Investing in later life
What to think about, and how we can help with drawdown
In the past, investing in later life was all about reducing risk and converting investments into cash before buying an annuity. While you can still buy an annuity if you choose, other approaches are now available.
If you want to keep your pension pot invested to take an income via drawdown or lump sums, you need to think longer term. Your pension pot may need to provide you with an income for 30+ years – which means it should ideally generate income while preserving your capital.
How you invest will depend on how you plan to use your pension. Will it be the main source of regular income, used to provide for one-off expenses, left to provide for your family when you die, or a mixture of all of these?
When choosing investments, you also need to consider the level of risk you’re willing to take and how a downward turn in the market would impact your retirement income. The usual principles of investing apply – a well-diversified portfolio, with a range of assets, geographical areas and sectors, will help you weather most storms.
Remember to always research investments thoroughly, and never be rushed or manipulated into making decisions. Your pension is one of your most valuable assets, and you should always be wary of pension fraud.
Need help investing in drawdown?
When you put your pension pot into drawdown, you don't have to go it alone. We'll offer you Investment Pathways, which lets you choose between four main retirement goals. You'll then be able to invest your pot in a fund designed to broadly match that goal.
Investment Pathways are completely optional, and if you prefer, you can choose your own investments or keep your portfolio as it is. You can shop around and compare Investment Pathways offered by other providers by using the Money Advice Service's comparison tool.
Learn more about Investment Pathways
How to generate cash to pay your pension income
When you reach retirement age you’ll likely need your pension pot to generate cash – so you can take an income, be it regularly or ad hoc. You can generate cash by selling investments, or by buying income-paying shares or funds.
Corporate bonds and equity income funds might be worth considering. You could also invest in the ‘income’ units of funds rather than the ‘accumulation’ units. The former pay any dividends or interest generated by the fund out to you in cash, rather than reinvesting it like the latter.
If you depend on a regular income, it may be a good idea to always keep some of your portfolio in cash. That way you won’t be forced to sell investments when markets are low – although remaining in cash will give a poor return, especially in times of higher inflation.
Get help investing for an income
Finding income-paying investments for your retirement can be hard. But we can help.
Our investment ideas can make investing easier; with Starter portfolios you can manage yourself, a list of Favourite funds to lighten your research load, and no-hassle AJ Bell funds that let you leave the hard work to us.
Each investment idea has income-paying options. Simply choose the one that suits you and your retirement goals.
The AJ Bell funds are an easy way to get investing. Just choose your fund, and how much to invest. We do the rest.
Two AJ Bell funds are designed for income – one that aims to hold your capital steady, the other to grow it in line with inflation.
Browse funds