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

coyrls

ader42 said:

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. 

We have had a series of posts from people asking if now is the right time to start drawing from a cash buffer.  Your criteria for when you will draw from your cash buffer are subjective and so you will be regularly asking yourself the same question.  It doesn't sound like a recipe for a relaxing retirement.

MK62

coyrls said:

ader42 said:

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. 

We have had a series of posts from people asking if now is the right time to start drawing from a cash buffer.  Your criteria for when you will draw from your cash buffer are subjective and so you will be regularly asking yourself the same question.  It doesn't sound like a recipe for a relaxing retirement.

True......but then you can't really have a DC pension withdrawal plan which doesn't involve you making decisions......unless you maybe take the decision now to buy an annuity (though this is irreversible, and you'd no longer have a DC pension), or else pay someone else to make these decisions for you.

coyrls

MK62 said:

coyrls said:

ader42 said:

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. 

We have had a series of posts from people asking if now is the right time to start drawing from a cash buffer.  Your criteria for when you will draw from your cash buffer are subjective and so you will be regularly asking yourself the same question.  It doesn't sound like a recipe for a relaxing retirement.

True......but then you can't really have a DC pension withdrawal plan which doesn't involve you making decisions......unless you maybe take the decision now to buy an annuity (though this is irreversible, and you'd no longer have a DC pension), or else pay someone else to make these decisions for you.

Yes but if you define criteria more objective than "personal expectations of growth" as part of a withdrawal plan, those decisions are less frequent and more easy to make.

NedS

coyrls said:

MK62 said:

coyrls said:

ader42 said:

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. 

We have had a series of posts from people asking if now is the right time to start drawing from a cash buffer.  Your criteria for when you will draw from your cash buffer are subjective and so you will be regularly asking yourself the same question.  It doesn't sound like a recipe for a relaxing retirement.

True......but then you can't really have a DC pension withdrawal plan which doesn't involve you making decisions......unless you maybe take the decision now to buy an annuity (though this is irreversible, and you'd no longer have a DC pension), or else pay someone else to make these decisions for you.

Yes but if you define criteria more objective than "personal expectations of growth" as part of a withdrawal plan, those decisions are less frequent and more easy to make.

I agree. If you are going to have a cash buffer and intend to draw upon it when markets are down to avoid selling equities (and presumably then intend to replenish it when markets are up), you should have a defined set of circumstances as to what constitutes up and down. A simple set of rules that have been modelled to show they are beneficial to the portfolio as a whole. Otherwise it's 'finger in the air' and hope for the best.

ader42

To slightly clarify, I'll probably want the pot to still have grown in total value each year after any drawdown and costs; but the pot should be significant enough for some flexibility.

In any case I can't see myself drawing down more than 4% per annum before state pension age, and will reduce the amount I drawdown after said state pension age, and then reduce again once other half's state pension kicks in.

If grandchildren turn up then things might change of course - particularly if I want to help my son with housing costs. It will be a balance, no point having my son struggle financially and have to wait until he is in his 50s before he gets any inheritance.

Albermarle

To slightly clarify, I'll probably want the pot to still have grown in total value each year after any drawdown and costs; but the pot should be significant enough for some flexibility.
That's a very tough, maybe unrealistic ask, as you are trying to drawdown but maintain 100% of the capital at the same time ( or near enough) . Some ups and downs in the pot year to year are all taken into account in the calculation of a safe withdrawal rate ( acknowledging that SWR is open to opinion/discussion) and some slow reduction in the capital sum over a period of time is normal. The debate about when to use cash is more around when there is a particularly bad year/drop in markets, and how bad it would have to be to trigger switching to cash.
For example if you had £250K on Jan1st and during the year you withdrew £10K , fees of £1,500 and a investment drop of say 5%, leaving you with approx £225K , would be just part of the normal drawdown process and not a trigger to change strategy.
If the same happened 4 years on the run then it might be.

coyrls

NedS said:

coyrls said:

MK62 said:

coyrls said:

ader42 said:

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. 

We have had a series of posts from people asking if now is the right time to start drawing from a cash buffer.  Your criteria for when you will draw from your cash buffer are subjective and so you will be regularly asking yourself the same question.  It doesn't sound like a recipe for a relaxing retirement.

True......but then you can't really have a DC pension withdrawal plan which doesn't involve you making decisions......unless you maybe take the decision now to buy an annuity (though this is irreversible, and you'd no longer have a DC pension), or else pay someone else to make these decisions for you.

Yes but if you define criteria more objective than "personal expectations of growth" as part of a withdrawal plan, those decisions are less frequent and more easy to make.

A simple set of rules that have been modelled to show they are beneficial to the portfolio as a whole.

That would be ideal but I am not aware of any studies that have modelled the use of a cash of buffer governed by a simple set of rules that shows the outcome as beneficial to the portfolio as a whole.

GSP

Thought this thread was about withdrawals, and what frequency to take these. 

Surely talk of cash buffer’s etc can be found in other threads?

Albermarle

GSP said:

Thought this thread was about withdrawals, and what frequency to take these. 

Surely talk of cash buffer’s etc can be found in other threads?

It has digressed, which is normal/usual.

Time4T_Accounts

Still interesting, though (and relevant for me - ta!)