For most people, their 60s is a decade of transition. Retirement is looming and you are likely to be entering your final years of full-time work.
This is your chance to make the final preparations to ensure that you have a happy and financially secure retirement. Most of the hard work of saving towards your pension is likely to be behind you but you still have time to boost the size of your nest egg.
Whether you plan to retire at the state pension age or keep on working well into your 70s, you need to have a plan in mind and make sure it is on track.
Luckily, there are a few easy tricks for getting your savings plan in order for a smooth transition into retirement.
1. Work out how much you will need
The first thing to do is work out when you want to retire and how much money you will need to be able to do that comfortably.
Your mortgage may be paid off, your children may now be independent and you may now find yourself saving more than ever.
With the right planning and decisions, you can still make a difference to your pension savings, said Brian Henderson, of Mercer, a consultancy.
But it is not as simple as it sounds, there are a lot of moving parts to consider, such as expected investment returns, how long you will live for, other non-pension savings, your tax rates and how much state pension you expect to receive.
As a general rule of thumb you could multiply the income you want by your life expectancy when you retire to get the total pot size you will need, Mr Henderson said. “For example, if you want an annual income of £30,000 from the age of 65, assuming you live to 83, you’ll need to have saved around £540,000.”
However, most people have a combination of savings, private and state pension entitlements.
2. Get to grips with your options
If you are 60 years old you will have been able to access your personal pension for five years now. This means that you can dip into your defined contribution pension pot and take 25pc of your pension tax free. Anything on top will be taxed as income like any other. Making a large withdrawal may push you into a higher tax band than normal.
Tom Selby, of pension provider AJ Bell, said the earlier you access your pension, the longer it will potentially have to last for in retirement – and if you draw too much, too soon you will risk running out of money early.
He said: “Let’s assume a saver has a £100,000 fund and needs £5,000 a year from their fund to support their lifestyle, with the income going up each year in line with 2pc expected inflation.
“If they achieve investment returns of 4pc after charges, their fund could be expected to last around 25 years. For someone taking an income from age 65, that implies they risk running out of money by age 90.”