Where Should You Put Your Savings as You Get Older?

Key message

Savings should be allocated according to when each pound is likely to be spent, not simply the saver’s age. Cash is appropriate for near-term spending, while money that will not be needed for many years may remain invested—even for someone in their 70s or 80s. The speaker warns that holding long-term savings in low-interest cash can erode their purchasing power.

Suggested framework: three “homes” for savings

• Next 2 years: Keep planned spending in a competitive easy-access or notice account. The speaker also recommends maintaining roughly 2–3 years of spending in cash as a buffer, so investments do not have to be sold during a market downturn.
• Years 3–7: Consider fixed-rate bonds or gilts held to maturity. The speaker cites fixed bonds paying about 5.1%–5.4% at the time.
• 8 years or more: Consider keeping the money invested in the stock market, ideally through a stocks and shares ISA. The speaker says this may apply at any age, provided the money is not needed sooner.

A practical step is to write the expected spending year beside each savings pot, then match it to the appropriate home—starting with any cash earning less than inflation.

Cash, inflation and returns

• The Bank of England average rate for money accessible at any time was cited as 1.65%, compared with inflation of 3.1%.
• On £10,000, the speaker says 1.65% earns £165 in a year, while £310 would be needed to keep pace with 3.1% inflation. The estimated real buying power falls to about £9,855, a £145 loss.
• A best-buy easy-access rate of 4.3% earlier that month was given as an example of a rate that could exceed inflation.
• The speaker’s rule of thumb is that if an account rate starts with 1% or 2%, the money is likely losing ground to inflation at the cited rate.
• The video says the cash ISA limit was due to fall to £12,000 from April 2027, but that this had been reversed and would return to £20,000. This is the speaker’s claim in the subtitles.

Investing, retirement and risk

• The speaker cites Fidelity International analysis saying UK shares beat inflation in 95% of rolling 10-year periods since 1988, compared with 58% for cash. Cash lost ground in roughly 4 out of 10 such periods.
• The speaker argues that the risk of shares in retirement is being forced to sell during a downturn. A cash buffer can help manage that risk.
• The speaker cautions that so-called “safe” investments can fall sharply too. In 2022, long-dated UK government bonds reportedly fell 40.3%, while global shares measured in pounds fell 7.8%. Rising interest rates particularly hurt long-duration bonds.
• Workplace pension funds may begin shifting into bonds 10–15 years, and sometimes 20 years, before retirement. This process is called lifestyling. The speaker recommends checking a pension fact sheet for exposure to long-dated bonds.
• The video refers to research suggesting that the riskiest years are around retirement. It says a 75-year-old might therefore hold more in shares than they did at 65, once that period has passed and a cash reserve is in place.
• If money may be needed for emergencies, care, a house move or another near-term expense—or the saver might panic-sell—the speaker says a larger cash allocation may be appropriate.
• ONS life-expectancy projections cited suggest that a 65-year-old man may live to about 85 on average, and a woman to nearly 88. Money intended for later life can consequently have a long investment horizon.

Gilt example and cautions

The speaker gives the example of a 0.375% UK Treasury gilt maturing in October 2030, which reportedly cost just over £83 in mid-October and pays back £100 at maturity. The speaker says much of the return would come from the increase to £100 and would be free of capital gains tax; the small coupon is subject to income tax.

For someone who has used their savings-interest tax allowance, the speaker estimates that a savings account would need to pay about 8.2% for a higher-rate taxpayer or 6.2% for a basic-rate taxpayer to match the gilt after tax. A best two-year fixed bond was cited at 5.15% earlier that month.

The comparison is based on stated April 2027 tax rates and applies only if the gilt is held to maturity. It may not suit basic-rate savers whose interest remains within their tax-free allowance, ISA money, or money needed before 2030. Gilt prices can move, returns are only assured if the gilt is held to maturity, and dealing costs can matter for small investments. The speaker suggests discussing the strategy with an adviser.

Assets and instruments mentioned

Cash and current accounts; easy-access and notice accounts; fixed-rate savings bonds; UK shares; global shares; long-dated UK government bonds; gilts; annuities; workplace pension funds; and stocks and shares ISAs.

No individual stock tickers are mentioned.

Disclosures

No explicit “not financial advice” disclaimer appears in the subtitles. The speaker recommends discussing the gilt strategy with an adviser and notes that outcomes depend on the saver’s timeline, tax position and need for access to the money.

Presenter and sources

Presenter: Saka Sain, who says he has more than 25 years’ experience helping people plan their finances.

Sources cited: Bank of England; Office for National Statistics; Fidelity International; the government’s pensions commission; and a study in the Journal of Financial Planning.