If your savings plan is for your retirement (accumulation stage) u will have the following three choices when that day arrives.

Option One.

Buy an annuity.

The biggest risk is the unknown amount. It could be

Canada Life figures show the 65-year-old with a £100,000 pension pot could buy an annuity linked to the retail price index (RPI) that would generate a starting annual income of £3,896. That’s up from £2,195 in the New Year following a 77% spike in rates this year.
Oct 22

You have to surrender all your hard earned, so not a good outcome, unless markets have crashed and interest rates are near to double figures. Of course the value of your portfolio will most probably have crashed so the benefit may not be that great.

Option two.

Use the 4% rule.

Invest for capital growth hoping for growth of around 7%, depending on your skill level. If u buy a tracker there will be several years of flatlining where your capital will most probably fall and when u want to start spending your hard earned keep everything crossed the market hasn’t crashed before u need the cash.

Option Three.

Buy Investment Trusts that pay a dividend and use those dividends to buy more Investment Trusts that pay a dividend, the accumulation stage. When u enter your de-accumulation stage switch into the safest yields available.

Accumulation stage. Trusts that pay a high dividend and better if trading at a discount as u may be able to book profits to re-invest to earn more dividends.

De-Accumulation stage. Income is most important and making a profit is less of a consideration.

Remember with Compound Growth, u should make more income in the final few years than in most of the early years, so the sooner u start the better chance of a better retirement.

But as always best to DYOR as it’s your hard earned.