Approaching Drawdown Next Year

segovia

I'll be considering entering into drawdown from my SIPP's next year, I have one with AJ Bell with 60k and one with II with 440k.  I am not in any desperate need of any 25% tax-free lump sums, I would much prefer a regular income. My portfolio is currently in Hsbc MSCI world ETF which has provided consistent performance over the past few years.  When moving over to a drawdown scenario there are investment options available from II or I could choose my own investments. For anyone who just entered SIPP drawdown in the past 2 / 3 years have been your experiences?  J 

Albermarle

or I could choose my own investments

In the case of which investments you can have, there is no difference pre or post drawdown.

Typically ( but with many exceptions ) someone in the 50's or 60's will have a medium risk portfolio before drawdown and after .

I would think many do not actually change their investments at all when they go into drawdown.

tacpot12

I've been taking drawdown for the last three years. The fundamental decision you need to take is whether you will get your regular income by regularly selling the investments you own or by investing in assets that produce a natural income.  AJ Bell don't have a system that allows you to say "Sell the number of shares that will produce £x every month and continue to do so until I or my executors tell yo to stop". I don't know if II does. If it does, you might want to move your investments with AJ Bell to II. 

I chose to reinvest my pension portfolio in assets that produce a natural income; mainly Investment Trusts but also some EFTs. I have invested in quite a range of different products so I receive different amounts of money every month. As I didn't have any other cash buffer at the time, I converted my portfolio to produce income about 12 months before I retires, so that by the time I had retired, there was a good float to pay the regular monthly income that I needed. You could delay this conversion until the point of retirement, and just sell all your assets but only buy income producing replacements with a percentage of it, leaving the rest as a cash float.

My portfolio has always produced over 4%yeild, and has also grown in value by about 2% per annum. With a better choice of investments I would expect you can get closer to 4% yield and 3% growth pa. I do have other income streams, such as a rental property, and  I now have a larger cash float as a result of selling another rental property. Most of the proceeds of the sall have been invested to produce growth rather than income as I find that I have enough income to meet my day-to-day living expenses and can always sell assets if I want to make a one-off purchase like a car or holiday. 

segovia

tacpot12 said:

I've been taking drawdown for the last three years. The fundamental decision you need to take is whether you will get your regular income by regularly selling the investments you own or by investing in assets that produce a natural income.  AJ Bell don't have a system that allows you to say "Sell the number of shares that will produce £x every month and continue to do so until I or my executors tell yo to stop". I don't know if II does. If it does, you might want to move your investments with AJ Bell to II. 

I chose to reinvest my pension portfolio in assets that produce a natural income; mainly Investment Trusts but also some EFTs. I have invested in quite a range of different products so I receive different amounts of money every month. As I didn't have any other cash buffer at the time, I converted my portfolio to produce income about 12 months before I retires, so that by the time I had retired, there was a good float to pay the regular monthly income that I needed. You could delay this conversion until the point of retirement, and just sell all your assets but only buy income producing replacements with a percentage of it, leaving the rest as a cash float.

My portfolio has always produced over 4%yeild, and has also grown in value by about 2% per annum. With a better choice of investments I would expect you can get closer to 4% yield and 3% growth pa. I do have other income streams, such as a rental property, and  I now have a larger cash float as a result of selling another rental property. Most of the proceeds of the sall have been invested to produce growth rather than income as I find that I have enough income to meet my day-to-day living expenses and can always sell assets if I want to make a one-off purchase like a car or holiday. 

A useful answer, my wife is still working with a regular and decent wage coming in and we have rental property, also my state pension next year which is a bonus and I am continuing to work until the end of the year which gives me the opportunity to add another 40K to my pension. My wife will have a DB of 9K a year when she finally finishes. I think it will be case of seeing what we need, cutting down a bit and living off her wage, state pension and rental income and only drawing down from the SIPP to  top up any shortfalls. I have liked the HSBC World ETF, currently showing a 28% return  so I may keep  that running when I move to drawdown