At 63. Is it even worth turning lifestyling off.

sgx2000

At 63.  Is it even worth turning lifestyling off.

I currently have a small workplce DC pension with Aviva worth approx £78k

Given that I will probably retire within the next year or 2.
Is it worth the hassle ...?

QrizB

Does your current lifestyling approach achieve the investment mix you want/need?

If it does, leave it as it is.

If not, you should probably change it.

sgx2000 said:

At 63 ...
Given that I will probably retire within the next year or 2.
Is it worth the hassle ...?

At 63 you can expect to live for another 25+ years. If you intend to fund your retirement by drawdown, you'll be invested for that long.

Being in the wrong investment mix over that period could seriously reduce your retirement income.

sgx2000

Probably a really stupid question..
Probably going to drawdown or drawdown/annuity mix

At retirement would Aviva just carry on with the same lifestyled investments or would they offer alternatives?

(lol you would think I would know the answer given how long I have been following the forum...lo)l

QrizB

sgx2000 said:

Probably going to drawdown or drawdown/annuity mix

Right at the moment, RPI-linked annuity rates seem to be higher than the 4% that's mostly safe for drawdown. Of course drawdown is flexible and has the possibility of leaving something for your descendants, so it's not quite a straight comparison.

sgx2000 said:

At retirement would Aviva just carry on with the same lifestyled investments or would they offer alternatives?

It should (might) be explained in your scheme booklet.
My current DC pension is with Scottish Widows. The default lifestyle gets you into relatively low risk, low growth funds at your declared retirement age, then leaves them there.

sgx2000

Thanks for the rreply...

I have just looked at the Aviva website.

They are currently offering (their quick annuity calc)
19560 lump
3942 income

But this is obviously not rpi linked etc

So yes more than te 4% drawdown rate but probably less when rpi linked (no option in the calc)
Oh and I have just seen the medical forms....wow....

Albermarle

sgx2000 said:

Probably a really stupid question..
Probably going to drawdown or drawdown/annuity mix

At retirement would Aviva just carry on with the same lifestyled investments or would they offer alternatives?

(lol you would think I would know the answer given how long I have been following the forum...lo)l

I am pretty sure Aviva will have more than one lifestyle option.

If it is one that is based on you getting an annuity at your retirement age , it will all go to cash/gilts in the last year ( and will be well on its way to that 4 years out) . If you then buy an annuity, that will use all the pot so end of story.

If it is one based on you drawing down your pot, it will derisk in the years leading up to retirement ( means reducing the % of equities basically) but only to a point . So at retirement there will be still be a mix of investments. Not 100% sure what would happen when you started to drawdown, you might be offered some new investment options.

The scenario to avoid is being in an annuity focused lifestyle fund when you actually want to drawdown.

sgx2000

My pension is currently at the same level it was before covid.
But, I have paid appox £10k in over this period
So I am still massively down.....

I wonder if bonds will recover faster than equities over the next 2 years??

sgx2000

Thanks albermarle....

Aviva do have 5 options but all are consolidation funds....

My account is currently set to annuity....
Be just my luck to move to a drawdon option and then bonds recover.....

Albermarle

I wonder if bonds will recover faster than equities over the next 2 years??

Nobody can answer that question.
All you can do is make sure you are in the most appropriate investments/lifestyling option that fits your future plans.

QrizB

sgx2000 said:

I wonder if bonds will recover faster than equities over the next 2 years??

Looking at my tealeaves a la Sybil Trelawney ...

Bonds values were kept high by ahistorical low interest rates.

Interest rates, and bond prices, are now at more typical levels.

I would not bank on a quick recovery.

sgx2000

QrizB said:

sgx2000 said:

I wonder if bonds will recover faster than equities over the next 2 years??

Looking at my tealeaves a la Sybil Trelawney ...

Bonds values were kept high by ahistorical low interest rates.

Interest rates, and bond prices, are now at more typical levels.

I would not bank on a quick recovery.

My thoughts too.

A harder choice is whether to take an annuity now while the rates zre high... or wait in the hope that they improve further