Can I get retirement income from cash?

dunstonh

Can I use my cash to simply buy a pension?

yes, subject to eligibility. That is if you mean pension. I think you may mean income rather than pension when you say that. In which case yes would be the answer to that as well (annuity for example). However, it may not be the most suitable thing to do. The UK has a lot of tax wrappers that suit different scenarios and a lot of different ways of doing the same thing but having pros and cons on the method.

I`ve talked to an IFA and his suggestion is to invest some of the money in an investment bond type plan and the rest in ISA`s etc. Yes, the plan would bring in the £6-7k pa that my wife and I are looking for but the main thing we don’t like is that the money is never accessible should we ever need cash in a hurry.

You say are disappointed with that. Yet your reasons are wrong. (your money is accessible and if you think you need some of it accessible then dont invest it. That is why you hold back cash savings). Also, an investment bond is a tax wrapper. It can access nearly 30,000 different types of investments. Nearly identical to the investments you can get in the ISA or pensions or other tax wrappers or unwrapped.

We are looking for no risk investments/savings accounts or whatever else is available that will return £6-7k pa with a cash sum left over if possible for us to buy a few bits. We are both 65 years of age, own our own home with no mortgage and have no debts.

No such product exists. Every option has a risk. Some will have investment risk. Some will have inflation risk (very important to consider when drawing an income). Others will have shortfall risk (cash deposits a good example at the moment).

Obviously cash is a 'riskless' investment or as close as you can get

No it is not. It suffers shortfall risk and inflation risk. If you draw the interest in full each month then your £200k would be worth around £130,000 in 10 years time in spending power terms. The interest paid would no longer be enough (it may not have been in the first place).

You may have dipped into it for misc expenditure as well (which sounds likely from what you have said). So, the interest will go down in actual terms as well as real terms. So, you start having to draw more capital to compensate. Which means less interest again and more capital withdrawals. That spiral continues and you end up with nothing.

Rymo_2

Hi Wastenot,

I too am intending to have a significant part of my retirement funds in cash, alongside a personal pension, employer pension and some S&S ISA investments.

Whilst I know people point out the shortfall and inflation risk which can be managed or minimized, it is a nice feeling to have some certainty over what you will have.

If my pensions and investments do well the so called drawbacks of cash will not be a problem anyway as they will give me not far off what I take home now.

The other posters on here seem to be giving you some pretty good ideas and seeing an IFA is possibly a good idea.

I have worked out that if I can get 3% interest on my cash (in retirement ) and take a monthly income increasing at 2.5% per year my cash will last 30 years!

My other pensions, and state pension will take me further if I'm around!

Whilst I understand the reasons why cash is frowned upon as a retirement income vehicle, for a lot of people I believe it can be a sensible option.