Draw down - why is it so hard?

mrklaw

michaels said:

One big question is do I 'bridge' the start date using DC like for the state pension or take it early with the reduction. Overall it should make little odds but it would impact the size of any heritable pot on early second death, taking the DB earlier means a smaller bridge and hence a bigger DC pot left.

isn’t this one relatively easy to illustrate? Couple of excel columns, pop the reduced DB income in one with a top up from DC leading up to SPA, then in the other have the higher DB at normal retirement age with higher DC contributions to fill the gap. Compare both the totals needed and the relative reductions in the DC pot. 

Do you think you’ll need the DC pot after SPA? i.e does it only need to cover the bridge or will it be needed for income (or only one-off purchases) after SPA kicks in?

michaels

mrklaw said:

michaels said:

One big question is do I 'bridge' the start date using DC like for the state pension or take it early with the reduction. Overall it should make little odds but it would impact the size of any heritable pot on early second death, taking the DB earlier means a smaller bridge and hence a bigger DC pot left.

isn’t this one relatively easy to illustrate? Couple of excel columns, pop the reduced DB income in one with a top up from DC leading up to SPA, then in the other have the higher DB at normal retirement age with higher DC contributions to fill the gap. Compare both the totals needed and the relative reductions in the DC pot. 

Do you think you’ll need the DC pot after SPA? i.e does it only need to cover the bridge or will it be needed for income (or only one-off purchases) after SPA kicks in?

The relative incomes with a 3.25% SWR are as above, but the trade off is bigger inheritance pot but less guaranteed income so more at the mercy of the markets.