One for the experts( you know who you are!)

Amateurretiree

So there is lots of talk about ‘derisking’ before you retire.
Just wondered exactly what allocation would you move to and how many years before retiring?

It’s a bit of a moot point for me as I have an NHS DB, but DH has a SIPP , just wondering if we are on the right lines.
We are quite risk averse, currently in Defensive funds( but pretty much back where we were pre COVID.
DH retired last year at 60, gets SP at 66, I’m 58, SP at 57.
My DB pretty much covers essentials but we like long haul holidays normally a couple of times a year which can eat up a fair bit, but we want to do it while we can.

Amateurretiree

Whoops wishful thinking SP at 67!

Amateurretiree

Just thinking, should have given more info. We don’t mind running capital down, we have checked our state pensions and can easily live on both of those plus my DB as that is what we manage on now, but we still don’t want to run the SIPP down to zero over the next 9 years, just so if one of us dies the survivor has enough to live on. Got 3 years in cash .

[Deleted User]

You haven’t done this, but even if you did provide all the info, its very hard for someone else to properly evaluate your risk. Nobody knows your full position and attitudes as well as you do.

Read this, understand risk and then design your own asset allocation. “Deep Risk: How History Informs Portfolio Design“. The whole series is very good. 

Marcon

A few lines of info isn't going to help anyone to help you make informed choices.

Thrugelmir

Amateurretiree said:

We are quite risk averse, currently in Defensive funds( but pretty much back where we were pre COVID.

Might be "defensive" however they sound volatile and correlated in nature. Do you like rollercoaster rides? 

Albermarle

If you are risk averse and already in defensive funds , then you are effectively derisked already I suppose .
Apart from moving everything to cash or gilts ( no risk or return effectively ) there is probably not a lot else you can do ( on the basis of the info supplied )

Linton

Dereisking before retirement was the standard advice when retirees usually took an annuity for which one had to pay the full amount in cash.  Now that many people plan to access their pension pot during the whole of their retirement derisking is less important since much of  the money would not be touched for say 15+ years..  The danger with too much derisking is that your pension pot can be seriously depleted by inflation.  It's a matter of balancing short term risk vs long term risk.

So from what you have said you could consider holding your planned expenditure for the next 5 years as cash but otherwise keeping to the same type of investing you have been happy with so far.  This is a broad suggestion not definitive advice, which we cant give anyway.  There is too little information to say much more.

Amateurretiree

Thanks everyone for your replies, I just really wanted general advice nothing specific so that’s been great( I’m not looking for free advice from the IFA ‘s on here, just wondered what other people do approaching or in early retirement.)
We feel quite comfortable with our financial position, we don’t care about increasing our money, just don’t want to lose a lot of it!

DH s SIPP consists of 35% cash( so that equates to about 6 yrs potential expenditure if we ever get to travel again)
20% global bonds
7% uk credit bonds
5 % global inflation linked bonds
10% US Stocks 
5% uk government bonds
 and then a mixture of some emerging market bonds,global high yield bonds,Pacific stocks.
Thanks again for those who have responded, appreciate the expertise .

Audaxer

Amateurretiree said:

So there is lots of talk about ‘derisking’ before you retire.
Just wondered exactly what allocation would you move to and how many years before retiring?

It’s a bit of a moot point for me as I have an NHS DB, but DH has a SIPP , just wondering if we are on the right lines.
We are quite risk averse, currently in Defensive funds( but pretty much back where we were pre COVID.
DH retired last year at 60, gets SP at 66, I’m 58, SP at 57.
My DB pretty much covers essentials but we like long haul holidays normally a couple of times a year which can eat up a fair bit, but we want to do it while we can.

You sound as if you are well covered for income with your DB pension, especially when your SPs kick in as well. So assuming the portfolio in the SIPP already amounts to more than enough to cover expensive holidays etc. until your SPs start, then I would think you probably don't need to de-risk anymore. 

Albermarle

That is pretty defensive/cautious !
My initial ( non expert ) reaction would be that relying so much on bonds and so little on stocks/shares, that it is unbalanced even for a cautious portfolio , especially when you have a lot of cash as a safe haven anyway .
Also cash in a SIPP is normally earning nothing /losing to inflation . Is there anyway you could hold more cash outside the SIPP in normal interest paying savings accounts and have more non cash investments in the SIPP