Lifestyle Strategies

bjorn_toby_wilde

I'm interested to know how forumites feel about lifestyle strategies these days.

I received a letter from Scottish Widows about one of my two DC pots, which has been dormant for four years since my company moved to a new provider.  The gist of it was that now I've passed the age of 60 I should review my investment strategy as they would be starting to move the money into "lower risk" investments.

The low risk element of my other DC pot has actually taken the biggest hit over the last year, I assume due to the well documented hit on bonds and gilts.

My instinct, as I don't need this particular pot when I do hit 65, is not to stick with the lifestyle strategy, but leave the balance as it is.  On the other hand, is now a good time to be buying bonds and gilts again?  I realise nobody has a crystal ball but I'd be interested to know what others are thinking.

Pat38493

I am planning to cancel the life-styling option on my DC schemes (in effect I already have partially done so as they have the retirement age set to 65 and I am planning to retire not later than 57).

This is an easier thing for me, since as a couple we have fairly significant DB benefits that means we would not starve in the long run even if we had the biggest crash in history.

In particular I've seen others post that a lot of the lifestyling strategies were designed for people who were planning to buy an annuity, and therefore need to protect the pot size at a particular date, and they are probably not appropriate if you are planning to use flexible approaches.  

Albermarle

I received a letter from Scottish Widows about one of my two DC pots, which has been dormant for four years since my company moved to a new provider. 

This pension is not dormant. The investments in it still go up and down and you still pay fees. 

There are two basic lifestyle strategies. One is aimed at people planning to buy an annuity, so they derisk effectively down to cash.

The other is aimed at people who plan to go to drawdown. Here % equity is decreased to a certain level ( can vary between different plans)

Big problem if you are in the annuity lifestyle but intend to drawdown, as some are by mistake/history/ poor info.

If you intend to drawdown and are in the drawdown lifestyle plan, the usual problem is that they derisk more than is normally recommended ( on this forum anyway) . Usually a minimum 40% equity is recommended for drawdown, probably more is better. 

MEM62

bjorn_toby_wilde said:

The gist of it was that now I've passed the age of 60 I should review my investment strategy as they would be starting to move the money into "lower risk" investments.

The low risk element of my other DC pot has actually taken the biggest hit over the last year, I assume due to the well documented hit on bonds and gilts.

Lifestyling in terms of de-risking is not suitable for everyone.  Your investment strategy needs to be considered in the wider context of your goals.