After more than three decades of arduous duty as a prison officer, Ian Beattie finally reached the juncture of repose.
Upon closing the chapter of his career in 2022, aged sixty, he drew a tax-exempt windfall of £48,000. When joined with his modest nest egg, it amounted to £60,000 — capital that demanded both stewardship and purpose.
With six years yet to traverse before the state pension beckons, and his £20,000 Isa allowance nearly exhausted for that year, Beattie searched for a method by which his funds could spin a steady rivulet of income to complement the £1,400 monthly stipend flowing from his service pension.
From his home in Grangemouth, Falkirk, fate delivered him an article describing an artifice known as savings laddering — a tactic of dispersing savings across accounts with staggered maturity dates, thereby harvesting optimal yields.
This discovery has since borne him fruit exceeding £3,000 per annum — a yield circling 5 per cent, eclipsing the 2.6 per cent average interest of ordinary easy-access accounts tracked by Moneyfacts.
How the mechanism unfolds
The customary form of laddering involves parceling savings into bonds of differing terms — often one through five years. The design is to reap the richer rates of long-dated deposits while ensuring not every penny languishes in confinement.
Some, like Beattie, wield it differently — turning it into a cadence of income, with maturities falling month by month.
“My pension, together with the rhythm of staggered interest, has kept my living standards unbroken throughout these years of retirement,” remarked Beattie, now sixty-three.
He harnesses the Flagstone savings platform, which proffers offerings from nearly seventy banks. His first step was to lodge £10,000 into a six-month fixed account in October 2022.
The following month, he placed another £10,000 in a like account — and continued the ritual, month after month, until the entirety of his £60,000 rested in bonds that, together, yielded between £3,000 and £3,500 a year.
“When that first deposit matured in April 2023, I pocketed the interest, then promptly rolled the capital into another six-month term,” he explained. He has repeated this monthly, sometimes swelling the stake to £12,000.
Since his embarkation in late 2022, interest rates often stood above 5 per cent. Indeed, between July and November 2023, the prime one-year rate pierced 6 per cent, as recorded by the Private Office advisory firm.
Now, yields have receded. His six-month notes render between 4.06 and 4.35 per cent. His most recent account, with ICICI Bank, held £12,000 and returned £270 at 4.49 per cent. Still, he remains unwavering, valuing the liquidity and flexibility more than chasing the peak.
“This method means my original lump remains intact, the interest keeps flowing, and, crucially, each month I have £10,000 coming free should sudden need arise,” he affirmed.
Being a basic-rate taxpayer beneath the £50,270 threshold, Beattie enjoys a £1,000 annual savings allowance before the 20 per cent levy bites. On £3,000 in interest, about £400 departs to the taxman.
An alternative climb on the ladder
Whereas Beattie favors six-month rungs, the orthodox ladder scatters a lump across accounts stretching one through five years. The rhythm then is to reinvest each maturing bond into a fresh five-year term, so the ladder lengthens even as liquidity remains.
This approach thrived when long maturities rewarded savers with meaningfully higher rates. Recently, however, short-term offerings rivalled or surpassed their longer kin, as markets braced for falling rates. Yet tides shift again.
As of now, the finest five-year fix stands at 4.52 per cent with JN Bank, eclipsing their one-year at 4.43 per cent. JN Bank equally holds the crown for two- and three-year terms at 4.45 per cent. Contrast this with August last year, when a one-year peaked at 5.25 per cent while the best five-year languished at 4.4 per cent.
“If five-year yields continue to stand higher than their shorter cousins, the appeal of traditional laddering will rekindle,” observed Anna Bowes of the Private Office.
Yet Beattie, unmoved by fashions, persists with his six-month cadence — and even seeks to persuade peers to embrace the same.
“I would heartily recommend this path to those in my shoes. My money remains within reach, it is secure, the returns are respectable, and every month it adds a cushion to my pension,” he concluded.