Priorities for savings among over-60s in the UK

Later-life saving is often about preserving what you have while still earning a reasonable return. For many people over 60, that means thinking about how long the money might need to last, whether it may be used to supplement a pension, and how comfortably you can tolerate changes in interest rates and inflation.

Common priorities include security of capital, convenient access to at least part of the money, and keeping pace with the rising cost of living as far as possible. It is also worth checking that savings are protected under the Financial Services Compensation Scheme (FSCS), which usually covers up to £85,000 per person, per authorised bank or building society group. Many over-60s also consider how savings fit with estate planning, for example keeping some funds separate for future care costs or for gifts.

Easy access savings accounts and convenience

Easy access savings accounts allow you to pay in and withdraw without notice, often online, by phone, or in a branch. They can work well for emergency funds, short-term spending plans, or when you simply prefer to know that money is available at any time without penalties.

The trade-off for this convenience is usually a slightly lower interest rate than you might find with a fixed-rate or notice account. Rates can move up or down, and some accounts pay an introductory bonus rate that reduces after a set period. For over-60s, holding several months’ essential expenditure in an easy access account can offer reassurance, while longer-term money may be placed in options that pay more.

Fixed-rate savings accounts and stability

Fixed-rate savings accounts, sometimes called fixed-term deposits or bonds, pay a set interest rate for a defined period, such as one, two, or five years. During that term, you will normally not be able to withdraw money, or you may face a substantial interest penalty if you do. In return, you gain certainty about the rate you will earn over the agreed period.

To show how some common account types compare in practice, the following examples use typical interest ranges and well-known UK providers based on offers available in late 2024. The exact rates and terms will change over time, but they give a sense of how the main options differ for someone over 60 looking for higher interest and tax efficiency.

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Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.

When deciding whether to use a fixed-rate account, it can help to think about when you will realistically need the money. Locking in a rate can be attractive if you rely on savings interest as part of your income and want stability for a few years. However, tying up too much may make it harder to respond to unexpected expenses or future changes in interest rates.

Tax advantages of cash ISAs and allowances

For savers of any age in the UK, cash Individual Savings Accounts (ISAs) allow interest to be earned without income tax. The standard ISA allowance has been £20,000 per tax year in recent years, and there is no separate, higher allowance purely for people over 60. Once money is inside a cash ISA, interest remains tax-free year after year, which can be particularly useful if you have significant savings or expect to be a higher-rate taxpayer in retirement.

Alongside ISAs, the Personal Savings Allowance (PSA) lets basic-rate taxpayers earn up to £1,000 of interest a year tax-free outside an ISA, with £500 for higher-rate taxpayers and no allowance for additional-rate taxpayers. In practice, some over-60s with modest taxable income may pay little or no tax on interest, while others with larger pensions or investment income can benefit more from making full use of their ISA allowance each year. Keeping records of which accounts are ISAs and which are taxable can help you see whether shifting money into tax-advantaged accounts might reduce future tax bills.

Notice accounts and regular saver ISAs

Notice savings accounts sit somewhere between easy access and fixed-rate products. You agree to give a certain amount of notice, often 30, 60, or 90 days, before withdrawing money. In exchange, providers may offer a rate that is higher than easy access but with more flexibility than a fixed-term bond. For over-60s who can plan ahead for larger withdrawals, such as annual insurance bills or holiday spending, this structure can provide a useful middle ground.

Regular saver accounts and regular saver ISAs require you to pay in a set amount each month, usually up to a maximum. The balances are often capped, but interest rates can be relatively high for the first year or so. This can work well if you are setting aside part of a pension or other income regularly and are comfortable with limited access and a smaller overall balance. When choosing among these accounts, it may help to spread money across different types so that some savings are instantly available, some are working harder at higher rates, and some are sheltered from tax where appropriate.

A balanced mix of easy access, fixed-rate, notice, and ISA products can give over-60s in the UK a blend of flexibility, stability, and tax efficiency. Reviewing your arrangements periodically, and especially when your income or spending needs change, can help ensure that your savings continue to support the lifestyle you want throughout later life.