Drawdown - interested how people manage this month by month...

AlanP_2

coyrls said:

ader42 said:

If the pot has not performed well in the previous year.......

How are you going to determine if the pot has not performed well in the previous year?

When I get to that point I will use CPI. If it hasn't kept up with that over the previous 12 months it hasn't performed well.

Arbitrary and a bit of a blunt instrument possibly but it does have the merit of being a measurable yardstick.

zagfles

coyrls said:

dunstonh said:

If someone was coming to this site and was saying that they have £x to invest that they intend to draw out in the next 3 years, nobody here would be telling them to invest the money in risk based assets.

Nobody here would tell them to put the cash in an account with 0% interest, either.

Indeed, the solution is easy. Hold cash outside the pension where you can get rates around 3%. Hold equities in the pension. Drawdown whatever is tax efficient, if you're selling equities you can always rebuy them eg in an ISA with the cash you've got outside the pension. Don't hold cash in the pension if you not getting interest, that's daft/lazy.

Also don't try to time the market unless you think you have a better idea where the market is heading than all the other buyers/sellers who set the market price. If you have that skill you should already be a billionaire. If you're not, forget market timing, and that includes holding a cash buffer for when "the market is low".

Albermarle

Indeed, the solution is easy. Hold cash outside the pension where you can get rates around 3%. Hold equities in the pension.

On the other hand if you have maximised your pension to get the tax relief ( especially for a 40% taxpayer) by adding most of your cash  savings to your pension, then cash in the pension would still be better than cash outside.

zagfles

Albermarle said:

Indeed, the solution is easy. Hold cash outside the pension where you can get rates around 3%. Hold equities in the pension.

On the other hand if you have maximised your pension to get the tax relief ( especially for a 40% taxpayer) by adding most of your cash  savings to your pension, then cash in the pension would still be better than cash outside.

But once you go into drawdown you'll be taking some tax free cash out...

bostonerimus

I keep about a year's cash in the bank (combo of current and saving account) and another year's in a "Stable Value" fund inside my DC pension account that is getting 2.1% right now. I bought a rental property 20 years before retirement and took a job with a DB pension 10 years before I retired, because I didn't want to rely on the uncertainties of drawdown from volatile investments and the rent and DB pension now provide me with income to live on. I don't touch my DC pot and let it accumulate. I will start to make withdrawals soon for tax reasons, not to spend.

A_T

Keeping cash in a SIPP is a tricky one. Some providers don't count it in their platform charges (Bell, HL, Fidelity) but give tiny interest well below the BOE base rate

I contacted Vanguard a few weeks ago when the BOE rate was 1.25% who say while cash is included in their 0.15% charge they pay 1% interest of which they take 0.2%. So a lot better than the SIPP providers mentioned above.

GSP

As expected, you will get many different answers to this as everyone has different circumstances and views on how they will use their pot.

The main thing for me I have learned is to do a number of spreadsheets based on what you have now, predicted growth, predicted annual withdrawal, and when state pension kicks in if it applies how much you can reduce taking money from your private pension.

Build this ‘planner’, but with all these numbers and sums the key is to keep the prospect of running out of money far from you, as a comfort factor at least.

As we have seen, the markets and therefore in most cases pension pots rise and fall. I would say with stats you should not take figures in isolation, but annually even bi-annually perhaps. Then review at the end of each of these terms.

You will get a few posters on here that live for today, or will die rich because they are so careful on what they do and spend.

As I said be careful not to run out of money using a planner, but at the same time try and enjoy yourself with what you have and spend these later years wisely.

Edit, going back to your question, it’s what you are comfortable with the frequency you withdraw. Can be monthly, 3 or 4 times a year or once a year. With the later though while nice to have, it can lull you into a false sense of wealth when starting out. My preferred frequency would be several times a year gauging how much you are going to need, and keep the rest invested.

bostonerimus

I'll be interested to see if anyone has an annuity as part of their retirement income solution.

ader42

dunstonh said:

My intent is to use the 25% lump sum to provide my cash buffer. I will then take £x a month, deciding how much each April.

Why take it up front and not on drip?  Taking it phased with each withdrawal is normally the most tax-efficient way.

I will be taking the 25% lump sum to pay off the mortgage and leave me a cash buffer - I say cash but a chunk of it might be invested inside an ISA.

I know it would be more tax efficient to not pay the mortgage off but I want that security and it will save me a good deal of mortgage interest too - yes if the stock market behaves I'd end up with more if I left it invested there but I don't want everything in the pension - I don't want all my eggs in one basket.

ader42

coyrls said:

ader42 said:

If the pot has not performed well in the previous year.......

How are you going to determine if the pot has not performed well in the previous year?

Based on personal expectations of growth and the ticker price at the time.