How to boost retirement income

Verbatim

My husband and I are beginning to think more about retirement planning. We hope to have around £80 - £100k in savings including PEPs and ISAs etc.

Which financial products, apart from shares, would be safe and pay an income?

Lokolo

What about pension? Do either of you have one?

dunstonh

Which financial products, apart from shares, would be safe and pay an income?

As far as income provision is concerned, pension beats ISAs.

£80-100k in retirement provision is at the lower end.

Annisele

How old are you now, and when are you wanting to retire? What sort of income are you hoping for?

What do you mean by "safe"? For example, if you stick all your money in cash it's not entirely "safe" because its value will likely be eroded by inflation over time.

kidmugsy

Go for the new Index-Linked Savings Certificates. Whenever you want "income" just cash some in. The penalty for early cashing in is light after the first year.

ermine

You can only stick 15k into those, maybe good enough for two year's income

Verbatim

We won't be relying on this as our only source of income. We both have income from property and pensions but have seen the value of our private pensions reduce over the last decade or so. We will be retiring gradually I think and not for the next 4 or 5 years. I was intending to look at the newly released Index linked saving certificates and will put some non tax exempt cash in. I am reluctant to go back into shares having lost out over the years.

I was thinking more of something that pays out regularly. I thought there were investments other than shares and obviously building societies that had products which provided an income? But perhaps these are not worth the candle/ give a very low return?

ermine

I thought there were investments other than shares and obviously building societies that had products which provided an income?

Annuities?
Income Investment trusts?
Bonds?

There are all sorts of investments that provide an income. Some, like annuities, once you have bought you know exactly what you are going to get. The others have varying elements of risk to both stability of income and to the capital. You gotta eat some risk to be able to get more income, for any given capital sum. Safety is inversely proportional to return...

You viewpoint to risk depends on how old you are, and the nervousness of your disposition. If you are 20 you can take more risk than if you are 65

jamesd

Non-share investments include things like corporate bond funds, government bond funds and property funds. These should ideally be held inside a stocks and shares ISA 9which isn't limited to just stocks and shares) or pension. Year to year variation in capital value is likely to be in the 10% range, depending on just which are used.

Normally you'd combine those with equity income funds like Invesco Perpetual Income or Newton Higher Income. Something like Invesco perpetual Distribution is also interesting.

Those are the core of the retirement income of most people who don't buy one of more annuities. The mixture used would be chosen so that the total variation in capital value is likely to be within a target set at the outset. Maximum reasonable income level would come at perhaps 30% year on year variation but that's not required, 10% or even 5% can be targeted, though with a lower income level available.

kidmugsy

ermine wrote: »

You can only stick 15k into those, maybe good enough for two year's income

That's £30k for a couple. Each can also hold £15k On Trust for the other, so then they've reached £60k.

Verbatim

jamesd wrote: »

Non-share investments include things like corporate bond funds, government bond funds and property funds. These should ideally be held inside a stocks and shares ISA 9which isn't limited to just stocks and shares) or pension. Year to year variation in capital value is likely to be in the 10% range, depending on just which are used.

Normally you'd combine those with equity income funds like Invesco Perpetual Income or Newton Higher Income. Something like Invesco perpetual Distribution is also interesting.

Those are the core of the retirement income of most people who don't buy one of more annuities. The mixture used would be chosen so that the total variation in capital value is likely to be within a target set at the outset. Maximum reasonable income level would come at perhaps 30% year on year variation but that's not required, 10% or even 50% can be targeted, though with a lower income level available.

Thank you. That was the sort of thing I was hoping for. I hadn't thought of the point you and someone else raised about variation in capital value. I rather assumed that the fund value would stay the same and that one would just have a rather small income from the capital.