SIPP Cash Buffer Handling

xylophone

I retired last April and started taking my works DB. Come next month I intend to crystallise my SIPP and start taking a monthly top up from that. 

Have you checked your SP forecast?

Have you booked a Pension Wise appointment to discuss ways of accessing your DC pension?

You are still under age 56 - is your plan to use the SIPP as a buffer until SP cuts in?

Doglegger

xylophone said:

I retired last April and started taking my works DB. Come next month I intend to crystallise my SIPP and start taking a monthly top up from that. 

Have you checked your SP forecast?

Have you booked a Pension Wise appointment to discuss ways of accessing your DC pension?

You are still under age 56 - is your plan to use the SIPP as a buffer until SP cuts in?

Yes, have a full forecasted SP and have had the Pension Wise appointment. The SIPP will be used as a top-up to DB to take me to the 41% tax threshold (Scotland). When I reach SP in 12 years time then the SIPP will be left barring any emergencies.

Scrudgy

42% now Doglegger

Bands	Band name	Rate (%)
£12,571*- £14,876	Starter Rate	19
£14,877 - £26,561	Scottish Basic Rate	20
£26,562 - £43,662	Intermediate Rate	21
£43,663 - £75,000	Higher Rate	42
£75,001 - £125,140**	Advanced Rate	45
Above £125,140**	Top Rate	48

westv

I'm glad I don't live in Scotland!

Doglegger

Scrudgy said:

42% now Doglegger

Bands	Band name	Rate (%)
£12,571*- £14,876	Starter Rate	19
£14,877 - £26,561	Scottish Basic Rate	20
£26,562 - £43,662	Intermediate Rate	21
£43,663 - £75,000	Higher Rate	42
£75,001 - £125,140**	Advanced Rate	45
Above £125,140**	Top Rate	48

Yeah, I realised that as soon as I'd posted.

redpete

The nearest thing in my SIPP to a cash buffer is about 18 months' worth of withdrawals held in a money market fund.  I include this as part of the initially 50% of total funds held in bonds.  I've also got about a year's worth in savings accounts - these are mostly for unexpected expense or unusually expensive holidays. At the beginning of each year I take the year's 'salary' out by selling bond funds and put it in savings accounts from which I take a monthly amount (this on top of a reasonable DB income and state pension later this year).
The 50% held in equities will stay invested until it increases >20% at which point I will transfer 20% into the bond funds.
Some might recognise this as Prime Harvesting which I took from McClung's book. It's a strategy that I could understand and work with relatively easily, and I decided any strategy is better than totally winging it. I did wonder whether the post-QE world of the bond market might invalidate some of the recommendations - but that got too difficult for me to assess; the DB and state pension make this less of a risk than it might have been.

Steve_PL_too

Linton said:

In real life you have to deal with the ups and downs of the market in some way, ideally with minimal cost, effort and disturbance to day to day life.  The question is how.

Quite right. And how we individually deal with it will depend on our individual circumstances.  I am 66 (just), and have a cash buffer for the next 6 to 8 years (inflation depending);  the extent to which I maintain/change that will depend on how my life develops over the years.  That emotional comfort blanket, to me, is very important.  Everybody else’s circumstances will differ.  (For what it’s worth - probably not a lot - other than the cash, I’m mostly in world tracker funds : the cash buffer is my counterbalance).