Aminatidi wrote:mum has around £50K in savings accounts and around £40K across a couple of stocks and shares ISAs.
She has a few pensions and each year she withdraws around £3000 in "cash" from those savings to cover living expenses
Just a suggestion - swap the stock ISA's over to a VMID holding (Vanguards FTSE 250 index tracker). From what I've seen that has compared to HYP and for a number of reasons is a good choice of Index Tracker IMO (feeds in and out of top/bottom so tends to be more equal weighted, 50% of earnings from foreign, 20% of index are Investment Trusts i.e. diversified enough, low cost, easy to manage or move if required/desired). VMID 2.85% current dividend yield (after 0.1% VMID expense i.e. 2.95% FTSE dividend yield) recently generates around £1.14K of income on £40K invested, add to that £1.86K drawn from cash savings to provide the £3K disposable income.
For the cash/savings buy into 1, 2, and 3 year high street bank bonds in around equal measure, as each bond matures, roll the surplus (after taking £1.8K or whatever cash to top up dividend income to a combined £3K) into another 3 year bond. Preferably ISA versions. You might alternatively extend out to a 5 year bond ladder. A factor with a fixed term bond ladder is that they are 'fixed term', penalties if you need cash. Holding one rung in instant access tends to yield a lower interest rate but provides liquidity. 1 run in instant access, count that as the bond ladders 1 year rung, buy a 2 year and a 3 year fixed term bonds, roll the 2 year into another 3 year when that 2 year has matured, roll the 3 year into another 3 year when that matures. A form of staggered bond ladder.
Not a recommendation, just the first web site that a search found
https://www.money.co.uk/savings-account ... gLb2vD_BwELikely over time stock dividend value might relatively expand, requiring less of bonds to be drawn down. As a example HYP pays more in dividends but price appreciates less, overall comparable to the FTSE 250 in total returns - that pays less in dividends but price appreciates more. All else being equal if everything remained the same in inflation adjusted terms, drawing 1.8K/year from 50K of bonds would last 27 years (mum perhaps in her 90's), but in practice there may still be a sizeable amount of bonds still remaining due to dividend yields having grown in real terms. Could even be that the dividends alone were enough to cover the (inflation adjusted) £3K withdrawals. Just ignore any capital valuations of stocks just leave them as-is, as a form of longevity insurance should ever all of bonds have been spent, only then look to selling down some/all of stock. The hard part is having to manage the bond ladder. Best to avoid too much under any one umbrella group so that the funds remain protected by the £85K FSCS limits - but that's not really a issue in your mums case.