what percentage of equity do you hold in your retirement pension ?

leosayer

But I guess the question is still, if you are aiming for x% equity, y% bonds, should you count the value of your state pension as being part of your overall pension pot value and equivalent to a bonds holding?

I don't see that guaranteed income has a portfolio equivalent value because you can't use that value to rebalance into equities if the percentages drift out of your tolerance. Also, bond values are impacted by changes to inflation and interest rates in a very different way to guaranteed income.

The way I think of guaranteed income is simply that it reduces the amount you need to draw from your portfolio each year.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82005241#Comment_82005241

I'd value SP and a DB pension by seeing what it would cost to get the equivalent income from an annuity. So if a single life RPI annuity has rate of payout rate of 5.5% that would make SP at 12.5k/year equivalent to a lump sum of 227k.

DT2001

100% equities in my pension. I am shortly able to draw by SP and have a DB pension already.

I also have S&S ISAs and cash ISAs.

I am not aiming for a specific % of equities/bonds/ITs/cash but an ability to generate income combined with a willingness to vary that income in the knowledge that I have guaranteed income in excess of my ‘necessary’ spending level.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82005394#Comment_82005394

FYI in don't keep any cash in my non-taxable accounts…they are 100% equities so I can maximize tax free growth and withdrawals. Inside my DC pension accounts I have small percentages in bonds and MMFs that I set aside at the beginning of each year to pay taxes.

cfw1994

https://forums.moneysavingexpert.com/discussion/6668827/what-percentage-of-equity-do-you-hold-in-your-retirement-pension

What are your thoughts on this, @Mick70 ?

Have you retired now?

https://forums.moneysavingexpert.com/discussion/comment/82003012#Comment_82003012

I’m with @Marcon on this one: we all have our own circumstances, lifestyles, differing income streams with DB, DC, savings, etc.

FWIW, which is likely not much, I track our situation fairly closely, & it wavers around these numbers:

Cash Equivalent	8%
S&S ISA (no tax payable)	36%
Stock (tax payable)	9%
DC Pension Pots	47%

The other point being we also have 3 small DB pensions kicking in at various points, and the full SP to look forward to. Everyone is different 🤷‍♂️

Archerychick

in my forties and my DC is 100% equities because well it has time on its side. Other s&S isas are 70%/80% with remainder mostly in bonds. Obvs have some cash savings too.

mrklaw

those of you derisking - what are you using for the fixed income part? simple bond fund (UK/Global? short/intermediate/long term? ) Target date fund or lifestrategy or equivalent? I’m in Fidelity so ETF preferred as OEICs are expensive and I’d probably move provider.

Twisting myself in knots trying to understand bonds vs other and the relative complexity of other options vs just whacking it in a LS fund and forgetting about it for a while.

I’ll have a chunk in cash but the main draw is only about 7.5k a year and is only discretionary (although my wife would say holidays are essential) so that has me half thinking just keep in equities -but I think I want to remove some volatility and would trade that for slightly lower returns - 80/20 or perhaps 60/40

two state pensions, 15k DB at 60, wife in a TDF for her portion so we’re already pretty defensive..

DT2001

https://forums.moneysavingexpert.com/discussion/comment/82006789#Comment_82006789

I have moved some funds to an ETF in ultra short bonds and income focused investment trusts. I am hoping that the income will be steady while the market fluctuates more. I started my research with an article on ii about generating £10k income per year - it has been ongoing/updated for 3/4 years. Also looked at dividend heroes and concentrated mainly at the lower end. As it happens they have made a greater paper profit from capital than income.

NormalNorman

Being GenX too we have a mix of DB/DC so always maxed the risk. However, with drawdown starting in the next two and a bit years some money is playing it safe in the wrappers as quitting work then in non-negotiable. Unless I choose to keep it on just to pay for another long haul trip etc.

Dunno if this helps but the fist couple of years of drawdown is in STMMF. This is on top of two DB schemes @60 which cover the basics. The remainder of the pot is invested in VWRL. If the cash buffer, STMMF, needs topped up then being in an ETF allows instant sales if there is a spike in the price unlike a fund I can take advantage. If the market is poor then there is ISA cash as well as ISA S&Ss. I will also be taking a lump sum from one of the DB schemes at 60 as the commutation rate is in the 20s.

Then at 67 two more DB schemes and SP so only get richer with age no matter what I do so not going to stress about it to much. For example, I did think about VHYL but looking at overall returns probably still better in VWRL. I like the thought of some income dropping into the cash account too.

Wife also has a mix of DB/DC so again diversified.

Storcko14

https://forums.moneysavingexpert.com/discussion/comment/82006789#Comment_82006789

I use a mixture. Short maturity bonds and cash. Bond funds within a LS 60 with an average duration of 8-9 years. An ILG ladder 2028-2034 and STMM. Probably too much in the latter if inflation takes off so that'll be kept a close eye on. Between us we also have 3 tiny DBs with an average increase cap of about 3.75% which also get lumped in as 'bonds'. Then 2* full SP at 67 by which time the equity component will be back at about 70% vs 50% just now.