
There are 4 options.
Option one.
U could go to a cash proxy, Government Gilts using a Gilt ladder and spend any returns plus part of your capital 2b secure.
One problem would be if interest rates were low at the time u would have to spend part of your cash fund before investing in Gilts
Option 2.
Your underlying portfolio is invested only for growth, hoping that u have your portfolio has grown enough to pay for your retirement.
U could buy an annuity, where u hand over all your cash for a secure pension.
If interest rates are low so will be the annuity offered.
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
Option three.
U use the 4% rule, google for details and sell shares at the start of the year and hope that the underlying shares go up in price and not down. U will need a cash fund just in case the market crashes after u start to withdraw your funds.
If the market crashes just before u need your funds, u would use your cash fund and keep everything crossed that markets recover before u deplete your cash fund. As u have to regularly sell shares the law of diminishing returns will kick in but if u haven’t crossed the bar, u should need less income as your age increases.
If u have a million take out an annuity at a resilient time and join the SKI club.
Option four.
Use a dividend re-investment plan, using the dividend stream as a ‘pension’ leaving the underlying portfolio to whoever u like, as it’s your hard earned.
Leave a Reply