Vanguard Target Retirement Fund: A sensible choice for my pension plan?

Sun-Is-Fun

I have a final salary pension (luckily :beer:) from working in public service in my earlier life for 20+ years that starts when I reach 60.

My aim is to retire at 55 (in just under 9 years time) and bridge those five years until I reach 60 with a SIPP - taking the initial lump sum and then, each year for five years, withdraw up to the tax threshold present at the time, so I avoid paying any income tax.

By the time I reach 60, the SIPP fund will become exhausted, and my other pension will kick in.

I started the SIPP earlier this year and am currently investing in Vanguard Target Retirement Fund 2025. It was a toss up between that and Vanguard Life Strategy 60.

I was wondering whether this is a sensible fund to use for the next nine years or so or would something else be better?

MallyGirl

the retirement fund migrates to a higher percentage of bonds and less equity as the target date approaches

Sun-Is-Fun

MallyGirl wrote: »

the retirement fund migrates to a higher percentage of bonds and less equity as the target date approaches

Yeah, I believe it becomes a 50:50 split of shares and bonds on the target date chosen and then a downward slide to 30% over seven years.

EdSwippet

mjfp509 wrote: »

I was wondering whether this is a sensible fund to use for the next nine years or so or would something else be better?

Assuming you have a decent margin for error regarding your required income during the gap from retirement to final salary pension, this seems entirely reasonable to me. This fund should provide partial protection from severe market downturns and ought to be at least relatively stable over the five year drawdown compared to more equity-heavy alternatives, so overall a decent choice.

The alternative would be to manage the equity/gilt split for yourself. That is definitely worth doing if you plan to drawdown the fund over a 40+ year retirement, as here a target retirement fund would probably be too light on equities to safely drawdown over such a lengthy timeframe. But... this is not what you plan.