Moving out of Scottish Widows?

ex-pat_scot

SonOf wrote: »

Just because he is retiring in 9 months does not mean he will be drawing every penny of the pension at that time. The bulk of it may be invested for another 25-35 years.



No it doesn't.



No they dont. Most remain invested at the same level. Although some may lower a notch.

Lifestyling products were designed for the era of annuities, so that by the date of retirement, 25% of available funds were in cash (and ready to be drawn as the PCLS / tax free lump sum) with the remaining 75% in fixed income (and ready to be used to purchase an annuity).

IF this is still your desired option at retirement, then Lifestyling remains one sensible approach (depending on your risk appetite).

However if you are instead looking to use pensions freedoms, gradually depleting your DC pot, leaving the remainder invested, then much of those funds will remain in investment for 20-30 years +, depending on your depletion rate and investment strategy. Under this scenario, derisking your pot at the date of retirement is a hugely risk-averse approach, introducing inflation risk instead.

In practice, you may wish a hybrid or ladder approach, whereby you encash for short term / medium term expected withdrawals (eg 12 months expenditure), or use a portion of your pot to purchase one or more annuities as you age in order to get a guaranteed floor income.

My expected approach, which is to retire mid 50s (ish) is to keep invested in a global diversified ETF portfolio, as the money has to last 40 years.