How to invest in your 60s
Investing in your 60s sometimes involves a shift to lower-risk assets. We explain why and explore other ways to build your wealth later in life.
Once you reach your 60s, retirement is likely just around the corner – or perhaps already underway. While it’s a time to enjoy the wealth you’ve spent so long building up, you’ll want to ensure it lasts your retirement, can cover unexpected costs or even leave a legacy for future generations.
Deciding how to invest in your 60s means thinking about several things, such as whether your current mix of investments is right for your goals, how you want to draw your pension money in retirement and estate planning.
Here are four ways to make the most out of investing in your 60s and beyond.
Consider lower-risk investing
If you don’t quite have the savings you hoped for at this stage in life, you may be tempted to move your money into slightly riskier investments, such as shares, in the hopes of getting higher returns.
However, unless you’re planning to keep your money invested for several more decades – perhaps you’re planning to pass it on to future generations – taking on more risk could put your hard-earned savings in jeopardy.
As a general rule, it's a good idea to have a higher allocation to shares when you're younger and gradually shift towards lower-risk assets, such as bonds1, as you move closer to retirement. Rather than making a large change all at once, this should be done over many years.
This is the approach taken by our Target Retirement funds and Managed Personal Pension. They gradually shift your portfolio into lower-risk investments as you get closer to retirement, so you don’t need to make those decisions yourself.
Give your pension a final boost
Your 60s are a good time to check how much you’ve saved into your pension and work out whether you’re on track to meet your retirement goals. If your pension is smaller than you hoped it would be, consider increasing how much you pay in each month or adding a lump sum. If you have a workplace pension, your employer might offer to pay in more if you increase your contributions, usually up to a certain percentage.
One of the reasons why paying into a pension is so valuable is that personal pension contributions benefit from tax relief. This means a £100 contribution only costs £80 if you’re a basic-rate taxpayer, £60 if you’re a higher-rate taxpayer and £55 if you’re an additional-rate taxpayer. You can continue receiving tax relief up until your 75th birthday.
Most people can get tax relief on pension contributions of up to 100% of gross relevant earnings, capped at £60,0002. In some circumstances, you might be able to make pension contributions over your annual allowance and still benefit from tax relief. This is because you can ‘carry forward’ unused allowances from the previous three tax years. Read more about carry forward rules.
If you’re already enjoying retirement, keep in mind the Money Purchase Annual Allowance (MPAA). Once you start taking money from a defined contribution pension3, the amount you can invest in your pension while still getting tax relief is limited to £10,000 a year and this can’t be carried forward.
Don’t forget other tax-efficient ways of investing
Your pension isn’t the only way to invest for retirement in your 60s – you can also use tax-efficient accounts such as a stocks and shares individual savings account (ISA). With an ISA, you can withdraw as much money as you like without paying tax.
You won’t pay income tax on the dividends4 or interest you receive from investments in a stocks and shares ISA, and you won’t pay capital gains tax (CGT) on any profits you make when selling investments. You can save up to £20,000 in ISAs each tax year5.
If you have investments outside an ISA, such as in a General Account, you can make profits of up to £3,000 without paying CGT and receive dividends of up to £500 without paying dividend tax (2026-27 tax year). You can also receive up to £1,000 of tax-free interest, depending on your income tax band6.
The way you draw income from your investment and savings pots could make a big difference to your overall tax bill in retirement. For example, taking income and capital from General Accounts before ISAs and pensions may help you preserve the tax wrapper benefits for as long as possible. However, what’s right for you will depend on your individual circumstances, so we’d suggest speaking to a financial adviser first.
Consider how you want to pass on your assets
Your 60s are also a good time to start thinking about how you might want to pass on your assets to future generations.
By planning ahead, you can have peace of mind that your loved ones are cared for and it may also be possible to reduce the amount of inheritance tax (IHT) owed.
ISAs and General Accounts form part of your taxable estate and may be liable for IHT, unless they are inherited by your spouse or civil partner. From April 2027, most pensions will no longer be exempt from IHT either. This means that if you have money in a defined contribution (DC) pension when you die, it will be added to the value of your estate and IHT might need to be paid.
Giving away assets during your lifetime can reduce the value of your estate and, consequently, the amount of IHT due.
However, it’s really important not to give away too much too soon. Running out of money during your retirement could be more detrimental than your beneficiaries paying some tax. To learn about gifting and other ways to help manage IHT, read our article on how to reduce your inheritance tax bill.
It’s also important to have a will and an expression of wish form for your pension – and that you keep these up to date. This will ensure your money and other assets go to the people and causes you care about when you die.
1 Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.
2 For more on what counts as ‘relevant earnings’ that can earn tax relief when used to fund a pension, see the HMRC Pensions Tax Manual. Your annual allowance might be lower than £60,000 if you have a high income or you’ve already flexibly accessed your pension pot. To work out if you have a reduced (tapered) annual allowance, see HMRC’s website. If you’ve flexibly accessed your pension, you can work out what your alternative annual allowance is here.
3 A defined contribution pension is a pension scheme that builds up a ‘pot’ of money to pay you a retirement income. They’re sometimes called money purchase pensions and can be a workplace pension scheme set up by your employer or a personal pension scheme set up by you.
4 Dividends are the payments some companies make to their shareholders out of their profits.
5 The annual ISA allowance is £20,000 for the 2026-27 tax year. This limit covers all your ISAs, including cash ISAs and stocks and shares ISAs. From April 2027, the annual cash ISA limit will be £12,000, but those aged 65 or over will still have the full £20,000 allowance.
6 For more information on tax-free interest see https://www.gov.uk/apply-tax-free-interest-on-savings
Investment risk information
Investing gives your money the opportunity to grow over time, but market movements mean values can rise and fall along the way.
The eligibility to invest in either ISA or Junior ISA depends on individual circumstances and all tax rules may change in future.
Eligibility to invest in a Vanguard Personal Pension depends on your individual circumstances. Please be aware that pension and tax rules may change in the future and the value of investments can go down as well as up, so you might get back less than you invested. You cannot usually access your pension savings or make any withdrawals until the age of 55, rising to the age of 57 in 2028.
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Any tax reliefs referred to are those available under current legislation, which may change, and their availability and value will depend on your individual circumstances. If you have questions relating to your specific tax situation, please contact your tax adviser.
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