How can my £100k pay me £10k a year?

Sexyscorp66

I rent,and I'm 52.So could a private pension pay me the £10k a year for 15 years?-a friend of mine ,many years ago now,put £100k into a Legal and General bond that pays him an income of £5000 and has a small degree of capital growth.
Is there a website where I can calculatell what kind of pension I can get if I put it in a pension pot?-would an annuity if £10k be possible?

eskbanker

Sexyscorp66 wrote: »

Is there a website where I can calculatell what kind of pension I can get if I put it in a pension pot?-would an annuity if £10k be possible?

Google 'annuity calculator' - many of the pension providers publish them and there are some independent ones out there too....

xylophone

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/purchase-life-annuity/

https://www.pru.co.uk/investments/investment-articles/guide-to-investment-bonds/

You have no "relevant income" so that the most you could contribute to a pension and receive tax relief would be (net) £2880 - the provider would claim tax relief of £720 and add to the pot - a pension cannot usually be paid before age 55.

See an IFA for personal advice tailored to your exact objectives?

https://adviserbook.co.uk/

Tick "confirmed independent" and the specialism you require.

Sexyscorp66

Yes the reason I haven't gone down the IFA route is that a)finding the right one will be like looking for a needle in a haystack; and b)my friends have been pretty useless in nit knowing any to recommend.
Couldn't I just invest a lump soon in a pension and get the annuity?-since I don't really have a regular income.

Stubod

..yes you could, just that annuities are only paying about 2% so you would only get a couple of grand a year from your money. NB There are a few websites you can google that will give you an estimate for an annuity depending on whether you want a "partner" to benefit when you pass away, and whether or not you want index linking. Obviously the more "benefits" you want the lower the annual "pension" will be.


NB Not sure why finding a good "IFA" would be difficult? There are websites that can give you names and contact details for "local" IFA's and they usually offer a "free" session to discuss your requirements. NB Make sure they are an "IFA", and not an "FA" linked to a single company.
(If you are not comfortable with investing then they would probably offer you the best solution for maximising your return on your £100k).



I seem to remember that my MIL took out a scheme with her bank (HSBC I think) whereby she gave them £40k and they gave her a guaranteed £150 per month, (not index linked). If the "investment" did OK they she may get some money back, but they guaranteed to pay the £150 until "end of days" even if the initial capital went west....can't remember what the product was though.

Malthusian

Stubod wrote: »

I seem to remember that my MIL took out a scheme with her bank (HSBC I think) whereby she gave them £40k and they gave her a guaranteed £150 per month, (not index linked). If the "investment" did OK they she may get some money back, but they guaranteed to pay the £150 until "end of days" even if the initial capital went west....can't remember what the product was though.

A handful of companies offer products like this. They are extremely expensive (you're typically looking at charges north of 3% per year) and fall between two stools. If you want a guaranteed income for your lifetime and don't care what's left at the end, an annuity will give you a higher starting income. If you do care what's left at the end, then the high chance of capital erosion due to the income you are drawing plus the eye-bleedingly high charges makes it unsuitable.

The main advantage they have over annuities is that the adviser can justify an ongoing fee. Yum yum.

If the OP wants to maximise the amount of income they get from their £100k then they are a non-starter for the reasons discussed above.

Unless the OP is in very poor health the only way to generate £10k a year is by spending the capital and running a very high risk of leaving themselves in poverty in a fairly short space of time. Assuming they don't want that, they need to revise their expectations.

bostonerimus

You won't be able to generate 10% return without taking on large amounts of risk and the probability is that in some years you have large losses.

You have a good chance of generating 5% from a sensible portfolio over the long term.