Managing your money in retirement – 4 golden rules to avoid a shortfall© Getty Images

Managing your money in retirement comes with significant challenges, including the risk of overspending and running out of funds in old age. Cost-of-living pressures have only made things more difficult in recent years.

A comfortable retirement now costs a single person £43,900 per year, according to figures from trade association Pensions UK. This has risen from £33,000 in 2019, before the pandemic sparked the highest level of inflation in a generation.

These figures do not include housing costs, so anyone still renting or paying a mortgage in retirement could face even higher outgoings.

With this in mind, it is unsurprising that one in five adults worry their pension won’t provide enough income in retirement, according to research from Nottingham Building Society. This rises to more than one in four among over-60s (28%).

Some use their pension savings to buy an annuity, giving them a guaranteed income for life (depending on the product you buy). However, the amount you qualify for depends on the size of your pension pot.

Others opt for pension drawdown in the hope it will give them better value for money – but the risk is that they could outlive their savings.

“If you aren’t sure how to go about this, it’s worth considering employing a regulated financial adviser to help you navigate what can be complex choices.”

The lottery effect – overspending early on in retirement

Poor financial planning can create problems for those who opt for drawdown, with some retirees overspending early on in retirement and leaving themselves short towards the end – a time when outgoings can shoot up thanks to care costs.

Last year, a study by Legal & General (L&G) found that some retirees were at risk of emptying their pension pot a decade early, after taking large cash lump sums and withdrawing too much in monthly income.

Savers generally expect their pension pot to last 22 years from age 60, according to L&G’s analysis, taking them to around 82. But for those who may not have other sources of income, such as property wealth or a defined benefit pension, it typically runs out by age 77. Both fall short of the average life expectancy, which is 86 for those who are currently age 60.

“For most people, their pension pot is the largest sum of money they’ll have access to, and after decades of hard work and saving, it’s natural to view it as a well-deserved reward,” said Katharine Photiou, managing director of workplace savings at L&G.

“However, our research shows the sudden financial freedom can trigger ‘The Lottery Effect’ for some savers, which can lead to unsustainable spending.”

Golden rules to avoid retirement shortfall

1. Make a plan before taking your tax-free cash

Once you turn 55, you can access your pension and are entitled to take 25% of your savings as tax-free cash. Some rush to withdraw this straightaway as one lump sum, but that can be a mistake.

When you withdraw money from your pension, you take it out of a tax-efficient environment and move it into one where a tax bill may be generated – for example on savings interest, or dividends and capital gains if you decide to reinvest the money

Withdrawing your tax-free cash and sticking it in a savings account also means you miss out on the potential for future investment growth.

It is better to have a plan for what you are going to do with the money. Some use it to pay off their mortgage, for example, so they can retire debt-free. Everyone’s personal circumstances are different, so it is worth seeking financial guidance or advice.

Remember: you don’t need to take all of your tax-free cash in one go. You can take it in instalments if you prefer. This means the money remains invested for longer and can hopefully continue to grow.

2. Build up your emergency savings

Everyone should have an emergency savings pot to cover unforeseen costs. Those who are working should have enough to cover one-to-three months’ worth of essential expenses, but this rises to one-to-three years among retirees. It is generally advisable to keep this in an easy-access account.

If you haven’t got enough in emergency cash savings as you head into retirement, should you use your pension tax-free cash to top it up? Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, says it depends on your circumstances.

She told MoneyWeek: “If someone is in drawdown and needs a buffer to help them maintain income during periods of market volatility, then they could look at having 1-3 years’ worth of emergency savings.”

If they also have income from an annuity or a defined benefit pension, they might be able to keep less in their emergency cash reserve, leaving more invested in their pension.

“The decision to take tax-free cash to top up emergency funds will also depend on wider issues such as access to other assets, size of estate given the upcoming inclusion of pensions as part of people’s estate for inheritance tax, as well as wider planning issues,” Morrissey said. “If in doubt, people should seek financial advice.”

3. Think about how much income you need

A cash management strategy is important. How much income do you need to live on, and is your pension pot big enough to sustain you for as long as you might live? Some people adopt the 4% pension rule – a guideline that can be used to help you draw a sustainable retirement income for around 30 years.

This rule suggests you can withdraw 4% of your pension in your first year of retirement. In all subsequent years, you can withdraw the same amount but adjust for inflation. If you had a £500,000 pension, this would mean taking £20,000 in the first year. If inflation was around 2%, you would then take £20,400 out the second year, £20,808 out the third year, and so on.

There are pros and cons to the rule, as we explore in a separate piece. If you are in a position to seek tailored financial advice, that is usually the best approach, as a financial adviser will be able to help with cash-flow modelling.

4. Consider combining drawdown with an annuity

Pension drawdown is a more popular option than buying an annuity, based on FCA data. While the idea of guaranteed income is appealing, many dislike the idea that an insurer will profit from their life’s savings if they die shortly after purchasing the annuity contract. Meanwhile, your loved ones can inherit any unused pension savings.

That said, annuity rates currently look attractive and can give you peace of mind, offering guaranteed income until you die. Recent data from Hargreaves Lansdown’s annuity search engine shows a 65-year-old with a £100,000 pension can get up to £7,793 per year from a single-life level annuity with a five-year guarantee.

Savers don’t need to choose between the two approaches. A combination of the two can be a good strategy. “This mix and match approach means you can secure the income you absolutely need from an annuity, and also keep some invested for growth in a drawdown plan which provides a more variable, flexible income,” said Laith Khalaf, head of investment analysis at AJ Bell.

Investment trusts with wide discounts can use tenders and buybacks to close the gap. But these aren’t a sustainable solution and don’t produce the best outcome for investors.

By Cris Sholto Heaton

Many investment trusts have become very rattled by the threat of activist investors and are concerned about reducing their discount to net asset value (NAV). This is mostly good: some boards had become too dozy about putting the interests of their investors first and more attention to structural discounts was overdue.

Still, it is also clear that many investment trust boards are convincing themselves that regular share buybacks and tender offers (an offer to buy shareholders’ shares) are the best way to keep discounts down. As a shareholder in a number of investment trusts, I am far from convinced that this always produces the best outcome for investors like me.

The rules for investment trusts with wide discounts

Wide discounts can reflect a range of factors, including poor performance, doubts about the reported NAV, being in a sector that’s out of favour, or the investment trust being too small and/or illiquid. Tenders and buybacks can do nothing for the first three: if the problem persists, you may need to change manager, change strategy, find ways to prove the NAV, or just wait for your market to become popular again.

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Meanwhile, the fourth scenario is why too many buybacks and tenders can even be actively harmful. They shrink the size of the fund, which will make it less attractive to many investors. Even an investment trust that starts at a healthy size can shrink itself into irrelevance if it gets hooked on buybacks and tenders in a vain attempt to control a discount driven by other factors. Consider Bellevue Healthcare (now CT Healthcare), which peaked at around £1 billion in 2021, but had dwindled to under £300 million by 2025, without really reducing the discount.

Who benefits the most from buybacks and tenders?

The other question is who benefits most from buybacks and tenders. Buybacks are at least accretive to remaining shareholders if the price is genuinely below net asset value. Still, I am cautious about trusts that decide to sell illiquid assets in weak markets to fund buybacks, because they may be selling the best assets and leaving the fund with the junk that is less likely to be worth its carrying value.

Since tenders typically happen near NAV, they are not directly accretive. True, long-term investors could take up each tender offer to the limit allowed, take the proceeds, and use them to buy shares more cheaply in the open market again – but many won’t. So the beneficiaries here are often influential shareholders – activists or institutions – who want a chance to exit at a preferential price. If the discount does not then shrink and the trust becomes smaller and less viable, long-term holders have been left worse off by the whole process.

This does not mean that tenders and buybacks are always bad – but they need to be structured in a way that limits these disadvantages. A large exit opportunity every five years, perhaps triggered only if the fund underperforms, is fairer to all investors – not just those who want to cash out – than constantly shrinking the assets.

I’ve booked a profit of £300 with TRIG.

Cash for re-investment £826.

The written plan for the SNOWBALL was to buy Investment Trusts that yielded 5% or above.

Mr. Market has been very benevolent and the plan has been increased to a base of 7% or above. This means the Snowball will achieve its ten year plan early.

I’ve therefore increased this year’s fcast to £11,200 and the target to £12,000.

The target includes some special dividends and all though it’s likely there will be more special dividends in the financial year 2027, these are not a given.

Current income for the SNOWBALL

Dividends to date £4,548. Fcast dividends for first the six months £7,681 and the fcast figure for the year £13,400.

The figure of 12k is very important as that means income of 1k a month for re-investment.

The fcast for 2027 has been raised to £12,000 and the target £12,869.

If the fcast and the target is met it will mean the ten year plan has been achieved ahead of the plan.

A question I get asked a lot. Are you sure of the supply ?

Whilst when I predict the future I am often wrong, I expect that there will be a lot of consolidation in the Renewables sector so the next ten year plan could include some pair trading, investing in some higher yielding ETF’s balanced out with some safer lower yielding Investment Trusts, such as CMPI and the Dividend Hero Trusts.

A plan without an end destination, whilst better than no plan is still a bad plan as your retirement income depends on the end destination.

My friend the choice is yours. GL

A history lesson.

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

Filtering for High Income

Finally another popular question is selecting high income funds and we can use ETFs as an example. I would typically apply my other usual criteria on cost, currency and size but there are some other things to think about in this case. If we filter based on minimum 12 month yield the problem is this selects funds where the price has crashed recently. Dividend yield is income divided by price so a suddenly much smaller price can result in huge yields. This means looking at recent return for the fund over the last 3 months, say, can be helpful. By choosing funds where the 3 month return is above a threshold you can omit these funds. I find volatility helpful here too because a fund that generates more yield (income) for the same amount of risk (volatility) is preferable. In ShareScope this is “Deviation of Returns” and I usually choose a period covering the last year measured with a daily sample frequency. If you filter by latest Close date being recent (last week or so) you can also ensure that this is not a fund that is not priced regularly and that the fund hasn’t been closed down.

Thursday 30 April

AEW UK REIT PLC ex-dividend date
BioPharma Credit PLC ex-dividend date
CQS Natural Resources Growth & Income PLC ex-dividend date
CQS New City High Yield Fund Ltd ex-dividend date
Custodian Property Income REIT PLC ex-dividend date
Diverse Income Trust PLC ex-dividend date
Edinburgh Investment Trust PLC ex-dividend date
European Smaller Cos Trust PLC ex-dividend date
Global Opportunities Trust PLC ex-dividend date
Henderson Far East Income Ltd ex-dividend date
M&G Credit Income Investment Trust PLC ex-dividend date
Sequoia Economic Infrastructure Income Fund Ltd ex-dividend date

I’ve bought for the SNOWBALL 7341 shares in SEQI Infrastructure for 6k.

The cash from the recent sale has now been re-invested at a blended yield of 9.5%.

When the cash from the dividends roll in, subject to the market at the time, they will be added to GCP or SEQI

(“GCP Infra” or the “Company”)

Dividend Declaration and Market Update

Dividend Declaration

GCP Infra is pleased to announce a dividend of 1.75 pence per ordinary share for the period from 1 January 2026 to 31 March 2026. This is in line with the Company’s annual dividend target of 7.00 pence per ordinary share. The dividend will be paid on 8 June 2026 to holders of ordinary shares recorded on the register as at the close of business on 8 May 2026.

Expected timetable:

Shares quoted ex-dividend

7 May 2026

Record date for dividend

8 May 2026

Dividend payment date

8 June 2026

Market Update

The Company notes the recent UK Government announcements relating to: (i) the removal of carbon price support (“CPS”) from 2028; and (ii) the increase to the tax rate on the electricity generator levy (“EGL”) from 45% to 55%; and (iii) the intention to introduce the option for low carbon generators that do not benefit from an existing contract-for-difference (“CfD”) to bid for a wholesale CfD (“WCfD”) (the “Announcements”).

The Company does not expect any material impact on the valuation of the Company’s investment portfolio as a result of the Announcements. The Company’s independent electricity price forecaster had, in their long-term forecasts, already assumed the phasing out of the CPS alongside the increased alignment of the UK and European Union carbon markets. Further, such electricity price forecasts are below the level at which the EGL applies. The Company and its Investment Adviser will continue to review proposals relating to the WCfD as they are developed to assess the extent to which the WCfD would benefit any projects in its investment portfolio.

GREENCOAT UK WIND PLC

Net Asset Value, Dividend and Government Policy Announcements

Net Asset Value

Net Asset Value / Net Asset Value per share	£2,897 million / 134.2 pence
Dividend / Dividend per share	£57.9 million / 2.68 pence

The Company announces that its unaudited Net Asset Value (“NAV”) as of 31 March 2026 is £2,897 million (134.2 pence per share), including a 2.1 pence per share reduction as a result of a post period adjustment for the removal of Carbon Price Support from April 2028.

The Company’s March 2026 Factsheet is available on the Company’s website, http://www.greencoat-ukwind.com.

The performance of the Company’s assets for the quarter was strong, with wind generation 4.2 per cent above budget, and power prices ahead of expectations. Continued delivery of the Company’s structurally robust cashflow will fund its 2026 capital allocation priorities and, in line with its initial priority of reducing gearing, the Company repaid £30 million of its Revolving Credit Facility at the end of March 2026.

The past two months have presented a compelling opportunity to enter into power price hedging arrangements for a portion of the Company’s merchant volume. At the start of 2026, the Company had merchant power exposure of 4.5TWh pa. Over the past quarter, the Company entered into hedges for 1TWh of power sales through to March 2027. As a result, for the next 12 months, 68 per cent of the Company’s cashflows are fixed in nature.

These hedges have secured power prices at NAV accretive rates, and together with above budget generation, serve to further underpin full year dividend cover expectations, whilst retaining a balanced exposure to merchant power prices in the near term.

Dividend

The Company also announces a quarterly interim dividend of 2.68 pence per share with respect to the quarter ended 31 March 2026, in line with the annual dividend target of 10.70 pence per share for 2026.

Dividend Timetable

Ex-dividend date         14 May 2026

Record date                 15 May 2026

Payment date               29 May 2026

Government Policy Announcements

Last week the Government released a number of UK energy policy statements, including changes to the Electricity Generator Levy (“EGL”), the introduction of Wholesale Contracts for Differences (“Wholesale CFDs”) for operational renewable energy projects and its Reformed National Pricing Delivery Plan.

EGL

The EGL was introduced in January 2023 and applies a 45 per cent tax to exceptional revenues from the sale of power. The electricity price above which the tax applies currently stands at £82.61 / MWh. The rate of tax has now been increased to 55 per cent with effect from 1 July 2026 and the tenor of the EGL, which was due to expire on 1 April 2028, will be extended.

In 2023, the Company (and its group) paid £14 million of EGL in respect of elevated power revenues received in 2023. At today’s forecast power prices, the net power price that the Company expects to receive for all future forecast periods is lower than the threshold.

Wholesale CfDs

The Company, and Schroders Greencoat LLP the (“Manager”), have for some time advocated for the introduction of a Wholesale CfD mechanism. It has the potential to address the long-term challenge of how the wholesale electricity market functions as low marginal cost generators become the majority. It could provide both meaningful savings to consumers and attractive, inflation-linked cashflows conducive to sustained investment in UK renewables.

The Company and the Manager will continue to engage with the Government to ensure a balanced outcome for both consumers and generators. The Manager’s view is that, if implemented carefully, this mechanism could be a constructive option to use in composing the Company’s revenue profile. The Company will judge how it will participate in the mechanism as conversations with the Government progress and further detail is provided.

Reformed National Pricing Delivery Plan

Following the Government’s decision to retain a single wholesale electricity market, the Reformed National Pricing Delivery Plan (the “Plan”) sets out how the Government plans to approach electricity market reform. It includes proposals to reduce constraint costs, improve system operability and solicits views on reforms that could sharpen locational investment signals. In considering forward-looking reforms, the Plan recognises the need to not undermine confidence in the sector. The Company will continue to engage with the Government through the consultations that follow, in particular to preserve existing investments and investor confidence.

2 Magnificent Dividends To Buy And Hold Forever

Apr 26, 2026 RLJ, RLJ.PR.A, EPD

Rida Morwa Investing Group Leader

Summary

• Certain items are worth their weight in gold to us, despite not fetching much when sold.
• The best investments are the ones you never feel the need to sell.
• We discuss our top picks to buy and hold for a lifetime of passive income.
• Looking for more investing ideas like this one? Get them exclusively at High Dividend Opportunities. 

Co-authored with Hidden Opportunities

Can you name one of your possessions that you’ve held onto for years, something that has quietly stood the test of time?

For some, it’s a wedding band, serving as a symbol of a lifelong commitment made by two people. Others think of the phrase “diamonds are forever” as a way of saying that the hardest known substance to human beings depicts unmatched hardness and durability (not the James Bond movie starring Sean Connery).

You may have also heard the phrase “worth its weight in gold.” Not all prized possessions are valuable from a monetary standpoint. Some people have a memory box for their children, storing meaningful toys and artifacts that remind them of their kids growing up. Family photographs, heirlooms, and recipes are popular examples of objects that are cherished for decades, often by multiple generations. I’m reminded of a cousin who planted a tree each time one of his children was born. Today, those children are in their teens, and in his backyard stand two strong, deeply rooted trees, growing steadily year after year, requiring little attention, yet impossible to ignore.

Some assets are worth more in your hands than in the market. If you have a 20-year-old car that is well-maintained and runs perfectly, odds are high that selling it will fetch you no more than a few thousand dollars. Yet, the value in that asset comes in its ownership and regular use, rather than the cash it can secure by selling it in the market at pennies.

The most valuable things in life are often not the flashy, valuable ones. They are the ones that last.

Investing can work the same way. While markets swing between euphoria and fear, there are select investments designed not for excitement, but for endurance. These assets quietly generate cash flow quarter after quarter, year after year, and are often structured to reward patience, to incentivize holding, and to compound wealth over time. They are well-positioned to be the prized possessions of your portfolio. Today, we will discuss two forever income plays that are built to keep paying.

Pick #1: EPD – Yield 5.8%

Enterprise Products Partners (EPD) is one of the largest midstream operators in North America, based on infrastructure, pipeline mileage, and market capitalization. EPD owns and operates over 50,000 miles of pipeline, and 300 MMBbls of Liquids Storage, among other infrastructure essential for secure storage, processing, and transportation of NGLs, Crude Oil, Natural Gas, Petrochemicals, and Refined Products, from energy basins to customers and export terminals. ~90% of EPD’s long-term contracts have CPI-linked escalation provisions, providing inflation protection, and ~80%–90% of its gross operating margin is fee-based, providing much-needed insulation from commodity prices.

Note: EPD is Master Limited Partnership that issues a Schedule K-1 to investors

EPD maintains a strong balance sheet, rated investment-grade A3, and the partnership ended 2025 with $5.2 billion in liquidity and a 3.3x leverage ratio, one of the lowest levels in the midstream industry. EPD ended 2025 with a 4.7% weighted-average cost of debt and a comfortable maturity schedule.

The partnership has $4.8 billion of major capital projects under construction, with 5 out of 6 estimated to come online in 2026. 55% of EPD’s gross operating margin is from the partnership’s NGL business, followed by Natural Gas at 16%. The United States is a low-cost supplier of NGLs to the world, and we estimate ~15-25% of Adj. EBITDA likely comes from direct export demand. We also note that EPD is the largest individual global LPG supplier, exporting a third of total U.S. LPG exports. The complete disruption of maritime traffic in the Strait of Hormuz has a profound impact on the global supply, and EPD stands to benefit from higher U.S. exports.

However, this large dependence on exports also comes with risks and considerations. When the U.S. Government imposed export controls on ethane to China, EPD management noted that they could redirect product to other countries to mitigate the effects, but it would take time. The worst possible outcome for EPD is the Government imposing an outright cap on energy exports. While we don’t anticipate this scenario materializing at this time, it cannot be ruled out entirely because the U.S. trading policy and global energy dynamics are rapidly evolving. A cap on energy exports would result in volume backup domestically, terminal utilization drops, and a sharp decline in fee-based revenues for EPD.

EPD boasts 27 years of consecutive distribution raises and currently yields 5.8%, with a 1.7x coverage. These payments are typically 100% ROC, making them beneficially tax-deferred for eligible investors. Management expects new assets to come online at high utilization levels, supporting organic growth in Adj. EBITDA, and continued distribution increases.

Pick #2: RLJ-A – Yield 7.9%

RLJ Lodging Trust (RLJ) is a hotel REIT that owns and operates 92 hotels with ~21K rooms in 23 states. Over 50% of the REIT’s Adj. EBITDA comes from the Sunbelt states, and most of its portfolio comprises assets that are part of the network of top global hotel brands like Hilton, Marriott, Hyatt, etc. Source

RLJ maintains a healthy balance in property classes across urban lifestyle (39% of 2025 Adj. EBITDA), urban gateway (36%), urban metro (11%), and resort properties (14%). America 250 and the 2026 FIFA World Cup are significant events this year, and notably, 62% of FIFA WC matches are scheduled to be played in RLJ markets.

RLJ cut its quarterly common stock dividends to $0.01/share during the COVID-19 pandemic, a brutal time for the travel industry, but maintained its preferred stock dividends. Since 2022, in light of improving fundamentals and outlook, the company has been focusing on capital returns to shareholders. This includes significant dividend increases and share repurchases.

RLJ’s $0.15/share common stock dividend calculates to a 7.6% annualized yield at an impressive 40% payout ratio. RLJ spends $25.1 million annually on preferred stock dividends. This compares with $209 million in AFFO generated (which RLJ calculates after subtracting preferred stock dividends). The REIT ended 2025 with $1 billion in liquidity (including $410 million in restricted cash) and has no debt maturities until 2029. Source

For 2026, management projects Adj. EBITDA between $312 and $342 million and AFFO/share between $1.21 and $1.41, which places its current dividend at a comfortable 45% payout ratio.

• $1.95 Series A, Cumulative Convertible Perpetual Preferred Shares (RLJ.PR.A) – Yield 7.9%

RLJ-A is a convertible preferred, which has negligible chances of being subject to a forced conversion into common stock due to the need for +1,100% upside ($89.09/share for 20 trading days). We believe this is quite improbable at this time. As such, RLJ-A can be considered as a perpetual source of yields, backed by a well-managed hotel REIT.

Conclusion

At High Dividend Opportunities, we want your portfolio to be worth its weight in gold, not because you plan to sell it, but because of what it pays you to hold it. The best investments aren’t traded; they’re owned, and they quietly deliver income, year after year, proving their value over time.

Markets will move, and there will be varying frequencies of noise surrounding them. Real wealth is built by staying steady and consistent. Because sometimes, the greatest returns come not from what you sell, but from what you never have to. This is the power of income investing.