Moneymakeover Mid 50s - can we retire?

Brendan Burgess said:
The Sequence of Return risk might apply to someone who has just enough to survive.
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It applies equally to anyone who would prefer to comfortably spend e.g. 58k or 60k or 65k a year, rather than just 55k. Hands up who wouldn’t want that? Or it could be the difference between sleeping well during an equities rout or not, given the OP’s demonstrated caution.

It’s utterly naive to blindly follow accepted wisdom when the article I linked clearly makes the case, with data, for a reverse glidepath in the current circumstances.
 
A reverse glidepath means gradually increasing investment risk over a shrinking time horizon. That makes no sense to me.

A balanced approach, as with most things in life, is the appropriate approach here IMO.
 
Sarenco said:
A reverse glidepath means gradually increasing investment risk over a shrinking time horizon. That makes no sense to me.
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Investment risk, Sequence of Returns risk, Inflation risk, Longevity risk. There’s more than one type of risk, and no way to mitigate all of them. Choose your poison, but don’t pretend the others don’t exist.
 
Sarenco said:
A reverse glidepath means gradually increasing investment risk over a shrinking time horizon. That makes no sense to me.
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Why not? Maybe the aim is not to maximise returns but minimise potential losses?
Sarenco said:
A balanced approach, as with most things in life, is the appropriate approach here IMO.
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What do you mean by balanced approach? Like invest 100% in equities and reducing spending if needed?
 
@CharlieMac

If the objective is to minimise potential losses you wouldn’t gradually increase equity exposure in retirement.

A balanced asset allocation has an equal allocation to risk assets (equities) and reserves (cash/fixed-interest).
 
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Sarenco said:
If the objective is to minimise potential losses you wouldn’t gradually increase equity exposure in retirement.
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If this was my objective, I definitely wouldn’t dump my life savings in at a CAPE that’s pretty much double the long-term average either, and at the very time in my life when Sequence of Returns risk becomes tangible as I start drawing an income from those same investments.
 
Thanks a lot, everyone – this is really beneficial to us, especially the prompt to leave before winter hits :cool:

Follow-up Q:

Should we defer drawing down one or both pensions (reverted to 100% equities) and use our cash to fund life until we reach 65/66?
i.e. just accessing the cash we need annually, and investing the remainder
 
I think you should seek some advice, but I have 3 Pensions, one is linked to a former db pension, so I can't touch that, but my plan is work for circ 3 mts in 2027 to use tax free allowance and 20% tax band, retire one pension in 2028, and then draw arf income to use 20% tax band, and use savings for making up shortfall, as if I live off savings then im giving up low tax bracket that in the future more of my income will then be in higher tax bracket, so better to get some out at 20% each year than live completely off savings.

I hope this makes sense, it does to me and my pension are over 1.5mc excluding the deferred db pension.
 
Brendan Burgess said:
Ideally you should use up your 20% tax bands.
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And maybe build up additional PRSI contributions towards the state pension by drawing at least €5K p.a. from a vested PRSA or ARF.

Key Post - PRSI and planning retirement

This Key Post is in the form of a FAQ where I don't know many of the answers. I will update the post as I get answers. 1. PRSI payable on reaching state pension age Answer: 0 (Class M) 1a. Does this relate to the start of the tax year in which you become 66? Or to after your birthday? Answer...
www.askaboutmoney.com
 
The only snag with that plan is that imputed distributions kicked in at 61, so they will be drawing more from their pensions than they actually need given their high level of after-tax savings.

On balance, I would be inclined to leave the pensions alone for as long as possible, live on the after-tax savings in the interim and make voluntary PRSI contributions.

The alternative is to split the pensions into smaller PRSAs and retire each separately over time as required. But be wary of the commission payments.
 
Sarenco said:
The only snag with that plan is that imputed distributions kicked in at 61, so they will be drawing more from their pensions than they actually need given their high level of after-tax savings.
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Not if they can transfer some or all pension investments to a PRSA and then, if necessary, split that into smaller policies that can be retired on a phased basis.

Reddit: oh, I should have read your full post before saying exactly the same thing that you finished with. :D
 
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