Pension Drawdown - Annual or Monthly ?

segovia

Exodi said:

Depends if you need to spend £16,000 immediately or if your spending is spread across the year.

As long as you have a sensible cash buffer, it's better to leave the money employed for as long as possible.

No need for a lump sum, the withdrawal is required to replace a monthly salary from a Ltd company that I am closing down. 

segovia

dunstonh said:

Whatever suits your objectives.

And remember, that 4% is not a safe withdrawal rate.

4% was indicative for explanation purposes 

segovia

Albermarle said:

You will probably have less need to contact HMRC for a tax refund, if you take it monthly.

If I take it monthly do I also sell my holdings monthly just before payment is due to be paid ? 

segovia

LHW99 said:

If you are taking it as UFPLS, some platforms won't set up monthly UFPLS's - you have to request each one separately. Taking out annually (or 6 monthly) and keeping in a cash saving / ISA account to transfer from monthly can be less hassle.

I'll ask the provider, it's A J Bell 

Mark_d

segovia said:

Assume I have a pot of 400K and I have decided a safe withdrawal is 4% 

Would you take one £16,000.00 per year or 12 x £1,333.33? 

J  

It would depend on your needs and the fees for making each withdrawal.  I'd instinctively take the money monthly however if you'll need to pay for a £5k holiday early on in the year, then I'd take more of the money early rather than using short term borrowing.

segovia

Mark_d said:

segovia said:

Assume I have a pot of 400K and I have decided a safe withdrawal is 4% 

Would you take one £16,000.00 per year or 12 x £1,333.33? 

J  

It would depend on your needs and the fees for making each withdrawal.  I'd instinctively take the money monthly however if you'll need to pay for a £5k holiday early on in the year, then I'd take more of the money early rather than using short term borrowing.

I have other income streams I can tap into, I am checking with AJ Bell what the options are and any associated fees   

poseidon1

segovia said:

Albermarle said:

You will probably have less need to contact HMRC for a tax refund, if you take it monthly.

If I take it monthly do I also sell my holdings monthly just before payment is due to be paid ? 

Interesting, that you don't appear to have any appreciable income producing assets in your Sipp, thereby necessitating investment sales to access your income drawdown requirements.

Reading this forum I am getting the impression this may be a  fairly common occurrence?

I have always invested in income producing investments so there is a constant income flow sufficient to meet any future draw down needs ( in my case via planned UFPLSs) without necessitating investment sales at times when underlying capital values may have crashed.

My question to those who don't have income producing sipp assets, do you still sell assets at times of significant market  falls to meet your income drawdown, or make sure you always have sufficient cash in the kitty to meet 1 year's drawings? 

GenX0212

 have always invested in income producing investments so there is a constant income flow sufficient to meet any future draw down needs ( in my case via planned UFPLSs) without necessitating investment sales at times when underlying capital values may have crashed.

My question to those who don't have income producing sipp assets, do you still sell assets at times of significant market  falls to meet your income drawdown, or make sure you always have sufficient cash in the kitty to meet 1 year's drawings? 

Doesn't that cut both ways, by holding 'cash' you could be losing out on investment growth?

eskbanker

GenX0212 said:

 have always invested in income producing investments so there is a constant income flow sufficient to meet any future draw down needs ( in my case via planned UFPLSs) without necessitating investment sales at times when underlying capital values may have crashed.

My question to those who don't have income producing sipp assets, do you still sell assets at times of significant market  falls to meet your income drawdown, or make sure you always have sufficient cash in the kitty to meet 1 year's drawings? 

Doesn't that cut both ways, by holding 'cash' you could be losing out on investment growth?

The issue is that liquidating a fixed amount when values are depressed represents a higher percentage of the balance, thereby inhibiting future growth prospects - search for 'sequence of returns risk'.

Albermarle

segovia said:

LHW99 said:

If you are taking it as UFPLS, some platforms won't set up monthly UFPLS's - you have to request each one separately. Taking out annually (or 6 monthly) and keeping in a cash saving / ISA account to transfer from monthly can be less hassle.

I'll ask the provider, it's A J Bell 

I think it varies from provider to provider. I think with AJ Bell you have to have the cash available. If they have to sell investments they charge you. You need to check that though.