful if you don’t need it yet	No tax until withdrawn

Drawdown vs Annuity

Feature	Drawdown	Annuity
Income guaranteed	No — depends on investments	Yes — for life
Flexibility	High — withdraw what you need	Low — fixed once purchased
Investment risk	You bear it	Insurance company bears it
Inheritance	Remaining pot passes to beneficiaries	Usually dies with you (unless joint/guaranteed)
Best for	Those comfortable with investment risk	Those wanting certainty
Can be combined	Yes — use annuity for essential costs, drawdown for extras

Tax in Retirement

Income source	Taxable?	Tax-free element
State Pension	Yes	None — but uses Personal Allowance (£12,570)
Private/workplace pension withdrawals	Yes (75%)	25% tax-free lump sum
ISA withdrawals	No	Entirely tax-free
Savings interest	Yes (subject to PSA)	£1,000 PSA at basic rate, £500 at higher rate
Rental income	Yes	£1,000 property allowance
Dividends	Yes (above £500 allowance)	£500 dividend allowance

Tax-Efficient Withdrawal Order

Priority	Source	Why
1	State Pension	You receive this automatically — no choice
2	ISA withdrawals	Tax-free — use to supplement State Pension
3	Pension (within basic rate band)	Tax at 20% on 75% of withdrawals
4	Other savings/investments	Use PSA and allowances

Drawing from ISAs before pensions (beyond what you need) preserves the pension pot, which benefits from IHT advantages on death.

Benefits for Over 60s

Benefit	Eligibility	Amount
Pension Credit	State Pension age, weekly income below ~£218 (single) or ~£333 (couple)	Tops up income to the threshold
Attendance Allowance	State Pension age, need help with personal care or supervision	£72.65 or £108.55/week
Council Tax Reduction	Low income	Up to 100% off council tax
Winter Fuel Payment	State Pension age, receiving Pension Credit	£100–£300
Free prescriptions	Age 60+	Automatic (show birth date)
Free bus pass	State Pension age (England) or 60 (Scotland, Wales)	Unlimited off-peak travel
TV licence discount	Age 75+ receiving Pension Credit	Free
Disabled Facilities Grant	Any age, need adaptations to home	Up to £30,000 (England)

Pension Credit is a gateway benefit — applying unlocks Winter Fuel Payment, free TV licence (75+), full Council Tax Reduction, and other support.

Downsizing Your Home

Cost of moving	Typical amount
Estate agent fees (1–2.5%)	£3,000–£10,000
Solicitor/conveyancing	£1,000–£2,500
Stamp duty on new property	£0–£10,000+
Removals	£500–£2,000
Repairs/improvements to sell	£1,000–£5,000
Total moving costs	£5,500–£30,000

Should You Downsize?

Pros	Cons
Release significant equity	High transaction costs
Lower running costs and maintenance	Emotional upheaval
More manageable property	May lose community connections
Could be closer to family or amenities	Stamp duty on new purchase

Equity Release (Alternative to Downsizing)

Feature	Details
What it is	Borrow against your home while continuing to live in it
Minimum age	Usually 55–60
Types	Lifetime mortgage (most common), home reversion
Interest rates	5–7% (fixed for life)
Repayment	Repaid from estate when you die or enter long-term care
No negative equity guarantee	You never owe more than your home is worth (with ERC-approved providers)
Impact on benefits	May affect means-tested benefits
Impact on inheritance	Reduces the value of your estate
Regulation	Must receive independent legal advice

Always take independent financial advice before considering equity release.

Estate Planning

Action	Why it matters
Write or update your will	Ensures your assets go where you want
Consider a Lasting Power of Attorney (LPA)	Appoints someone to manage finances if you cannot
Review pension beneficiary nominations	Pensions pass outside your will — nominations must be up to date
Gift allowances	You can give up to £3,000/year IHT-free, plus small gifts and wedding gifts
Review IHT position	Nil-rate band £325,000, residence nil-rate band £175,000
Consider trusts	For larger estates or specific wishes

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