Regularly reviewing your finances is an important step at every stage of life. But as you get older, your priorities start to shift.
As retirement edges closer, you’ll need to think about everything from savings and pension contributions to paying off debt and passing on wealth in the most tax-efficient way.
Telegraph Money has spoken to wealth managers, tax experts and mortgage brokers to set out the essential financial tasks to tackle in your 50s, 60s and 70s that will both set you up for retirement and make your money last longer.
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Steps to take in your 50s
Reaching the age of 50 can be a major financial turning point, as Will Bryant, a chartered financial adviser and director of wealth strategy at Plum, explained: “Children may be leaving home, earnings are often at their highest, and retirement is no longer a distant concept.”
Others may still be paying off the mortgage while also supporting adult children and ageing parents. This makes it a good time to take stock of your finances.
Check your retirement plans are on track
As a first step, ask yourself whether your retirement plans are on track to reflect the lifestyle you want. You can do this by calculating your total projected income and likely expenses, then comparing the projections to your goals.
Les Cameron, of financial-services provider M&G, said: “If you’re falling short, take action by increasing your monthly contributions or consider making lump sum contributions such as with a bonus. Every extra pound you contribute now can still grow for 10 to 15 years.”
Maximising contributions to Isas and other tax-efficient vehicles can also prove valuable.
In addition, it’s worth checking your National Insurance record to identify any gaps that could result in lower state pension payments. If there are incomplete years in your record, you may be able to make voluntary contributions to boost the amount you receive.
Another important consideration at this stage is to review and rebalance your pension investments.
Mr Cameron added: “In your early 50s you still likely have 15-plus years of investing ahead, but ensure your pension’s investment mix aligns with your plans. The right mix depends on your retirement timeline and your drawdown strategy. The key is not to be caught by surprise by market volatility when you’re about to retire.”
It might also be worth consolidating old pension pots, particularly if you’ve had several jobs throughout your career. But it’s sensible to seek financial advice first to ensure this is the right choice.
Review your mortgage payments
Now you’re in your 50s, it’s time to focus on paying off existing debts so that you don’t carry them into retirement. This is particularly important when it comes to your mortgage, as reducing or clearing it before you stop working can make your retirement income go much further.
Mark Harris, of mortgage broker SPF Private Clients, said: “Overpaying on your mortgage is a simple way of doing this, with most lenders enabling you to overpay by up to 10pc of the mortgage amount per year without penalty. Overpaying enables you to clear the mortgage more quickly and reduces the interest you pay.
“For example, if you have 15 years left on a £250,000 mortgage at a rate of 4.5pc and overpaid by £250 a month, this would enable you to pay your mortgage two years and five months early, saving £15,898 in interest.”
Consider strategies for making cash gifts
This can also be a good time to start thinking about passing on wealth to the next generation, particularly if you want to help your children buy their first home or contribute towards university costs. Planning ahead could also help reduce a future inheritance tax bill.
Thanks to the annual exemption, you can give up to £3,000 each tax year without it counting towards your estate for inheritance tax purposes. You can also make larger gifts which are usually free from inheritance tax if you survive for at least seven years after making them.
Steps to take in your 60s
This is the decade when your focus shifts from building wealth to making it last. You might start reducing your working hours or even choose to retire completely.
It’s also when many people start enjoying the savings they’ve built up, whether that’s exploring new countries, spending more time with grandchildren or taking up new hobbies.
Daniel Hough, of wealth management firm RBC Brewin Dolphin, said: “Clients often find that the first part of their retirement is most expensive as they celebrate with well-deserved experiences, trips and other goals that they’ve been saving for.”
Plan how you’ll take your pension
At some point in your 60s, your pension savings typically start to provide an income you’ll rely on throughout retirement. This means you’ll need to decide how and when to access your pension, while ensuring you have enough savings to support you for the years ahead.
Mike Ambery, of pensions provider Standard Life, said: “For many, that means weighing up different ways of taking an income, whether that’s drawing down funds gradually, taking lump sums, or securing a more guaranteed income through an annuity, depending on what feels right for their circumstances and appetite for certainty.
“It’s also worth remembering that this doesn’t have to be an either-or decision. Some people choose to combine approaches – for example, using part of their pension to secure a dependable income for essential spending, while keeping the rest invested to provide flexibility for later on.”
Because the choices you make can affect your retirement income and tax bill, it’s worth seeking financial advice first.
You should also check that your pension beneficiary form is up to date. You can usually do this through your pension provider’s online portal, and it ensures your pension pot is paid to the correct person if you die.
Update your estate plan
Your 60s are also the time to review your estate plan. This means checking your will still reflects your wishes, making sure lasting powers of attorney are in place, and considering whether you want to pass on more of your wealth during your lifetime rather than leaving it all as an inheritance.
It’s also important to think about how you would fund care if you needed it in later life. Understanding your options now can help you decide how much of your savings you can afford to spend or gift. You should discuss your wishes with your family to make difficult decisions easier to deal with later on.
Steps to take in your 70s
Your 70s are the decade to reassess your financial situation and check that your money will last for the rest of your retirement. By this stage, you’ll probably be settled into your retirement and have a clearer picture of your spending needs.
Check your spending and investments
Regular financial reviews become even more important when you reach your 70s. With people living longer, your retirement could last 30 years or more, so you’ll need to take steps to ensure your income won’t dry up.
Mr Bryant said: “That means reviewing your spending, investments and withdrawal strategy regularly to ensure your finances remain sustainable as markets, inflation and tax rules change. It’s also sensible to maintain an emergency fund.”
Seeking financial advice is also sensible at this stage.
Consider downsizing
Your 70s can also be the time to assess whether your home still meets your needs. Consider whether you would be willing to downsize to free up cash or relocate to be nearer family.
Chris Ball, of financial advisory business Hoxton Wealth, said: “Beyond the practicality, the cash it releases can quietly fund the rest of the plan, more holidays, future care, gifts to family, or simply keeping your standard of living comfortably where you want it.”
Get your affairs in order
You might want to give your will another read-through at this point to check whether any changes are needed. Also ensure your family and executors know where all your important documents are kept.
Mr Bryant added: “With much of our life moving online, it is useful to keep a record of where accounts are held and who insurance policies are with, but be careful if writing down passwords.”
Many people choose to gift more to children and grandchildren during their 70s. But it’s crucial to keep accurate records to support this by noting the date, the recipient, the value of the gift, and a description (e.g., cash, shares, or property).
It can even be worth looking at the inheritance tax forms your executor will need to fill out so you know what’s required. Completing these as an estate-planning exercise will make your executor’s life a lot easier when the time comes.