I am a UK investor, but I believe my planned strategy is not dependant on country of tax residence, and would really welcome your views, comments, challenges to this.
I have posted a few times over the past few months and with the responses I have had, plus reading around the forums and the Wiki, I have come to a strategy for my retirement that I would like to explore with you all.
Some background and parameters:
We (myself and my DW) have investments in various pension funds
We currently have investment properties providing rental income
We will both be eligible for UK state pension when we reach 67 (in 9 years time)
(The UK state pension can be considered as an annuity with inflation index linked every year (that could change, but likely not too much))
We do not intend to leave our investments for inheritance purposes so are happy to run down to zero or close to - there are other assets (properties) we will leave (so we are not too mean
)At the point that the state pensions kick in, then that plus our rental income will cover all our essential expenses (plus a little more)
Should one of us die, and all investments are depleted, then state pension plus rental income will cover essential income
Current thinking/planning
Our current investments have more than enough in them to support the next 9 years (allowing for inflation for each year) until state pensions activate.
My thinking is to move those 9 years from the current set of investments and into a bond fund of some description.
The bond fund would ideally be inflation protected (not sure if that exists in the UK), but even if it were not I would have effectively protected against inflation by inflating each of the years in the first instance (I appreciate there is a risk here that actual inflation could be higher than forecasted, but I am using the UK average for the past 30 years, so this should be minimal), but ideally very low volatility
Then the remaining invested monies I could move into a much more aggressive set of funds (currently we are running at 45/55 equity) and gradually reduce volatility/risk as we near the end of the 9 years - when state pensions commence
The remaining investments would/should then provide the reduced income required to keep us going.
What do you think I have missed or risks that you can see that may be associated with this approach ?
