Strategies for securing income in retirement during uncertain times
There are several strategies to adopt to try to secure a stable income in retirement and some of these can help to preserve capital too
Retirement offers the opportunity to embrace a new lifestyle removed from the pressures and stress of work, but it also comes with the challenge of managing a fixed income for an unpredictable number of years. A typical retirement age in the UK is around 64 years for both men and women with women usually giving up work earlier than men.1
To avoid depleting your savings too quickly, it's essential to have a strategy in place to ensure your funds last and that you have a comfortable retirement income. Since each person's circumstances are unique, retirement income strategies and needs will differ. Regardless of your needs, it’s important to generate a reliable income and preserve your capital as much as possible. This has become more challenging given the current economic volatility and fluctuating market conditions.
There are several ways to receive an income in retirement – such as through an annuity – and it’s essential to seek professional advice to understand your options. In this article we look at investment strategies which could generate an income from your retirement pot and there are several approaches to consider:
1. Adopting the 4% rule
A commonly suggested guideline is the 4% rule, which means limiting your annual withdrawals to 4% of your retirement savings. However, this relies on assumptions about investment performance and the duration of your retirement, which may not hold true for everyone. If your investments suffer significant losses, you might need to reduce your withdrawal rate. Conversely, if your investments perform well, you could potentially increase it. The 4% rule can serve as a good starting point, but it's important to consider various scenarios with your professional adviser before determining the best withdrawal rate for your specific circumstances.
2. Investing in government and corporate bonds
With interest rates on investments like government and corporate bonds rising, now is an opportune time to reassess your portfolio. UK government bonds (also known as gilts), which offered near-zero interest rates a few years ago, now yield close to 4%2(current or past figures provided should not be considered a reliable indicator of future performance). This shift allows for a more balanced approach, reducing the need to take on excessive equity risk.
Gilts and other types of bonds play an important role as a portfolio diversifier, however, there are areas of concern for this asset class. With slow domestic growth there is a risk that gilt yields rise further, causing prices to fall, which we explain in ‘Balancing gilt market risks’. Diversification remains crucial to help to mitigate volatility and keep pace with inflation. Incorporating a mix of assets, including equities and alternative investments like gold, can help stabilise returns and preserve capital, although there is still the risk that the value can go down and you may get back less than invested.
Funds that invest in specific sectors may carry more risk than those spread across a number of different sectors. In particular, gold, technology and other focused funds can suffer as the underlying stocks can be more volatile and less liquid.
3. Structured products
Structured products, issued by reputable investment banks such as Goldman Sachs and UBS, offer another avenue for generating income. These products are designed with built-in risk mitigation features and are linked to the UK market and indices like the S&P 500. They aim to deliver a predefined return while incorporating measures to help reduce the impact of market downturns. Structured products can be tailored to meet specific financial goals, such as funding a child's wedding, by combining them with other investments like gilts. While the goal is to provide a predefined return and help cushion against market volatility, there are no guarantees that you will recover the full amount of your original investment.
4. Collective funds
Investing in collective funds that focus on income-producing assets, such as utilities and consumer staples, can provide a steady stream of income. Our extensive research and market influence enable us to select the best-fit funds for your individual needs. This bespoke approach ensures that your portfolio is aligned with your income requirements and risk tolerance. Of course, as with any investment there are risks and there’s a chance that the value of investments, and the income from them, can go up as well as down and you could end up with less than you originally invested.
5. Evelyn Partners’ Cash & Cautious Bond Portfolio
For those seeking a more conservative income strategy, Evelyn Partners’ Cash & Cautious Bond Portfolio (C&CB) can offer a balanced solution. With an emphasis on short-dated bonds and a tax efficient return profile, this portfolio strives to offer a reliable income while allowing the remaining assets to focus on growth. It aims to offer a net return after tax that is higher than the equivalent cash savings rate. This strategy is particularly effective for clients with specific income needs over the short-term.
There are risks associated with this portfolio too and income can go up as well as down. This product is not suitable for every investor and there are comparable products and providers that can be considered like National Savings & Investments’ products and other cash savings accounts.
Planning for longevity
People are living longer in retirement thanks to improved healthcare, better living conditions and advancements in medical technology. Currently, the average life expectancy in the UK is around 81 years3. As life expectancy increases, it's essential to plan for a retirement income that could last 20 to 30 years. Understanding your income needs and ensuring that both your income and capital positioned for longevity is vital. It’s important to set realistic income levels to avoid depleting your capital prematurely.
Speak to Evelyn Partners
To find out more about how you could secure your financial future with a tailored retirement income strategy contact Evelyn Partners to book an appointment with one of our expert advisors.
Sources
1. The Motley Fool, Average retirement age in the UK: Statistics for 2025, March 2025
2. Evelyn Partners/Refinitiv, July 2025
3. Database.earth, Life expectancy in United Kingdom, July 2025
