Retirement plan not going to plan.

MEM62

This year has seen my retirement plan take a wobble.  I am 60 and had planned to retire at 64/65. 

I currently have circa £300K in my DC pension pot and annual contributions (employer and employee) are currently £18,900.  The main part of the pot, £280K, is with 7iM.  The rest is in my employer plan through Aviva.  I have a DB pension that will pay me £5K when I reach 65.  I also have a rental property that I had planned to sell.  The money from that would have been invested and or put into a savings account until our mortgage deal expires in four years and the remainder would have allowed me to max out my pension contributions for the next two years and given me the cash buffer I needed when going into drawdown. 

The plan is failing in that the 7iM pension has made no gains in the last two years.  The Aviva plan is only just over a year old and is unlikely to see any growth in the current market.  It is worth roughly what I have contributed over that time. 

The tenants should have moved out of my rental property in May. They didn't so I obtained a court order.  They also ignored the court order, so I am now waiting for bailiffs to evict them.  In the meantime, mortgage rates have increased and this has had a knock-on effect on what I will achieve from the flat sale.  Anecdotal evidence suggests that £40K may have been wiped off the value of the property. 

With respect to the pensions, the market may recover in four years, but I think I will still be short of the £460+ target I set for the pot.a couple of years ago.  There will be also no way to recoup the reduction in the value of the flat.

What is that about the plans of mice and men?                     

wjr4

Which funds are you invested in within both pensions? 

GazzaBloom

I'm sorry to hear this. It brings home the reality of this almost unprecedented global financial crisis and how it affects individuals in many ways. Not many are making money in their pensions this year unless anyone had the foresight and stones to move their pension into an energy fund at the start of the year! 

I have no idea whether or when things will get better beyond a hope that they will in time. 

Randy

I've worked out my pension fund would be better off in a bank paying just 0.5% or more interested

dunstonh

The plan is failing in that the 7iM pension has made no gains in the last two years.

That doesn't make it a failure as you know that not every year can be profitable.  It is more likely that 2020 and 2021 were both positive years and 2022 is a negative year that has taken you back to 2020/21 prices.

As negative years are always coming and going to occur many times in the remainder of your life, you plan shouldn't have a problem accommodating these.

With respect to the pensions, the market may recover in four years, but I think I will still be short of the £460+ target I set for the pot.a couple of years ago.

Do you plan to be drawing out the whole £460k in 4 years time?  if so, then the plan has a problem. If not, the plan doesn't have a problem as money will be invested for longer than 4 years.

What was your planned draw rate for the DC pensions?

NedS

dunstonh said:

The plan is failing in that the 7iM pension has made no gains in the last two years.

That doesn't make it a failure as you know that not every year can be profitable.  It is more likely that 2020 and 2021 were both positive years and 2022 is a negative year that has taken you back to 2020/21 prices.

Exactly - the last 4 weeks of Truss-Tantrums have simply taken my portfolio back to where it was at the start of the year, in Jan 2022.

NedS

Randy said:

I've worked out my pension fund would be better off in a bank paying just 0.5% or more interested

Hindsight is a wonderful thing, but with inflation at 10.1% you would be accepting a guaranteed 9.6% loss. How much will your pension be worth in 10 years time?

bostonerimus

OP you don't mention anything about your budget. There are two major components to a retirement plan: your sources of retirement income and how much you intend to spend. Right now things look bleak on the investment side for many people, but remember you probably have at least 20 years for your money to remain invested, so there could be some recovery. Also if going into retirement your pot is not as big as you hoped then you need to cut spending or find more income like taking a part time job. I would do a detailed budget and see where you can save some money to reduce your initial withdrawals. A retirement plan is not a straight road and you need to adapt to the twists and turns of the economy and your circumstances.

Albermarle

NedS said:

dunstonh said:

The plan is failing in that the 7iM pension has made no gains in the last two years.

That doesn't make it a failure as you know that not every year can be profitable.  It is more likely that 2020 and 2021 were both positive years and 2022 is a negative year that has taken you back to 2020/21 prices.

Exactly - the last 4 weeks of Truss-Tantrums have simply taken my portfolio back to where it was at the start of the year, in Jan 2022.

Then you are well ahead of the pack. Most are down 10 to 20% since Jan 2022 and are at a similar level to January 2021.

NedS

Albermarle said:

NedS said:

dunstonh said:

The plan is failing in that the 7iM pension has made no gains in the last two years.

That doesn't make it a failure as you know that not every year can be profitable.  It is more likely that 2020 and 2021 were both positive years and 2022 is a negative year that has taken you back to 2020/21 prices.

Exactly - the last 4 weeks of Truss-Tantrums have simply taken my portfolio back to where it was at the start of the year, in Jan 2022.

Then you are well ahead of the pack. Most are down 10 to 20% since Jan 2022 and are at a similar level to January 2021.

I don't take much solace having just lost a full year's salary (or 10 years worth of average contributions) in the space of 4 weeks. I am lucky in that I have a secure job and can work one more year to make up any shortfall. I suspect many may not be so fortunate in the pending recession and debt re-rating I fear we are now facing.

Audaxer

NedS said:

dunstonh said:

The plan is failing in that the 7iM pension has made no gains in the last two years.

That doesn't make it a failure as you know that not every year can be profitable.  It is more likely that 2020 and 2021 were both positive years and 2022 is a negative year that has taken you back to 2020/21 prices.

Exactly - the last 4 weeks of Truss-Tantrums have simply taken my portfolio back to where it was at the start of the year, in Jan 2022.

Just to clarify @NedS - was your portfolio well up this from January to mid-September? If so, it's performing pretty well as I think most portfolios were already down for the year to mid-September, and a lot further down after the last 4 weeks.