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Dynamic spending rules for retirement drawdown pros/cons and alternatives?
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@GazzaBloom and @bowneyboy, I would be very interested in how you chose your 80-20 fund for retirement? Was it an 'off the peg' VLS or HSBC fund or something more self tailored? I am definitely leaning that way myself."All lies and jest, still a man hears what he wants to hear and disregards the rest”0
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GazzaBloom said:bownyboy said:sofm said:Q for those planning to retire next year... have you factored in/have any concerns about known issues between now and then? I'm thinking of a) war in Ukraine, b) UK election, c) inflation. Are you trusting the maths and modelling takes into account perceived risks, or just that the end of the CY2024 is long enough off for a, b and c to have completed/stabilised.
Yes these are things you cannot control - maybe I shouldn't worry unduly!
It was hard but what I learnt was our asset allocation was about right at 80% equities, 10% bonds and 10% cash.
Come the end of October the long hot summer was over and I got offered a contract for 4 months which I decided to take as a) it was cold and wet and b) the income from this would provide another years worth of expenses.
So fast forward to March this year and I'm 'retired' again and the investments are now the highest they've been and we hopefully don't need to touch them until April next year.
So I guess my point is don't sweat it too much. If you've run the numbers just go for it. James Shack has a great video on this topic here: https://www.youtube.com/watch?v=OuDCDp9Z9Y4
As an example if I look at my invested assets I'm about 90/10 stocks to bonds, but I have a large cash buffer and also DB pension and rental income so that I'm well insulated from market down turns. If you are relying on withdrawals from volatile assets in your invested pension pot, then you need a plan to temporarily reduce or eliminate those withdrawals in bad times or a strong stomach and faith in you modelling to continue the withdrawals.And so we beat on, boats against the current, borne back ceaselessly into the past.0 -
Bianchiintenso said:@GazzaBloom and @bowneyboy, I would be very interested in how you chose your 80-20 fund for retirement? Was it an 'off the peg' VLS or HSBC fund or something more self tailored? I am definitely leaning that way myself.
I settled on 85/15 for 2 reasons, Warren Buffet's suggestion of a 90/10 portfolio on his passing and 15% will be 3 years of my living expenses held in cash or cash equivalents. I just don't think I quite have the guts for 100% equities in retirement, although I am fairly risk on and can tolerate significant drops, so the 15% is only to provide some sleep at night comfort and slightly soften the biggest drawdowns in a major equity market downturn. It will be at the expense of some growth.
We have full state pensions that start paying out 9 years after retirement and I have a DB pension already in payment that will provide around 18% of our drawdown needs.
We have some flexibility in our drawdown plans and can reduce up to 25%-30% in extreme situations.
Over time, if we can get through the initial years without a bad a bad sequence of returns, I may soften the mix and even hold my nose and buy some bonds funds.2 -
GazzaBloom said:Bianchiintenso said:@GazzaBloom and @bowneyboy, I would be very interested in how you chose your 80-20 fund for retirement? Was it an 'off the peg' VLS or HSBC fund or something more self tailored? I am definitely leaning that way myself.
Over time, if we can get through the initial years without a bad a bad sequence of returns, I may soften the mix and even hold my nose and buy some bonds funds.And so we beat on, boats against the current, borne back ceaselessly into the past.1 -
Bostonerimus1 said:GazzaBloom said:Bianchiintenso said:@GazzaBloom and @bowneyboy, I would be very interested in how you chose your 80-20 fund for retirement? Was it an 'off the peg' VLS or HSBC fund or something more self tailored? I am definitely leaning that way myself.
Over time, if we can get through the initial years without a bad a bad sequence of returns, I may soften the mix and even hold my nose and buy some bonds funds.1
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