My retirement portfolio...11 months from drawdown

GazzaBloom

I retire in December this year and commence drawdown in April 2025.

Mortgage & debt free.

I have a DB pension paying out £6,227 a year of which 50% will increase with CPI capped at 5%.

Age 57, I will be 58 when drawdown commences, wife already retired, age 54. We have full state pensions due at age 67.

We need £33,078 per year in today's money for base living expenses which includes a £12K discretionary amount for entertainment, UK travel, days out etc.

Current portfolio in addition to the DB pension is

My DC Pension (0.16% AMC):

Blackrock US Equity Index:               £164,893.82 (30.45% of portfolio)

HSBC Islamic Global Equity Index:   £166,531.93 (30.76% of portfolio)

Legal & General Global Tech Index:   £85,683.90 (15.83% of portfolio)

Cash:                                                  £36,396.23 (earning 5.25% interest) (6.72% of portfolio)

Wife’s DC pension (0.15% AMC):

Vanguard S&P 500 ETF:                    £61,800.28 (11.41% of portfolio)

S&S ISA:

Legal & General Global Tech Index:  £12,893.63 (2.38% of portfolio)

Cash ISA:                                          £13,235.30 (earning 2.65%) (2.44% of portfolio)

Total:                                                 £541,435.09

Remaining contributions before drawdown starts is £42,082 cash into my DC pension and £2,000 into the cash ISA. We should be 83% equities funds / 17% cash or thereabouts at drawdown, or I will rebalance to around that.

Timeline and FiCalc shows 100% success rate when back tested using some 5% adjustment dynamic spending rules for first 15 years. I have added some one-off large purchases on a new car & home improvements into these as well but they are discretionary and not urgent.

I have a high risk tolerance and the heavy weighting to US stocks is intentional. Don't like or want bonds so a barbell of equity index funds and cash is my preferred position.

Anyone have any thoughts on this position, noting the above preferences? 

BlackKnightMonty

Thanks for sharing your position.

You are quite US / Tech heavy (as am I); though I have a third of my investments in UK and Europe now and am moving more towards an even split:

New fund; high risk/reward:

https://markets.ft.com/data/funds/tearsheet/charts?s=GB00BNTD9T28:GBP

the others:

https://markets.ft.com/data/funds/tearsheet/charts?s=GB0030617699:GBP

https://markets.ft.com/data/funds/tearsheet/summary?s=GB0030617707:GBP

https://markets.ft.com/data/funds/tearsheet/charts?s=GB00B8113P38:GBX

GazzaBloom

I note that @Sea_Shell & DH had a pot of around £536K when they took the leap...

Sea_Shell

GazzaBloom said:

I note that @Sea_Shell & DH had a pot of around £536K when they took the leap...

But we weren't planning or expecting to spend £30k+ per year 😉


Good luck with your leap.   Come on in, the water's lovely 🌞

GazzaBloom

Sea_Shell said:

GazzaBloom said:

I note that @Sea_Shell & DH had a pot of around £536K when they took the leap...

But we weren't planning or expecting to spend £30k+ per year 😉


Good luck with your leap.   Come on in, the water's lovely 🌞

Thanks...I can't wait
 
Drawdown will be £27K allowing for the DB pension already in payment and £12K of that is discretionary

Pat38493

What do you mean by 5% adjustment dynamic spencing rules - do you mean you have set it to use Guyton or similar and if so what settings are you using?

GazzaBloom

Pat38493 said:

What do you mean by 5% adjustment dynamic spencing rules - do you mean you have set it to use Guyton or similar and if so what settings are you using?

Guyton's Inflation adjustment and guardrails and but reduced to 5% adjustments in the increase/decrease amount instead of the default 10%. Success rate drops to 95% without the guardrails which is still pretty good.



To be honest, I will take each year as it comes once in drawdown, annual review will be just before the new tax year every year when I will make rebalancing and drawdown decisions for the following year. We have a fair bit of headroom for adjustments down after a market downturn and can always switch to drawing just cash in a serious crash, we will start with enough cash to cover 3 years+

I like Ramin's take on market crashes and their frequency n his latest Pensioncraft video:

10% drop - correction
20% drop - bear market
30% drop - crash

https://youtu.be/pY1dFKkIgQA?si=nTrAes5MISn_tuuv
 

Pat38493

GazzaBloom said:

Pat38493 said:

What do you mean by 5% adjustment dynamic spencing rules - do you mean you have set it to use Guyton or similar and if so what settings are you using?

Guyton's Inflation adjustment and guardrails and but reduced to 5% adjustments in the increase/decrease amount instead of the default 10%. Success rate drops to 95% without the guardrails



To be honest, I will take each year as it comes once in drawdown, annual review will be just before the new tax year every year when I will make rebalancing and drawdown decisions for the following year. We have a fair bit of headroom for adjustments down after a market downturn and can always switch to drawing just cash in a serious crash, we will start with enough cash to cover 3 years+

I like Ramin's take on market crashes in his latest Pensioncraft video

10% drop - correction
20% drop - bear market
30% drop - crash

https://youtu.be/pY1dFKkIgQA?si=nTrAes5MISn_tuuv
 

Seems fine - have you looked at the cash flow charts in detail for the worst case and pessimistic scenarios to see for how long your spend drops?  Those kind of adjustments sometimes has to be sustained for quite a few years in bad scenarios, but if you have headroom to control spend it's fine.  That said, I am seriously thinking about going at the end of August with a 3% failure rate on Timeline per my other thread tha I also posted today.

Also - using those settings might cause some quirks if you have guaranteed income kicking in later in retirement where it never adjusts your spend back upwards when actually there is plenty of scope to do so, but that's no big deal as you can adjust manually and that's not going to cause an unknown failure.

GazzaBloom

Pat38493 said:

GazzaBloom said:

Pat38493 said:

What do you mean by 5% adjustment dynamic spencing rules - do you mean you have set it to use Guyton or similar and if so what settings are you using?

Guyton's Inflation adjustment and guardrails and but reduced to 5% adjustments in the increase/decrease amount instead of the default 10%. Success rate drops to 95% without the guardrails



To be honest, I will take each year as it comes once in drawdown, annual review will be just before the new tax year every year when I will make rebalancing and drawdown decisions for the following year. We have a fair bit of headroom for adjustments down after a market downturn and can always switch to drawing just cash in a serious crash, we will start with enough cash to cover 3 years+

I like Ramin's take on market crashes in his latest Pensioncraft video

10% drop - correction
20% drop - bear market
30% drop - crash

https://youtu.be/pY1dFKkIgQA?si=nTrAes5MISn_tuuv
 

Seems fine - have you looked at the cash flow charts in detail for the worst case and pessimistic scenarios to see for how long your spend drops?  Those kind of adjustments sometimes has to be sustained for quite a few years in bad scenarios, but if you have headroom to control spend it's fine.  That said, I am seriously thinking about going at the end of August with a 3% failure rate on Timeline per my other thread tha I also posted today.

Also - using those settings might cause some quirks if you have guaranteed income kicking in later in retirement where it never adjusts your spend back upwards when actually there is plenty of scope to do so, but that's no big deal as you can adjust manually and that's not going to cause an unknown failure.

We have to leap into the unknown sometime right?

I can't do this 35 mile commute for much longer so have handed my notice in giving an extended notice period for my own sanity, my last day will be 13th December...yes, Friday 13th!

Pat38493

GazzaBloom said:

Pat38493 said:

GazzaBloom said:

Pat38493 said:

What do you mean by 5% adjustment dynamic spencing rules - do you mean you have set it to use Guyton or similar and if so what settings are you using?

Guyton's Inflation adjustment and guardrails and but reduced to 5% adjustments in the increase/decrease amount instead of the default 10%. Success rate drops to 95% without the guardrails



To be honest, I will take each year as it comes once in drawdown, annual review will be just before the new tax year every year when I will make rebalancing and drawdown decisions for the following year. We have a fair bit of headroom for adjustments down after a market downturn and can always switch to drawing just cash in a serious crash, we will start with enough cash to cover 3 years+

I like Ramin's take on market crashes in his latest Pensioncraft video

10% drop - correction
20% drop - bear market
30% drop - crash

https://youtu.be/pY1dFKkIgQA?si=nTrAes5MISn_tuuv
 

Seems fine - have you looked at the cash flow charts in detail for the worst case and pessimistic scenarios to see for how long your spend drops?  Those kind of adjustments sometimes has to be sustained for quite a few years in bad scenarios, but if you have headroom to control spend it's fine.  That said, I am seriously thinking about going at the end of August with a 3% failure rate on Timeline per my other thread tha I also posted today.

Also - using those settings might cause some quirks if you have guaranteed income kicking in later in retirement where it never adjusts your spend back upwards when actually there is plenty of scope to do so, but that's no big deal as you can adjust manually and that's not going to cause an unknown failure.

We have to leap into the unknown sometime right?

I can't do this 35 mile commute for much longer so have handed my notice in giving an extended notice period for my own sanity, my last day will be 13th December...yes, Friday 13th!

Yes well we might end up on similar scenarios so it will be interesting to compare notes as things go along.

leosayer

Seems to be high risk due to your concentration in US equities considering that you will being drawing on the bulk of your funds for the next 9-12 years before your state pensions start. 

A high risk tolerance is fine during the accumulation phase when you are earning and saving but do you really have the stomach for high volatility when you will almost entirely dependent on the portfolio for your normal living expenses? 

What's your plan for replenishing the cash pot during drawdown? Will you look to maintain a minimum % or £ cash pot?