Equities exposure when approaching retirement age

m_c_s

My biggest concern in your position would be what happens to the wife's income position if you passed away sooner than on average. 
You have plenty of DB income and when SP kicks in a lot of inflation protected income. Your current DB may payout death benefits but your wife still seems to have very little inflation protected income. So a few questions I would be evaluating are:
1. If you die before your wife's SP age how does that leave your wife financially?
2. After your death will your DB death benefits plus the DC pension be enough to sustain her required income level and can she handle the high equity position herself without panicking if the portfolio dropped 40% in value? 

Mick70

The DB is index linked and on death provides 55% to spouse

kempiejon

Mick70 said:

my strategy is simply to take out 4% pa - from both the S+S ISA and the DC pension
My wife has very little pension (will be about £14k pa) so as a couple were much more reliant on mine

I forget the exact dates and numbers but your wife's very little pension is what about half of pensioners have these days so as you've already got £32k DB and state pensions, DC and S&S ISA then I'd be all equities unless I was dead set on getting through a large sum fairly early on - buying that yacht, 2nd home on the Amalfi coast, flying lessons and fast cars.

If I were in your position from what you've shared here I'd be asking why am I going to work. Perhaps you've very high living costs not mentioned or work gives you purpose and fills your time.
If de-risking helps you ignore your portfolio, comfortable that it throws an excess of income for your needs, that's a sensible move. If you're not set on leaving a massive inheritance then only you can asses the best stocks:bonds/cash ratio but it needn't be big concern with a big pot and guaranteed incomes.

Is there a survivors partner provision in that £32k is there a mortgage to service? Annuities are considered less risky and would provision for a partner and ongoing regular expenses.

Mick70

kempiejon said:

Mick70 said:

my strategy is simply to take out 4% pa - from both the S+S ISA and the DC pension
My wife has very little pension (will be about £14k pa) so as a couple were much more reliant on mine

I forget the exact dates and numbers but your wife's very little pension is what about half of pensioners have these days so as you've already got £32k DB and state pensions, DC and S&S ISA then I'd be all equities unless I was dead set on getting through a large sum fairly early on - buying that yacht, 2nd home on the Amalfi coast, flying lessons and fast cars.

If I were in your position from what you've shared here I'd be asking why am I going to work. Perhaps you've very high living costs not mentioned or work gives you purpose and fills your time.
If de-risking helps you ignore your portfolio, comfortable that it throws an excess of income for your needs, that's a sensible move. If you're not set on leaving a massive inheritance then only you can asses the best stocks:bonds/cash ratio but it needn't be big concern with a big pot and guaranteed incomes.

Is there a survivors partner provision in that £32k is there a mortgage to service? Annuities are considered less risky and would provision for a partner and ongoing regular expenses.

survivor provision of DB pension is 55% of it.  No mortgage.

gm0

Your equities % needs to be viewed at "whole of portfolio" level - which includes (or should) the value of the indexed DB.  This is easily calculated.   Use the 3.5% UK global investment figure (or 4% if you prefer) and calculate the "value" of the DB indexed income - which is risk free.  And then can be considered to be minimum volatility asset - linker gilt ladder equivalent in the portfolio.

This will aid sleep.  As the % will be lower

The only issue that arises is investment time horizons i.e. if you have a "need" within a shorter than dip/recovery timeframes to sell down a DC pot - then you may not want to be fully "risk on" within that pot.  The amount that is risk reduced becomes as question of needs and goals and cashflow.

Cus

For me, risk has to be balanced against requirements.
Historical stats indicate that over the long timeframe, you will likely have more if you kept a higher equities share. There is no guarantee that in the next 50 years equities will perform better than other asset classes.  It has in the past, but who knows. A hundred years of stats sounds like a lot, but what will 150 years show us?

If you have enough now for the future without having to risk anything then why risk anything?

cfw1994

kempiejon said:

Mick70 said:

my strategy is simply to take out 4% pa - from both the S+S ISA and the DC pension
My wife has very little pension (will be about £14k pa) so as a couple were much more reliant on mine

I forget the exact dates and numbers but your wife's very little pension is what about half of pensioners have these days so as you've already got £32k DB and state pensions, DC and S&S ISA then I'd be all equities unless I was dead set on getting through a large sum fairly early on - buying that yacht, 2nd home on the Amalfi coast, flying lessons and fast cars.

If I were in your position from what you've shared here I'd be asking why am I going to work. Perhaps you've very high living costs not mentioned or work gives you purpose and fills your time.
If de-risking helps you ignore your portfolio, comfortable that it throws an excess of income for your needs, that's a sensible move. If you're not set on leaving a massive inheritance then only you can asses the best stocks:bonds/cash ratio but it needn't be big concern with a big pot and guaranteed incomes.

Is there a survivors partner provision in that £32k is there a mortgage to service? Annuities are considered less risky and would provision for a partner and ongoing regular expenses.

I feel this is the real question 🧐

Mick, you have posted a lot of times in the forum for over 5 years.  That is not a problem, of course….but I wonder what you are looking for?  Permission from strangers on the internet to retire?  Do it 🙏

We are all, as they say, a long time dead…..& realistically speaking, rarely do people find their health improves as they age 🫣

It sounds like you’re in good shape, financially speaking, unless as suggested above, you have outrageous outgoings?
Do you have plans, hopes, desires on how to fill your time?  

They are, I believe, more important than agonising over the unknown future performance of finances 🤷‍♂️

Be flexible.  

Be prepared to tighten your belt and maybe even pause drawdowns & live of cash if(when) markets collapse 👀

Your 32k pa DB fund puts you in a fabulous position 💪

What is stopping you?

Veloflyer

cfw1994 said:

kempiejon said:

Mick70 said:

my strategy is simply to take out 4% pa - from both the S+S ISA and the DC pension
My wife has very little pension (will be about £14k pa) so as a couple were much more reliant on mine

I forget the exact dates and numbers but your wife's very little pension is what about half of pensioners have these days so as you've already got £32k DB and state pensions, DC and S&S ISA then I'd be all equities unless I was dead set on getting through a large sum fairly early on - buying that yacht, 2nd home on the Amalfi coast, flying lessons and fast cars.

If I were in your position from what you've shared here I'd be asking why am I going to work. Perhaps you've very high living costs not mentioned or work gives you purpose and fills your time.
If de-risking helps you ignore your portfolio, comfortable that it throws an excess of income for your needs, that's a sensible move. If you're not set on leaving a massive inheritance then only you can asses the best stocks:bonds/cash ratio but it needn't be big concern with a big pot and guaranteed incomes.

Is there a survivors partner provision in that £32k is there a mortgage to service? Annuities are considered less risky and would provision for a partner and ongoing regular expenses.

I feel this is the real question 🧐

Mick, you have posted a lot of times in the forum for over 5 years.  That is not a problem, of course….but I wonder what you are looking for?  Permission from strangers on the internet to retire?  Do it 🙏

We are all, as they say, a long time dead…..& realistically speaking, rarely do people find their health improves as they age 🫣

It sounds like you’re in good shape, financially speaking, unless as suggested above, you have outrageous outgoings?
Do you have plans, hopes, desires on how to fill your time?  

They are, I believe, more important than agonising over the unknown future performance of finances 🤷‍♂️

Be flexible.  

Be prepared to tighten your belt and maybe even pause drawdowns & live of cash if(when) markets collapse 👀

Your 32k pa DB fund puts you in a fabulous position 💪

What is stopping you?

Ha ha yes indeed - I am in a broadly similar position and financially speaking there is nothing really stopping me retiring - I am 61. Why not? I guess fear for the future, 40 years habit is a hard one to break, and as I don't particularly care much for my job I guess I am also stuck in some sort of weird Stockholm syndrome. I also don't have much of a plan for retirement, but that is more because I haven't really thought about it - unless tinkering more with classic bikes in the garage counts....

I am however becoming increasing conscious of having a limited life on this mortal coil. Do I really want to spend the rest of it doing stuff I don't much care for? Sand in the hour glass runs one way and no-one turns it over.....          

Hal17

I also don't have much of a plan for retirement, but that is more because I haven't really thought about it - unless tinkering more with classic bikes in the garage counts....
    

That's a perfect reason to retire. 

cfw1994

Hal17 said:

I also don't have much of a plan for retirement, but that is more because I haven't really thought about it - unless tinkering more with classic bikes in the garage counts....
    

That's a perfect reason to retire. 

Indeed!
I often feel that most people don’t think about retirement at all.  By “most”, I mean the broader population, not people on MSE forums reading this!

Of the rest, I suspect the majority focus a big chunk of their thinking about the financial side, and not much about what they will do with their time.
I understand that - nobody wants to retire then run out of money to pay the bills, of course.

BUT….a crucial part of a happy retirement is how you spend your days 👀
That was part of my reason for starting this thread a couple of years ago.

Prior to giving up work, we went to a retirement seminar.  A lovely afternoon tea provided 😎
A big session was spent with the room considering how they would fill their 21 slots - morning, afternoon, evening, 7 days a week.  One guy wrote “golf” across all his days 🤣
We felt it was ludicrously basic, but I could see how some struggled to think of things to do 🧐
FYI….I wrote a spreadsheet…..each row was a broad topic followed by a bunch of ideas.   “Read more”, followed by some books I wanted to read.  “DIY”, followed by jobs in subsequent cells. Other topics included “Friends”, “Travel”, “Sport”, “Garden”, “Culture”, “Holidays”, “Family”.
Pretty soon ended up with far too much, & it was nice to colour cells green once done 🙏
Don’t really use it now - we have a groove that works for us - but I think it is a good way to start.  Failure to plan is planning to fail 🤪

I wonder whether Mick should focus more on the freedom he can afford rather than reworking questions about the money 🤷‍♂️