Retierment income

Perfectly reasonable if you do not want to invest. However, I would suggest a bond ladder for the 3 x fixed rates. Do one for 1 year, another for 2 years, a third for 3 years so that you get better rates. Although you may want to hold off a little to see what interest rates do later this year.

You will get more in the medium/long term (5 years plus) if you go for S&S ISAs or similar however.

Bearing in mind I am fairly risk adverse, does this sound like a good plan ?

It seems you are quite accepting of risks which could be greater than a sensible investment risk. e.g. inflation risk and shortfall risk.

You dont say how old you are but if in your early 60s, you could live another 30 years. £100k in will be worth around £60k in 10 years. time. So, ignoring investments to focus only on cash is actaully quite risky. Especially where income is involved.

HappiestByTheSea wrote: »

Thank you all for taking the time to reply.

I am already taking the minimum lump sum with the pension, I would take less if I could to increase the
monthly income. I am 52 btw.

I guess, now that its put to me, I could tie most of the cash up for a longer period, I had thought however that interest rates are expected to rise fairly soon so I hadn't wanted to be tied into a relatively poor rate for an extended period.

I do have some plans to purchase a camper and/or a small boat as my new property is right next to a marina so I would need access to at least some of it.

The pension arrangements are already made so I have little flexibility there.

My understanding of financial products is indeed probably very basic so I think the IFA option is probably a good one - I just know howvere that if there are risks that capital might be lost I wouldn't sleep well during my retirement !

Thanks again

There's nothing wrong with being conservative and putting your money into safe interest bearing accounts as long as you have dome the maths and you are certain that it will provide you with sufficient retirement income.

You need to see if 12k/year pension around 2% interest from your 240k and eventually state pension (maybe another 12k or 13k/year by the time you take it) allow you to live as you plan. You can always spend down some of the 240k, but that has to be done carefully. As interest rates go up you''l see higher returns, but your plan is very sensitive to inflation as you are ignoring the potentially greater returns of an equity and bond portfolio.

Capital is meant to bring you feelings of comfort and security. So don't cost yourself sleep.

However, what if you decided to trickle money into a Stocks and Shares ISA? That would be far less risky than suddenly investing a huge lump sum. If you were to subscribe, say, £500 p.m. for, say, 10 years then you might end up having somewhere about one quarter of your capital in S&S which might be quite enough for a risk-averse person. You could even set yourself a limit of 25% and stop the subscriptions when you've reached it. If you still shiver at the thought of the risk consider using that old-fashioned thing a "With Profits" ISA, where the effort is made to even out the ups and downs of the stock markets. Foresters Friendly Society offer one - there may well be others available.
https://www.forestersfriendlysociety.co.uk/saving-investing/stocks-shares-nisa/at-a-glance/

People here will mock the idea - "obsolete", they will shout, "expensive", boo, hiss ... Ignore them: if the charges on a With Profits investment are what must be paid to give you the confidence to slowly move a fraction of your capital into stocks and shares it may well be a cost worth paying.

As for the £240k, I hope you understand that it would be safest to spread it over a number of institutions that have separate banking licences. Apart from short grace periods involving big lifetime events, your deposits are covered by a guarantee up to only £85k per banking licence. One way round this is to make plenty of use of ns&i (previously known as National Savings and Investments) where they have a much bigger direct guarantee from HM Treasury.

For example you could put £50k into ns&i's Premium Bonds - the prize fund pays 1.4% p.a. of which around 1.25% p.a. would reach you as a roughly even flow of small monthly prizes and the other 0.15% goes on the bigger prizes which you might win (but very likely won't). All the prizes are tax-free.

You could open a 123 current account at Santander, put in £20k, and transfer the Direct Debits for your bills to that account. You'll get 1.5% p.a. and a cash back on the bills. For this they will charge you £5 (or thereabouts) per month. You'll be handsomely in pocket. You could also open their monthly saver that pays 5% AER interest. These interest payments are taxable but in your position of having a modest annual income there will be no tax to pay.

Then you'd open savings accounts elsewhere, some instant access, some notice accounts perhaps, some fixed term. Just make sure that you don't have more than £85k with any one bank (or building society), or any one group of banks that share one banking licence.

The idea of a "ladder" of fixed term accounts advanced above might suit you well. For example, after your PBs and Santander account are set up you'll have about £170k to spread about at less than £85k per institution. Quite easily done.