SIPP funds - 2 years to go

Ceme3000

I have a HL SIPP that I want to use as a bridging pension from age 55 to 60, when DB pensions kick in. I am 53 now and would like about 15K per annum increased with inflation each year. The intention is to take the entire SIPP tax free (or as much as I can) by combining the 25% tax free withdrawal and my personal income tax allowance each year.

There is 82K currently invested and I will add another £7200 before I reach 55 (I am not currently earning). The SIPP is invested in about 90% equities and 10% bonds but as it has already reached the target I need, I think it is about time I restructure it to reduce risk. I was thinking of keeping it simple and was looking at Vanguard Target Retirement Fund 2015 as a fire and forget option (39% Equity, 59% Bonds). Does anyone have any other ideas I could research? Should I consider going lower on equities?

Also can anyone explain why bond funds have surged in price recently?
Thanks

Linton

Why not leave say 50% in cash to cover your first few years of retirement. Equitty could go anywhere in the next 5 years and as you point out safe bonds are increasingly expensive. Bond prices cannot increase much beyond the point where they provide zero return and could easily fall.



Safe government bonds are increasing in price across the world as they are used as a haven in troubled times. Times are being seen as more troubled thanks to Trump and China, Trump and Iran etc. Even no deal BREXIT could be playing a small part.

Albermarle

(39% Equity, 59% Bonds). Does anyone have any other ideas I could research? Should I consider going lower on equities?

There is no exact answer to this question, as it is partly down to opinion, your risk appetite and your own personal circumstances.
If you were relying more on your pension to support you for many years in the future , then most would go for somewhere between 40% and 60% equities ( some would go even higher) .
As you will be needing the money sooner and for a limited period , than as suggested some cash element might be a safer option Although cash within a pension is safe it earns zero , or something very close.

Ceme3000

Thanks for the replies, a cash allocation does seem to make sense.