My retirement portfolio...11 months from drawdown

GazzaBloom

Pat38493 said:

It will be interesting to compare notes in future years regarding the bonds topic, as I am taking a different view on that.

I had virtually nothing in bonds during the last year or so, but I am now starting to build up bond holdings again.  I am trying not to suffer from recency bias there - it's easy to think that bonds are no good after we have had higher bonds volatility for a couple of years, and higher cash returns than bonds, but I think that historically these times are very rare.  Normally bonds will reduce the volatility and provide a different returns pattern to equities whilst at least matching or slightly exceeding inflation.

Therefore I am taking the view that I will use bonds for some of my holdings in the longer term, and rightly or wrongly I have already started switching some of my fund into bonds.  If I'm lucky this will be a good time as bond fund valuations should increase when interest rates start to come down which seems likely in the next 6 months.

It might be worthwhile to keep bonds under advisement rather than exluding them permanently from your thinking.

I have just triggered the crystallisation of my 450K II pension and I will probably invest some of the 25% TFC in ISAs (myself and spouse) in bonds rather than cash, but whatever I can't get into ISAs will stay in cash.  I am doing that partly because we are planning some big capital spends in the first year or two, and my planning to stop work is fluid - not sure yet exactly which month I will stop and whether I will go part time for a while.  

My red line is April 2026 - by that time I will definitely stop working completely.  However I could go as early as August this year if the work annoys me enough!  After August this year I will effectively filling in the last few % of the worst case scenarios which are very unlikely to fully materialise.

I agree on bonds, with cash paying 5% it's easy to hold cash. It's a good suggestion to keep these under review as the next couple of years unfolds.

I hope we don't hit a bad SOR in the next few years but with US debt at all time highs (among other countries) and high S&P500 valuations for the top stocks (the bulk of the index isn't so loftily valued) we'll see. I'm not going to panic and change course though, I'm going to stick to the plan but may nudge the cash percentage up over time if we get a good run. I can then pounce on low priced stocks or buy into bonds with some cash at some point down the road.

I would be dismayed if I had to carry on working in this job until April 2026. Having handed my notice in giving a year's notice it already feels like time has slowed to a crawl..!

Pat38493

GazzaBloom said:

Pat38493 said:

It will be interesting to compare notes in future years regarding the bonds topic, as I am taking a different view on that.

I had virtually nothing in bonds during the last year or so, but I am now starting to build up bond holdings again.  I am trying not to suffer from recency bias there - it's easy to think that bonds are no good after we have had higher bonds volatility for a couple of years, and higher cash returns than bonds, but I think that historically these times are very rare.  Normally bonds will reduce the volatility and provide a different returns pattern to equities whilst at least matching or slightly exceeding inflation.

Therefore I am taking the view that I will use bonds for some of my holdings in the longer term, and rightly or wrongly I have already started switching some of my fund into bonds.  If I'm lucky this will be a good time as bond fund valuations should increase when interest rates start to come down which seems likely in the next 6 months.

It might be worthwhile to keep bonds under advisement rather than exluding them permanently from your thinking.

I have just triggered the crystallisation of my 450K II pension and I will probably invest some of the 25% TFC in ISAs (myself and spouse) in bonds rather than cash, but whatever I can't get into ISAs will stay in cash.  I am doing that partly because we are planning some big capital spends in the first year or two, and my planning to stop work is fluid - not sure yet exactly which month I will stop and whether I will go part time for a while.  

My red line is April 2026 - by that time I will definitely stop working completely.  However I could go as early as August this year if the work annoys me enough!  After August this year I will effectively filling in the last few % of the worst case scenarios which are very unlikely to fully materialise.

I agree on bonds, with cash paying 5% it's easy to hold cash. It's a good suggestion to keep these under review as the next couple of years unfolds.

I hope we don't hit a bad SOR in the next few years but with US debt at all time highs (among other countries) and high S&P500 valuations for the top stocks (the bulk of the index isn't so loftily valued) we'll see. I'm not going to panic and change course though, I'm going to stick to the plan but may nudge the cash percentage up over time if we get a good run. I can then pounce on low priced stocks or buy into bonds with some cash at some point down the road.

I would be dismayed if I had to carry on working in this job until April 2026. Having handed my notice in giving a year's notice it already feels like time has slowed to a crawl..!

Yes this seems to be the strange thing - the close you get to feeling like you can definitely stop work, the slower the time seems to go and the less enjoyable the job becomes.  

You can sometimes only learn about something sometimes by living it - I was kind of hoping that knowing that I was (almost) financially independent would make my job more enjoyable as I would be able to be more assertive about avoiding pointless tasks, but it doesn't seem to be working out that way so far.

cfw1994

GazzaBloom said:

Pat38493 said:

It will be interesting to compare notes in future years regarding the bonds topic, as I am taking a different view on that.

I had virtually nothing in bonds during the last year or so, but I am now starting to build up bond holdings again.  I am trying not to suffer from recency bias there - it's easy to think that bonds are no good after we have had higher bonds volatility for a couple of years, and higher cash returns than bonds, but I think that historically these times are very rare.  Normally bonds will reduce the volatility and provide a different returns pattern to equities whilst at least matching or slightly exceeding inflation.

Therefore I am taking the view that I will use bonds for some of my holdings in the longer term, and rightly or wrongly I have already started switching some of my fund into bonds.  If I'm lucky this will be a good time as bond fund valuations should increase when interest rates start to come down which seems likely in the next 6 months.

It might be worthwhile to keep bonds under advisement rather than exluding them permanently from your thinking.

I have just triggered the crystallisation of my 450K II pension and I will probably invest some of the 25% TFC in ISAs (myself and spouse) in bonds rather than cash, but whatever I can't get into ISAs will stay in cash.  I am doing that partly because we are planning some big capital spends in the first year or two, and my planning to stop work is fluid - not sure yet exactly which month I will stop and whether I will go part time for a while.  

My red line is April 2026 - by that time I will definitely stop working completely.  However I could go as early as August this year if the work annoys me enough!  After August this year I will effectively filling in the last few % of the worst case scenarios which are very unlikely to fully materialise.

I agree on bonds, with cash paying 5% it's easy to hold cash. It's a good suggestion to keep these under review as the next couple of years unfolds.

I hope we don't hit a bad SOR in the next few years but with US debt at all time highs (among other countries) and high S&P500 valuations for the top stocks (the bulk of the index isn't so loftily valued) we'll see. I'm not going to panic and change course though, I'm going to stick to the plan but may nudge the cash percentage up over time if we get a good run. I can then pounce on low priced stocks or buy into bonds with some cash at some point down the road.

I would be dismayed if I had to carry on working in this job until April 2026. Having handed my notice in giving a year's notice it already feels like time has slowed to a crawl..!

Is there a reason you have given a years notice?

I got on very well with my boss (& his boss), and gave them about 6 months notice - I knew if we had redundancies I would not have been considered, but most people generally advise giving as little as possible to either get a chance of redundancy or to avoid the 💩 jobs being lobbed to them 🤷‍♂️

Does give you a long countdown clock, mind….I planned the detail of my LEJoG during those 6 months 🤣👍

GazzaBloom

cfw1994 said:

GazzaBloom said:

Pat38493 said:

It will be interesting to compare notes in future years regarding the bonds topic, as I am taking a different view on that.

I had virtually nothing in bonds during the last year or so, but I am now starting to build up bond holdings again.  I am trying not to suffer from recency bias there - it's easy to think that bonds are no good after we have had higher bonds volatility for a couple of years, and higher cash returns than bonds, but I think that historically these times are very rare.  Normally bonds will reduce the volatility and provide a different returns pattern to equities whilst at least matching or slightly exceeding inflation.

Therefore I am taking the view that I will use bonds for some of my holdings in the longer term, and rightly or wrongly I have already started switching some of my fund into bonds.  If I'm lucky this will be a good time as bond fund valuations should increase when interest rates start to come down which seems likely in the next 6 months.

It might be worthwhile to keep bonds under advisement rather than exluding them permanently from your thinking.

I have just triggered the crystallisation of my 450K II pension and I will probably invest some of the 25% TFC in ISAs (myself and spouse) in bonds rather than cash, but whatever I can't get into ISAs will stay in cash.  I am doing that partly because we are planning some big capital spends in the first year or two, and my planning to stop work is fluid - not sure yet exactly which month I will stop and whether I will go part time for a while.  

My red line is April 2026 - by that time I will definitely stop working completely.  However I could go as early as August this year if the work annoys me enough!  After August this year I will effectively filling in the last few % of the worst case scenarios which are very unlikely to fully materialise.

I agree on bonds, with cash paying 5% it's easy to hold cash. It's a good suggestion to keep these under review as the next couple of years unfolds.

I hope we don't hit a bad SOR in the next few years but with US debt at all time highs (among other countries) and high S&P500 valuations for the top stocks (the bulk of the index isn't so loftily valued) we'll see. I'm not going to panic and change course though, I'm going to stick to the plan but may nudge the cash percentage up over time if we get a good run. I can then pounce on low priced stocks or buy into bonds with some cash at some point down the road.

I would be dismayed if I had to carry on working in this job until April 2026. Having handed my notice in giving a year's notice it already feels like time has slowed to a crawl..!

Is there a reason you have given a years notice?

I got on very well with my boss (& his boss), and gave them about 6 months notice - I knew if we had redundancies I would not have been considered, but most people generally advise giving as little as possible to either get a chance of redundancy or to avoid the 💩 jobs being lobbed to them 🤷‍♂️

Does give you a long countdown clock, mind….I planned the detail of my LEJoG during those 6 months 🤣👍

I gave a year as I've been here 21 years and get on very well with my boss who started around the same time as me. My job is quite unique and no-one else does this job where I work so getting a replacement in and training them up will take time, we're at the end of May already and still not got a replacement in. 

It was also a stick in the sand and gives certainty to my decision.

Bostonerimus1

I like a high equity percentage portfolio for those with good control over their budget and sources of income that are decoupled from the stock market. If the OP and their spouse were 10 years older and about to draw their SPs I'd really like their plan, but drawing 27k from a 500k equity portfolio with a lot of US tech in it right now has too much sequence of returns risk for me. For the next 10 years I'd go with more fixed income in the portfolio and then increase the equity percentage closer to SP age or just add an annuity. 

alanyau88

I agree with Boston. Complete a spreadsheet with your likely expenditure and what you would like doing. There are always unexpected expenses such as repairs to home, inflation. or children requesting for bank of mum and dad. Anything that is too close to call will make me nervous. You may feel you have to cut down and yes you can. But is that what you really want to do in retirement, cutting down your expenses? Retiring before 60 is still young in my opinion and therefore you still have time to accumulate more wealth.

GazzaBloom

alanyau88 said:

I agree with Boston. Complete a spreadsheet with your likely expenditure and what you would like doing. There are always unexpected expenses such as repairs to home, inflation. or children requesting for bank of mum and dad. Anything that is too close to call will make me nervous. You may feel you have to cut down and yes you can. But is that what you really want to do in retirement, cutting down your expenses? Retiring before 60 is still young in my opinion and therefore you still have time to accumulate more wealth.

Thanks for your comments, I understand your concerns, but...

I have spreadsheeted this to death, our current detailed monthly zero based budget goes out to April 2026 in excruciating detail and we have an emergency cash fund put aside.

we've also recently spent £40K on home improvements in preparation for retirement.

60 isn't too young to retire if you die at 66 is it? as a close colleague of mine did in 2019, from seemingly perfect health to dead in 6 weeks!

I'm not ruling out working again completely but it wont be in high stress Management with a 35 mile commute each way as it is now!

FIREDreamer

GazzaBloom said:

alanyau88 said:

I agree with Boston. Complete a spreadsheet with your likely expenditure and what you would like doing. There are always unexpected expenses such as repairs to home, inflation. or children requesting for bank of mum and dad. Anything that is too close to call will make me nervous. You may feel you have to cut down and yes you can. But is that what you really want to do in retirement, cutting down your expenses? Retiring before 60 is still young in my opinion and therefore you still have time to accumulate more wealth.

Thanks for your comments, I understand your concerns, but...

I have spreadsheeted this to death, our current detailed monthly zero based budget goes out to April 2026 in excruciating detail and we have an emergency cash fund put aside.

we've also recently spent £40K on home improvements in preparation for retirement.

60 isn't too young to retire if you die at 66 is it? as a close colleague of mine did in 2019, from seemingly perfect health to dead in 6 weeks!

I'm not ruling out working again completely but it wont be in high stress Management with a 35 mile commute each way as it is now!

You’re a long time dead, so i am going end next month after OMYing for 4 years. My DB pensions bolstered with an annuity and still a decent drawdown pot left for extras.

I am 60 as well, early retirement, but not excessively so.

SouthCoastBoy

FIREDreamer said:

GazzaBloom said:

alanyau88 said:

I agree with Boston. Complete a spreadsheet with your likely expenditure and what you would like doing. There are always unexpected expenses such as repairs to home, inflation. or children requesting for bank of mum and dad. Anything that is too close to call will make me nervous. You may feel you have to cut down and yes you can. But is that what you really want to do in retirement, cutting down your expenses? Retiring before 60 is still young in my opinion and therefore you still have time to accumulate more wealth.

Thanks for your comments, I understand your concerns, but...

I have spreadsheeted this to death, our current detailed monthly zero based budget goes out to April 2026 in excruciating detail and we have an emergency cash fund put aside.

we've also recently spent £40K on home improvements in preparation for retirement.

60 isn't too young to retire if you die at 66 is it? as a close colleague of mine did in 2019, from seemingly perfect health to dead in 6 weeks!

I'm not ruling out working again completely but it wont be in high stress Management with a 35 mile commute each way as it is now!

You’re a long time dead, so i am going end next month after OMYing for 4 years. My DB pensions bolstered with an annuity and still a decent drawdown pot left for extras.

I am 60 as well, early retirement, but not excessively so.

I think 60 is a reasonable aspirational age for retirement, it is an age I have pencilled in as a potential retirement age, the problem is my wife is 2.5 years younger than me, so I may stay a little longer, she plans to retire at 60.

GazzaBloom

Bostonerimus1 said:

I like a high equity percentage portfolio for those with good control over their budget and sources of income that are decoupled from the stock market. If the OP and their spouse were 10 years older and about to draw their SPs I'd really like their plan, but drawing 27k from a 500k equity portfolio with a lot of US tech in it right now has too much sequence of returns risk for me. For the next 10 years I'd go with more fixed income in the portfolio and then increase the equity percentage closer to SP age or just add an annuity. 

I hear you but same such advice would have possibly advised holding bonds/bonds funds in 2022...