Bear Market/Crashes: how do Retirees Deal with it?

gadgetmind

My wife will have a tiny LGPS pension but probably only £600pa (in today's money) when it trickles in around 13 years from now. It's cost us close to zero but it's not something worth building into plans.

atush

i bought the book for my husband for xmas. I havent read it yet, but will soon.

Maybe on the beach at Easter?

No Sous viding for me this WE. Went to the local french bistro for my birthday yesterday. Traditional roast chicken (which has been brined) for dinner.

What have you SV recently?

gadgetmind

atush wrote: »

What have you SV recently?

Some brisket that worked very well, some lamb leg steaks that weren't very good at all, and some brulee. The brulee tasted great but I made a mess of the caramel on top as I'd had too much wine.

TBC15

Could an offset mortgage/current account be used in lieu of cash on the side-lines to cope with downturns?

gadgetmind

I have an offset tracker that I'm planning to use for this but it ends at age 65 as do many/most mortgages.

TBC15

gadgetmind wrote: »

I have an offset tracker that I'm planning to use for this but it ends at age 65 as do many/most mortgages.

At what point approaching 65 would it be prudent to start building up the cash reserve?

bostonerimus

chucknorris wrote: »

What conclusions did you come to when you considered drawdown v annuity, do you feel that at least having some annuity protection is worthwhile? With state pension and DB I should have about £23k index linked pension, if I used up 75% of my SIPP to buy an annuity, it would probably almost get that up to about £30k, I'll think that over, it might be not as I first thought, when I originally dismissed the idea.

There are many people that look at historical returns and the models and go 100% equities....I have a pessimistic streak so I'm glad I have a DB pension to rely on. However, I would not be buying a lifetime annuity right now with interest rates so low; if you life an average life you'd do just about as well from a savings bond ladder. Once annuity rates pick up I can see them becoming popular again at least for a portion of a DC pot.

jamesd

gadgetmind wrote: »

as I have £250k to put into the markets next week, and a fair bit more come April, it's come as a welcome drop ... If markets stay low until April, it's also saved me a fair bit of tax for exceeding LTA.

"Don't" is what I suggest. Even after the correction US markets are at a level that's correlated with a 25% a year chance of a major - 40%+ - drop. If you can't resist, money market was shown to beat bonds as an alternative to shares. If you can't resist equities, try moving in evenly over the next two years.

The current situation has only limited short term upside potential but lots of downside and you're in the happy position of being in cash.

If markets are a random walk, theory suggests investing as soon as possible. But they aren't and PE10 has a 0.6 correlation with US equity returns over the following fifteen years. The odds are stacked against you at the moment. A fair bit in equities because the one year correlation is low but a deck you know was stacked against you is a poor time to go all in.

jamesd

OldMusicGuy wrote: »

My strategy for retirement is not one based on safe withdrawal rates and I am glad because it looks like a period of volatility means increased risk of pound cost ravaging for those about to retire.

It shouldn't have much or any ravaging effect on those who've paid attention to research.

A year or so of investment income in cash or near-cash, ongoing income from interest and dividends, topping that up from bond rather than equity selling - both Guyton-Klinger and rising equity glidepath do this - should eliminate the ravaging effect. Bonus to those who used Guyton's sequence of return risk taming approach and cut equity holdings in advance.

chucknorris

bostonerimus wrote: »

There are many people that look at historical returns and the models and go 100% equities....I have a pessimistic streak so I'm glad I have a DB pension to rely on. However, I would not be buying a lifetime annuity right now with interest rates so low; if you life an average life you'd do just about as well from a savings bond ladder. Once annuity rates pick up I can see them becoming popular again at least for a portion of a DC pot.

I would still have plenty in bonds, property and equities, this would merely be a small diversity to bring my guaranteed index linked pension up to a round £30k. I don't think that it would be a bad thing to do, but I've realised that it would be an almost irrelevant thing to do.