Watching your life savings diminish dramatically during periods of market falls can be excruciating. For Lynne Carroll, a 68-year-old ex-hospice worker, watching the value of her pension lose £11,000 in the space of just three months this year became unbearable. 

“My pension with Scottish Widows was valued at £120,000 in December last year,” she said. “It is now worth £109,000, losing £1,000 a week since December, or more than 10pc of its value.”

She has transferred the remaining balance to a Sipp through Fidelity. “I would appreciate advice on how to rebuild the value of my savings,” she said.

Ms Carroll will turn 70 in two years. She added that after she had achieved her initial goal of rebuilding the fund back up to its recent value of £120,000, she wanted to begin withdrawing some income from the portfolio after her 70th birthday. 

Darius McDermott, managing director at Chelsea Financial

I think it is important to say upfront that we are currently in a very uncertain world and volatility is likely to continue for some time.

Unfortunately, even cash is not really safe in terms of protecting your money because with savings rates below 1pc and inflation at 5.5pc, the purchasing power of your savings is falling fast.

As Ms Carroll wants to take an income in a couple of years, I would suggest that she invests in funds that pay good dividends. She can simply reinvest these payouts for extra growth until she needs it. I’d suggest looking at something like the BMO MM Navigator Distribution Income fund, which yields 3pc. The Ruffer Diversified Return fund is a lower-risk option, but it does not pay an income. 

Then Ms Carroll may like to add some smaller holdings on the side. For example, she could add infrastructure funds such as Gravis Clean Energy Income or First Sentier Global Listed Infrastructure. These are slightly lower risk, less volatile areas of stocks and tend to have inflation-linked income sources.

If she is willing to add a little more risk she could consider a UK income strategy, such as the City of London investment trust. It does come with some risk because of its high exposure to stocks, but it has a 55-year track record of raising its dividend. The trust currently yields 5pc. 

To try to get back to £120,000 Ms Carroll will have to take some risk and understand that she might lose more money. We simply do not know what will happen in markets next. She could choose to drip feed the money back into riskier assets over the next six to 12 months. That way at least if the markets fall again, the impact is not so great. She could invest around £10,000 a month.