Drawdown from investments

iwannbejockmctavish

Could anyone give advice regarding what is considered to be a sensible withdrawal level percentage wise from an investment fund? I have been reading that between 3-4% of the value of the fund is considered to be a 'norm'.

Clearly, a lot will depend on where monies are invested and the volatility of markets etc. Just looking for a general consensus or feedback from forum members who are in drawdown.

Thanks in advance

MallyGirl

it depends on your goals. Do you want any left when you die, to pass on to descendents?
4% is often quoted as suitable for the US with 3 or 3.5% more appropriate for the UK but it depends on whether you are looking to preserve some of the fund or use it all up.

AnotherJoe

It also doesn't have to be a constant %. You might withdraw more earlier and less when other pensions kick in.

iwannbejockmctavish

Thank you for the responses. In an ideal world it would make me happy to have something to pass on. I do have other forms of savings, assets and investments, however, to be able to provide my kids with tax free cash would be a great thing to do. Some considerate planning is needed, cheers!!!

dunstonh

Could anyone give advice regarding what is considered to be a sensible withdrawal level percentage wise from an investment fund?

Anywhere between 1% and 5% depending on the asset mix. You dont mention the asset mix so its difficult to be specific. However, if at least 50% is equity, then around 3% is typical.

DairyQueen

Do you have other (guaranteed) sources of retirement income? How long do you anticipate the fund lasting (30 years is commonly used but it depends on factors such as: the age at which you begin drawdown and whether you enjoy good health). Do you have cash surplus (or guaranteed income) sufficient to allow you to suspend drawdown for a period if markets take a sudden drop and a bear market then ensues for a period of years? Do you wish to retain any of the fund for inheritance purposes?

May be worth your while researching 'sequence of returns risk' and also searching this forum for threads on drawdown (there are many). jamesd has an excellent thread. I will see if I can locate it...

Yep, here it is:

jamesd on safe withdrawal rates

iwannbejockmctavish

Thank you DairyQueen, I will review. I appreciate I have not detailed all of my financial funds, I really wanted a 'high level' idea.

TadleyBaggie

I'm drawing 4.5% and in 3 years the pension value is still in excess of the starting point.

redmalc

I have been discussing with my IFA earlier today the same question and I have come up with 3%

Thrugelmir

TadleyBaggie wrote: »

I'm drawing 4.5% and in 3 years the pension value is still in excess of the starting point.

That's a broad generalisation. How sustainable is your plan. If capital values were to fall. Likewise is your underlying investment income falling while you cash in "capital units".

k6chris

redmalc wrote: »

I have been discussing with my IFA earlier today the same question and I have come up with 3%

Yes, I have used 3% as a non-optimal starting figure to start with, based on approx a 60/40 equity / other stuff mix. Will review over time, but seemed a pragmatic enough figure to start using.