How to invest in your 60s
Investing in your 60s can help grow your retirement savings, so you’re not at risk of running out of money. Discover more about investing in your 60s here.
Your 60s are a good time to invest and set your finances up for retirement.
Investing can be a great way to grow your retirement savings, allowing you to pay off debt or boost your living standards in later life.
But what should you be investing in, and what should your financial priorities be?
Here’s our guide to everything you need to know about investing in your 60s.
The sooner you invest, the more time you have for your investments to grow.
As well as investing in your 60s, there are other options to keep your finances healthy.
Ensure you top up your pension whilst considering lower-risk investments such as bonds or money market funds.
Investing as you approach retirement can be tricky, but a financial adviser can offer expert guidance.
Why should you invest in your 60s?
With retirement just around the corner, it’s time to start thinking about getting your finances in order.
Whether you’ve already planned out your retirement funds or are still building them, making the right investments can provide you with healthier funds in a few years.
When you invest, your investments can rise in value, but this is not guaranteed.
Over time, the returns from your investments grow, boosting your retirement wealth, and there is a snowball effect over time, known as investment compounding.
In practice, this means the sooner you invest, the more time you have for your investments to grow.
Is it worth investing if you’re nearing retirement? The answer is yes!
Both before and during retirement, you need your pension to keep pace with inflation, and that’s where investing comes in.
Although investments can fluctuate in value, they tend to grow more than cash and beat inflation over time.
It’s also worth thinking about your attitude towards investing risk, as this may affect your investing decisions.
A financial adviser can really help here - they can analyse your circumstances and risk profile to help you plan your investments.
Deciding your financial priorities
Investing is one of many options you could pursue in your 60s and can help you ensure your finances are in good health, but it is far from the only way to make your financial future a reality.
1. Clear outstanding debt
Paying off any outstanding debts is vital.
Starting with any high-interest loans or debts, consider paying down as many as possible so you have more money for your retirement.
2. Achieve your financial goals
If you have financial goals, such as paying off a mortgage, now is a good time to prioritise them.
Whatever your plans are for retirement, your pension funds may not match your income as a working individual.
This could mean that achieving any financial goals you have yet to achieve may be harder once you are retired.
3. Top up your savings
If you don’t have a dedicated rainy-day fund, now is the time to get started.
Having an emergency savings pot will make it easier to manage your pension income in retirement as you won’t need to dip into your pot to cover extra emergencies.
Don’t forget that interest rates vary significantly between providers, so it’s worth shopping around for the best rates.
4. Top up your pension pots
Finally, one of the most important things you can do is to pay more into your pension.
With not long to go until you can access your state pension, a shortfall in your pension income can impact your retirement planning, and it’s never too late to top up or start your pension.
Although strictly speaking, pensions are a type of investment, we’ve counted them separately here. They’re often slightly easier to manage than stand-alone investments. Most workplace schemes have a default fund where you won’t have to make your own investment decisions.
If you have spare cash, then you may decide to max out your pension contributions. You can pay in a maximum of £60,000 each tax year, capped at your annual earnings in that tax year.
If you’re lucky enough to be able to contribute more than £60,000, you may be able to pay in more as you can carry forward any unused pension allowance in the last three years.
Try our pension calculator to see how much extra you could enjoy in retirement by increasing your contributions.
What should you invest in?
If you’re finding that you don’t quite have the savings you hoped for, it may be worth considering investing in a stocks and shares ISA alongside your pension.
As you near retirement, it’s especially important to think about your investment risk. In general, riskier assets fluctuate more in value over time, which could mean you have to withdraw cash at a low point.
If you are looking to make investments, consider lower-risk options, such as:
1. Bonds
As you get older, it’s important to ensure you have a steady income.
Bonds or gilts are among the safest investments you can make, and though they won’t create significant returns, they will return your principal investment with some interest.
You have a couple of options. One of the simplest ways to buy a bond is through a bond fund, or you can buy an individual bond or gilt.
Or you could choose a money market fund that invests in a range of short-term gilts. Money market funds tend to fluctuate less than other bond funds and can offer returns similar to a high-interest savings account.
There are many different types of bonds, including corporate bonds and government bonds, known as gilts.
2. Equity funds of ETFs
Investing some money into a fund or an exchange-traded fund (ETF) could be an easy way of adding passive income to your portfolio.
Although index funds aren’t necessarily low risk, they can be a great option as part of a balanced portfolio.
An index fund invests in a range of shares - it aims to match the performance of a whole index like the FTSE 100.
This means your investment is more diversified than buying individual shares - if one company underperforms, this is often offset by the performance of other companies.
3. Multi-asset fund
Investing in a multi-asset fund is another easy option that’s popular with older investors. It allows you to blend different types of investments, giving you a ready-made portfolio to match your investing risk.
For example, a 60:40 fund invests 60% in equities and 40% in bonds.
Keeping a balance of equities and bonds in your portfolio can give you the best of both worlds - the growth potential of equities alongside the slow and steady growth of bonds.
Consider an investment platform
If you’re looking to invest, there are various online platforms, including those which allow investments from as little as £25 a month.
Others offer access to thousands of bonds and shares, and some allow you to invest in the UK and abroad with minimal fees.
Investing before retirement
Investing as you approach retirement can be tricky, as you will need to plan to start withdrawing money from your pension soon.
Making the right decisions now will maximise your returns in retirement - helping set you up for a comfortable retirement.
To get advice based on your personal circumstances, speak to a qualified financial adviser via Unbiased.
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