'Lifestyling' and early retirement

sgx2000

Hi All

I am 63 and may retire early.

My workplace pension is with Aviva,  but has apparently been 'lifestyled' since I was 60
Its current value is 77K

Given that I may (if possible) retire within the next couple of years. 
Is there any point to trying to move the funds to something a little more risky?

Pat38493

It probably depends on when you need access to the fund and how quickly you will use it up.  

sgx2000

I hope to retire March next year. (funds permitting)

At which point I will probably opt for a drawdown pension from my current workplace pension.
(although I will wait until just before to decide)

I also have a LGPS  pension which has been paying since I was 60

Martin_the_Unjust

I always thought the nearer to retirement the less risk you should take, to be honest how much difference will a two or three percentage points better return make over a year or so?

L9XSS

MM funds would give you around 5% growth interest on 77k if interest rates remain high (BOE predicted to raise rates again this Thursday). Not particularly high risk but your timeframe is short for your investment period. Are you planning drawdown of the 77k Pension? Will you be accessing the 25% TFLS or taking this as part of a drawdown in stages? Need some more information regarding SP, cash reserves, iSAs etc and timeframes (ie how long the Arriva Pension will cover retirement or is it a bridge to State pension?) as you indicate you may retire early.

sgx2000

Probably take the TFLS as part of the drawdown  (although this could be problematic if in the future the government change the rules)
The 2 remaining years shortfall I will take from savings.

My state pension will be full (checked) 

Still a long way away.
I will adjust my plans and post my full details nearer the time.  (things do have a habit of changing lol)

artyboy

Martin_the_Unjust said:

I always thought the nearer to retirement the less risk you should take, to be honest how much difference will a two or three percentage points better return make over a year or so?

That's the 'old wisdom' where people needed to stabilise their pension pot value at the point of retirement because they were going to buy an annuity.

Now, with far more people opting for drawdown, unless you have a small pot that you intend to withdraw entirely within a few years (e.g. to provide a bridge until your state pension kicks in), then the reality is that you are likely to remain invested for the 20+ more years you survive.

So whilst it's sensible to maybe put aside a few years worth of anticipated drawdown into cash or money market funds (in addition to any immediate TFLS you might want to take), I personally don't see the point of de-risking the bulk of my own pot.

tacpot12

I would second artyboy's view. My pension fund now that I am retired is invested in funds that are as risky as the funds I invested in when I was accumulating my pension pot. I'm 59 now and expect to live for at least another 20 years, and hopefully 40, so I have a long investment horizon. My pension is in drawdown.  

hewhohuntselves

tacpot12 said:

I would second artyboy's view. My pension fund now that I am retired is invested in funds that are as risky as the funds I invested in when I was accumulating my pension pot. I'm 59 now and expect to live for at least another 20 years, and hopefully 40, so I have a long investment horizon. My pension is in drawdown.  

Just out of curiosity, what's your equity/bond (or ostensibly high/low risk) asset split?

older_and_no_wiser

Another one here in favour of NOT reducing risk of funds in retirement. 

Pat38493

older_and_no_wiser said:

Another one here in favour of NOT reducing risk of funds in retirement. 

ERN blog has an article where he found that reducing equity to 60% by retirement date and then running a glide path back up to 100% in the first decade provided a partial hedge against SORR.  You then stay 100% forever.  I suspect many financial advisers would sack me as their customer if I told them to do that!