Investment choices approaching retirement

shinytop

I’m planning on retiring October 2019 and have DC pensions worth c.£340k.. By that time I’ll have paid in another £60k. I’ll need about £80k of this in the first 2 years until DB pensions start and then would like another £120k over the next 7 years before SPs kick in. The rest can be taken as and when or kept for care or whatever. Current investments (the £340k) are

60% Main Pension - L&G Global Equity 60:40
25% Main Pension - L&G over 15 yr gilts
15% AVC - Clerical Medical Managed pension fund (no longer contributing)

Remaining £60k as yet undecided. I need to stay in the main pension until I retire but there looks to be a decent range of funds (or cash) I could switch to. When I retire I’ll transfer all of it somewhere else. I can transfer out the AVC any time.

I would say I have a medium attitude to risk. Apart from the 1st 2 years I could manage with less than the above as our DB pensions are good. Any thoughts on these investments? Up to 75% in equities seems a lot at this stage. Should I be putting more into cash or bonds?

Any thoughts welcome.

thanks

intowhere

Just out of interest, what is it that you do that allowed you to achieve a £340k DC pension pot and still have a DB pot in the background.

AlanP_2

Given you have 12 months to go until starting to withdraw and then need accessible cash for the few years I would put the next £60k into a Cash or near Cash fund and play safe.

You don't need to chase a high return.

Keeping 2-3 years retirement spending in cash is the general advice you see on here to reduce prospect of selling assets at a loss in a market downturn situation.

shinytop

Just out of interest, what is it that you do that allowed you to achieve a £340k DC pension pot and still have a DB pot in the background.

I have a reasonably well paid job that used to have a good DB scheme, had my kids and paid off my mortgage relatively early and never got divorced. When the DB scheme closed I put as much as I could into the DC, especially after the mortgage was paid off.

westv

£340k is large but isn't really that large.

kidmugsy

shinytop wrote: »

I’m planning on retiring October 2019 and have DC pensions worth c.£340k. By that time I’ll have paid in another £60k. I’ll need about £80k of this in the first 2 years until DB pensions start and then would like another £120k over the next 7 years before SPs kick in.

At least that first £80k should be in cash.

Anything that you reckon you won't need for, say, 10 years or so might be in equities (unless you fancy market-timing a crash) and perhaps long-dated index-linked bonds such as TIPS.

So that leaves the middle £120k. Maybe a mixture of short-dated bond funds, cash, gold, commodities, property, and other diversifiers.

Just at the moment I would myself have an awful lot in cash - with maybe part of that in foreign currencies if my pension scheme allowed that.

Thrugelmir

westv wrote: »

£340k is large but isn't really that large.

How much is from recent years bumper returns? What goes up must come down. Or at the very least return to the long term median trend. Stock markets unsurprisingly have to reflect actual company trading performance. They are not just niumbers on a screen that rise as if by magic.

westv

Thrugelmir wrote: »

How much is from recent years bumper returns? What goes up must come down. Or at the very least return to the long term median trend. Stock markets unsurprisingly have to reflect actual company trading performance. They are not just niumbers on a screen that rise as if by magic.

Are you replying to my post or post 2 - which I was replying to?

Albermarle

I have a reasonably well paid job that used to have a good DB scheme, had my kids and paid off my mortgage relatively early and never got divorced. When the DB scheme closed I put as much as I could into the DC, especially after the mortgage was paid off.

Interestingly I am almost exactly in the same ( nice ) position as the OP. It surprised me how much I was able to build up in DC pots after not really starting until already 40 ( apart from a SERPS optout ) but like already said there has been a very good market growth for the last few years which has helped .
Also I am by nature a saver rather than a big spender , which is a big factor as well

Thrugelmir

westv wrote: »

Are you replying to my post or post 2 - which I was replying to?

Putting the sum of £340k into context. "The rule is, jam to-morrow and jam yesterday – but never jam to-day.":)

shinytop

I would put the next £60k into a Cash or near Cash fund and play safe.

I just set that up that before I posted originally

How much is from recent years bumper returns? What goes up must come down.

quite a lot I think!

At the moment options for my work pension (the £300k) are a bit limited; it's either cash, various equity funds, one property fund or one 15yr gilts. Just over £200k is in equities; maybe that's about right overall. I think I'll transfer out the AVC to give myself more options there then think about whether I want to change more of the £200k equities in the work pension to cash.