Retirement in your 70s isn’t what it used to be, with retirees facing rising living costs, long waits for medical treatment and the growing likelihood of having to self-fund care.
Although there is limited time to make up any financial shortfalls – with the heavy lifting of pension saving firmly in the rearview mirror – financial planning doesn’t stop as soon as you hit 70 or retire. It simply shifts focus.
According to Lena Patel, independent financial adviser and director of ISJ Financial Planning, it is about structuring your wealth to last as long as possible. That means understanding your resources, cashflow modelling and being realistic about risk.
“Ultimately, it comes down to understanding your individual situation and expectations,” she said.
Big bills pending
Thankfully, the full state pension – which currently sits at around £11,400 per year – should just about cover the minimum retirement living standard, as outlined by the Pensions and Lifetime Savings Association (PLSA).
But it doesn’t stretch to cover other costs that you may incur in retirement, such as residential care, private treatment or miscellaneous spends that allow you to enjoy the retirement you’ve worked hard for.
Medical and residential care are likely to be major concerns when drawing from a fixed pot and watching inflation erode its value. The average cost of care in the UK is around £800 per week – or £41,000 a year.
Meanwhile, NHS waiting lists for common procedures like hip or knee replacements stretch to two or three years. You might think about going private but that isn’t cheap, either. A private hip replacement can set you back £12,000 while a knee replacement may cost as much as £14,000.
The expense is worth the drain on your pension pot in these instances, Patel insisted. “If you’ve got the money, spending it now can drastically improve your quality of life and give you freedom to enjoy your retirement while you still can”, but will require some additional expenditure planning.
Risk appetite
The likelihood of these big bills in the future needs to be factored into your portfolio, which means there is still room for risk in your retirement, according to Patel.
This likely goes against instincts, as you may be looking to de-risk your portfolios by shifting away from equities to low-volatility bonds, for example. But that strategy can be counterproductive when you are looking down the barrel of 20+ years of retirement.
“If someone is taking very little risk, we might model what happens if they increase that risk slightly – diversify into more equities, for instance,” said Patel.
“They could potentially see better returns, but it’s also about emotional comfort: Are you okay with possible volatility if it means more income later?”
Annuities are also making a comeback. “Annuities are becoming more attractive now, especially with higher rates,” said Patel. “If your pension pot is your only fund, annuitizing at this stage could make a lot of sense.”
Cashing in
Equity in property is often the last major financial asset to draw on – and it is becoming increasingly popular.
“Many people in later life are downsizing, especially if they need the funds to maintain their lifestyle,” said Patel. “Selling a larger property to move into something smaller can release equity that could then be reinvested. You can’t spend your house.”
Another option is equity release, whereby you give up home ownership either through a lifetime mortgage or a home reversion plan.
Thinking about your legacy
Of course, once you reach your 70s, it’s perfectly natural to be thinking about the future of your children and grandchildren. However, this should always be secondary to ensuring your day-to-day financial security, Patel insisted.
“You can’t have your cake and eat it, too – if you haven’t saved sufficiently, it’s difficult to leave a legacy,” she said. “You have to prioritise your immediate and long-term care needs. Anything left over is a bonus for your family. That’s the hard truth.”
Get proactive
With financial pressures mounting and set to become worse over the next few years, Patel’s core message is one of realism and action. Being proactive is key.
“First: Know your number. Understand how much income you’ll need each month and work backwards from there,” she said.
Although money doesn’t seem to stretch as far in 2025 as it once did, retirement does reduce some costs – like commuting – which means you don’t need as much to get by as you might expect, Patel noted.
“But, if you can’t make that number work, consider your options. Could you downsize, budget more strictly, or take on a lodger? It’s about understanding your financial position and finding out what works for you, not waiting until you’re in crisis.”
While Patel acknowledged that many of her clients over 70 are managing for now, she is clear-eyed about the future. “I do think it’s going to get more difficult. Seeking advice is important,” she said.