Many of our clients reach a point where their pension alone doesn’t quite stretch as far as they’d like. Rather than drawing down capital, restructuring your existing investments can open up a further stream of income — one that tops up your pension without you having to touch the underlying pot.
Not everyone needs income right away, though. If retirement is still some years off, or you have capital you won’t need to call on for a while, growth is usually the more useful goal. The right approach — income, growth, or a blend of the two — depends entirely on your own timeline and circumstances, which is exactly the kind of thing worth talking through with an adviser rather than guessing at alone.
Turning investments into income
Income investing means holding assets that pay you something on a regular basis — dividends from shares, interest from bonds, rent from property — rather than relying purely on the value of the investment itself going up. Done well, it can provide a reliable second income alongside your pension, State Pension, and any other income you already have coming in.
The trade-off is that income-focused portfolios are usually built around steadier, lower-volatility holdings, which can mean slower capital growth over time. Getting the mix right — enough income to be useful, without giving up too much long-term growth — is where a whole-of-market view of the options available really earns its keep.
Investing for growth
Growth investing takes a longer view. Instead of prioritising regular payouts, the aim is to build the value of the underlying capital over time, usually through a higher weighting to equities and other assets with more room to appreciate. It suits money you won’t need for five years or more, since it needs time to ride out the inevitable ups and downs along the way.
Growth and income aren’t mutually exclusive. Many of our clients hold both within the same portfolio — one part generating income for today, another left to grow for later — and we adjust the balance between the two as their circumstances change.
Getting the balance right as retirement approaches
As you get closer to retirement, it’s worth revisiting how much risk you’re actually comfortable carrying. A portfolio built for growth in your forties can look quite different from one designed to support you in your sixties and beyond, and a gradual shift towards steadier holdings is common as that transition approaches.
Spreading the risk
A well-diversified portfolio — spread across asset types, sectors and geographies — helps smooth out the effect of any one investment having a bad year. We spend a lot of our time on exactly this: aligning a portfolio’s mix with both your appetite for risk and the income or growth you need it to deliver.
Don’t leave cash sitting idle
Cash has its place — it’s what you want on hand for upcoming spending and for emergencies. Beyond that, though, it’s rarely doing you any favours. Inflation erodes its purchasing power over time, and spending the interest as you go means the capital itself is quietly shrinking in real terms. Surplus cash, once your short-term needs are covered, is usually better off invested.
Your withdrawal strategy after State Pension age
Reaching State Pension age often changes the most sensible way to draw an income, since the extra income can push you into paying more tax elsewhere. It’s a good point to revisit how you’re taking money out, so that your income and your tax position work together rather than against each other.
None of these pieces — income, growth, risk, diversification, cash, tax — sit in isolation. Our job is to help you structure all of your assets together, so they’re pulling in the same direction towards the goals you actually have.
Talk to us about your options
If you have surplus capital sitting idle, or simply want a second opinion on how your investments are structured, we’re happy to have a no-obligation conversation. As an independent, fee-based, whole-of-market firm based in Poole with 30 years’ experience, we build our advice around your goals — not around any particular product or provider.
The value of investments can fall as well as rise, and you may get back less than you originally invested. Past performance is not a reliable indicator of future results.
Apex CB Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority, FCA No. 507964.
Frequently asked questions
How do I turn my savings and pensions into a reliable income?
This usually involves combining several sources — State Pension, drawdown or annuity income, and returns from savings and investments — structured so that, together, they provide the income you need as tax-efficiently as possible.
Should I keep investing once I've stopped working?
For most retirements, which can last twenty years or more, holding everything in cash risks losing value to inflation over time. Many retirees keep a portion invested to help their money keep pace with rising costs, alongside enough cash for shorter-term needs.
How much cash should I hold once I'm retired?
A common approach is to keep one to two years of expected income needs in cash, so you're not forced to sell investments at a poor time to cover everyday spending, while the remainder stays invested for the longer term.
How does my attitude to risk change once I'm relying on my investments for income?
Many people naturally become more cautious in retirement, since there's less time — and often no earned income — to recover from a significant fall in value. That said, some risk is often still necessary to maintain income against inflation, so it's about finding the right balance rather than avoiding risk altogether.
What other income sources besides my pension should I consider?
Savings interest, investment income, rental income from property, and even part-time or consultancy work all add flexibility and can reduce how much you need to draw from pensions and investments, particularly in the earlier, more active years of retirement.
This is general information and does not constitute personalised financial advice. Individual circumstances vary, and product and tax rules can change. Apex CB Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority (FCA No. 507964).
Get In Touch With Us
If you like what you have seen on our website, the next step is to get in touch, we offer a free initial discussion with no obligation. You can do this face to face, by phone, or on Skype.
It would really help if you could tell us your reason for getting in touch.
Please rest assured that we take your privacy very seriously: We will never share or sell your personal details to anyone without your permission. We are an IFA in Poole.
Notice: You can not enter where the red marker is, please use any other entrance such as the top of station road.