Sipps with 3 years to go

jazzy23

Are people holding their nerve in the current climate? When only 3 years to retirement?

I am thinking of switching to dividend paying funds , not selling, and hoping things will change in the next few years . I have a 60/40 split. Equities/cash etc.

Others??

bownyboy

Depends on your age, yearly expenses, funds etc.

Remember your pension / ISA has to last you until you die, not just until you retire.

I'm 53 and still 100% equities. We also have a cash / MMF buffer of 3 years to help with the psychological impact of downturns. But FYI this downturn is nothing in the grand scheme of things. Zoom out on the graphs of returns and we're just back to January 1st numbers.

Marcon

https://forums.moneysavingexpert.com/discussion/6661963/sipps-with-3-years-to-go

Why does retirement matter? It's when you intend/need to draw benefits from your SIPP that is important, surely?

jazzy23

https://forums.moneysavingexpert.com/discussion/comment/81943720#Comment_81943720

I plan to draw in 3 years, or i did

jazzy23

Yes I want to retire at 63. Can't imagine getting past 83. It just needs to last till then.

After that I don't care

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81943783#Comment_81943783

But you won't be drawing all of your pension in one go in 3 years time will you? If you do drawdown you will presumably do that for the rest of your life and that could last 30 or 40 years after you first retire. Of course if you plan to buy an annuity when you retire then your time horizon is only 3 years.

Sam_666

What current climate ? You think "current climate" will go on for next 3y?
Can your crystal ball tell you what will happen in 3y time?
DRS1 post above echo's my thinking as well.

OldScientist

https://forums.moneysavingexpert.com/discussion/6661963/sipps-with-3-years-to-go

FWIW, I'm 6 years into retirement and currently have an equity/fixed income split of 67/33. However, roughly 80% of my income is provided by a DB pension, so the income from the portfolio is relatively unimportant (and will become even less important when our SP kick in and the allocation to equities will then rise). Having this floor of income reduces worry about market risk (although there are other risks).

So, as others have said - asset allocation is somewhat dependent on looking at your entire situation. For example, including existing sources of guaranteed income (SP and DB pension) and potential sources of guaranteed income (e.g., RPI annuity and collapsing inflation linked gilt ladders) that could be purchased from your portfolio. For example, in the latter case, a 30 year ILG ladder set to start providing income in 3 years time currently has a payout rate of about 4.5% (i.e., £100k invested in the ladder would produce an annual inflation adjusted income of £4500).

gm0

Pensioners with a lot of their essential income covered by State and DB pensions have a lot of flexibility on risk taken, inheritance and top up income goals and so also on asset allocation.

Those running an entire retirement solely on drawdown (with SP arriving in whatever state at 67+) need to take the ~40 year view of capital and income (which is empowering on looking through short term issues and volatility in planning said asset allocation to suit you - how risk averse/greedy you are and how much income you seek (need or want) to extract from a given size starting pot.

A large crash at the start hurts in deaccumulation (rather than being good - as in accumulation). So it is important to consider sources of support to income in the early years (pre-SP especially - because - more support aka bridging to SP) is important. As the consequences in the scenario where drawdown empties the pot of "units" too fast. Is a big problem. On the cannot control it list. This issue "known as squence risk or sequence of return risk" - is contingency planning agains the luck - good or for the purpose of planning - bad - of your age cohort.

Personal situation, partners pensions, housing, savings, ISAs and other assets all can play a role directly or as a "would sell that if I have to" scenarios. IF this THEN that type of setup.

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81943785#Comment_81943785

If you're looking at buying a fixed term (20 year) annuity, then yes, you do need to be concerned about the value of your pot at the point you buy that annuity - but it's not clear if that is your intention?

dunstonh

Are people holding their nerve in the current climate? When only 3 years to retirement?

There is nothing going on at the moment that is unusual or different to what is expected.

Are you planning a full withdrawal (cash in or annuity) in 3 years time? - it makes a big difference.