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Retirement Investing board question

Formerly "Lemon Fool - Improve the Recipe" repurposed as Room 102 (see above).
Gilgongo
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Retirement Investing board question

#420681

Postby Gilgongo » June 19th, 2021, 8:57 am

I'm not in favour of splitting boards, so this isn't a call for that. but might the Retirement Investing board benefit from some "guidence" for people to talk about decumulation as opposed to accumuation? The accumulation side of things is more than catered for on other boards (HYP, Investment Strategies and others), while the business of getting income from investments after retirement is somwhat scatterd about (often on those other boards). It's also a topic that creates quite a lot of "thread drift" on those boards because of that, perhaps?

So perhaps calling it "Retirement Income Strategies" or something, I dunno.

Maybe it's because I'm less interested in accumulation now that I'm approaching retirement :D

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Re: Retirement Investing board question

#420772

Postby mark88man » June 19th, 2021, 4:48 pm

Without claiming to be an expert on the boundaries of boards on TLF, I support this suggestion. Decumulation / bridging / safe withdrawal all seem to be topics on which useful discussion might be had. That said MSE manages it within one board but there are some well established threads on there focussing (especially on SWR). My main concern would be about bridging 60-65 and less so to 67 - so essentially the transition and first few years

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Re: Retirement Investing board question

#420777

Postby swill453 » June 19th, 2021, 5:29 pm

I agree it would be good to have all such discussion in a single place.

Currently we have "Retirement Investing (inc FIRE)" in "Investors' Roundtable" and "Pensions - Practical Problems" in "Managing Your Finances". Maybe a slight renaming and redefinition of the latter would do?

Scott.

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Re: Retirement Investing board question

#420780

Postby Alaric » June 19th, 2021, 5:46 pm

swill453 wrote:Currently we have "Retirement Investing (inc FIRE)" in "Investors' Roundtable" and "Pensions - Practical Problems" in "Managing Your Finances". Maybe a slight renaming and redefinition of the latter would do?


If talking about bridging an early retirement gap up to normal pension age, the investor might not be looking to draw out of funds subject to pension rules, particularly if the pension was of defined benefit form with sizeable lifetime reductions for taking it early.

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Re: Retirement Investing board question

#420781

Postby swill453 » June 19th, 2021, 5:51 pm

Alaric wrote:
swill453 wrote:Currently we have "Retirement Investing (inc FIRE)" in "Investors' Roundtable" and "Pensions - Practical Problems" in "Managing Your Finances". Maybe a slight renaming and redefinition of the latter would do?

If talking about bridging an early retirement gap up to normal pension age, the investor might not be looking to draw out of funds subject to pension rules, particularly if the pension was of defined benefit form with sizeable lifetime reductions for taking it early.

Agreed, so maybe something like "Pensions and Retirement Income - Practicalities"?

(I think the "pensions" word has to be there since it's what a lot of people will look for.)

Scott.

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Re: Retirement Investing board question

#420790

Postby 88V8 » June 19th, 2021, 7:11 pm

There's also overlap with High Yield Strategies, and for that matter the HYP board.

When I was on TMF and running up to retirement age it never occurred to me to look on a specific Retirement board.
Which is odd as I would guess that many Lemons are either retired or retirement planning.

However a look at recent topics on the board suggest that it goes well beyond income investment, and indeed is already quite busy. Not sure that renaming it would really add anything.

Perhaps posters could post a cross-link there to topics on other boards which might be of particular interest to the retired....

V8

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Re: Retirement Investing board question

#420802

Postby mc2fool » June 19th, 2021, 8:37 pm

swill453 wrote:
Alaric wrote:
swill453 wrote:Currently we have "Retirement Investing (inc FIRE)" in "Investors' Roundtable" and "Pensions - Practical Problems" in "Managing Your Finances". Maybe a slight renaming and redefinition of the latter would do?

If talking about bridging an early retirement gap up to normal pension age, the investor might not be looking to draw out of funds subject to pension rules, particularly if the pension was of defined benefit form with sizeable lifetime reductions for taking it early.

Agreed, so maybe something like "Pensions and Retirement Income - Practicalities"?

No, absolutely not! Don't bugger up a board that is working exactly as it should be 'cos of shortcomings in another board!

Pensions - Practical Problems is exactly what it says, practical issues with any sorts of pension, from the state pension to SIPPs to DB etc, mostly about their rules and workings. It is specifically NOT about any retirement investment matters, pension income strategies, accumulation, decumulation, etc, etc, and if you look at the contents of the board as it is now you'll see that it all fits well within that usage.

The board that needs some clarification even in the current scheme is Retirement Investing (inc FIRE) which, while is, indeed, about the things that Pensions - Practical Problems is not, does still seems to attract the occasional thread about matters that should be on P-PP. I've asked the mods to move threads from RI to P-PP a few times, but AFAICR never the other way round.

That aside, I'm with the OP in somehow making it clearer that the Retirement Investing (inc FIRE) board is for all retirement investment matters, decumulation as well as accumulation.

How about a rename to Retirement Investing, accumulation and decumulation? ;)

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Re: Retirement Investing board question

#420813

Postby MDW1954 » June 19th, 2021, 9:11 pm

Just to say that an interested moderator is watching this thread... Keep the suggestions coming. We are very open to making improvements in response to user suggestions!

MDW1954

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Re: Retirement Investing board question

#420822

Postby Allitnil » June 19th, 2021, 10:48 pm

Long-time ex-TMFer here (under a different moniker) and sometime lurker here.

I would welcome a board that specifically discussed decumulation approaches & issues. In a related discussion with some friends, one of them quoted William Sharpe (of Sharpe Ratio fame) who described decumulation as "the nastiest, hardest problem in finance". And having started to grapple with the issues both personally having recently retired with a wife nearing retirement, and considering how best to advise my mother following my father’s death, I couldn't agree more! Decumulation isn't as simple as selling assets and there are major considerations when it comes to CGT and IHT.

Of the existing boards, I agree with mc2fool that Pensions – Practical Problems should remain just that. Pensions are so important that there needs to be a dedicated place for advice about practical matters entirely divorced from strategic or philosophical issues.

Retirement Investing (inc FIRE) is a good board, but maybe because of the FIRE element in the name does tend to be mostly about how to achieve that rather than how to manage things once you get there! And maybe the FIRE in the name puts off those who might be retiring at what might be considered more normal ages from posting. I think that mc2fool’s idea about renaming the Retirement Investing (inc FIRE) board is a decent one, but the established history of the board is very much FIRE related and it’s good to have somewhere that Fools can high-five each other as they work towards it.

Can I humbly suggest that we have 3 boards:
- Pensions – Practical Problems
- Financial Independence, Retire Early
- Decumulation

(or similar – I must admit that I can’t come up with a good name for the third one and it needs something better than I've offered!)

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Re: Retirement Investing board question

#420835

Postby Alaric » June 20th, 2021, 12:08 am

Allitnil wrote:- Decumulation

(or similar – I must admit that I can’t come up with a good name for the third one and it needs something better than I've offered!)


"Living off (accumulated) wealth and savings" perhaps?

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Re: Retirement Investing board question

#420875

Postby Gilgongo » June 20th, 2021, 11:15 am

Allitnil wrote:I would welcome a board that specifically discussed decumulation approaches & issues. In a related discussion with some friends, one of them quoted William Sharpe (of Sharpe Ratio fame) who described decumulation as "the nastiest, hardest problem in finance". And having started to grapple with the issues both personally having recently retired with a wife nearing retirement, and considering how best to advise my mother following my father’s death, I couldn't agree more! Decumulation isn't as simple as selling assets and there are major considerations when it comes to CGT and IHT.


Interesting points - to which if I may add the following: the near extinction of final salary pensions, coupled with the probably permanent collapse of annuity values and the advent of "pension freedom" in 2014. This means discussions about living off invested assets are going to become important to a great many more people in the coming years.

TLF too the rescue!

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Re: Retirement Investing board question

#420897

Postby Gengulphus » June 20th, 2021, 11:54 am

Gilgongo wrote:I'm not in favour of splitting boards, so this isn't a call for that. but might the Retirement Investing board benefit from some "guidence" for people to talk about decumulation as opposed to accumuation? The accumulation side of things is more than catered for on other boards (HYP, Investment Strategies and others), while the business of getting income from investments after retirement is somwhat scatterd about (often on those other boards). It's also a topic that creates quite a lot of "thread drift" on those boards because of that, perhaps?

So perhaps calling it "Retirement Income Strategies" or something, I dunno.

Maybe it's because I'm less interested in accumulation now that I'm approaching retirement :D

I'm not really in favour of this as it stands, because for some investors, whether they are accumulating or decumulating after retirement is a matter of how their investments are performing, and such an investor would find that whether their posts were welcome on the board could depend rather randomly on the prevailing investment climate. For example, suppose this had been done in 2018, and someone retired then with a portfolio whose income was about 119% of what they needed, intending to reinvest the surplus to increase that safety margin. In the following year, they duly do that, and reinvesting the surplus results in their portfolio now being expected to produce about 120% of what they need. Clearly they're still accumulating, despite being in "the business of getting income from investments after retirement", and so if the criterion for posting to the board is that you're decumulating, their investment problems are not welcome on it.

And then Covid comes along and their income is halved - so they're now only receiving 60% of what they need from their portfolio, and are faced with a decumulation problem - so their investment problems are now welcome on the board. And in a few years' time, assuming economic recovery from the effects of Covid happens, they find themselves with surplus income again and their investment problems are suddenly no longer welcome on the board...

I'm not saying that's a fatal flaw with the idea: the system of having separate boards for separate types of question cannot work if people don't shift between boards as their problems change. But I suspect quite a few people do regard just a few particular boards as their 'home' on TLF, and IMHO it's preferable to avoid forcing them to change those boards, especially when the change is caused by external circumstances rather than a deliberate change on their part. (Even when it is caused by a deliberate change on their part, there can be problems getting them to move - e.g. I've observed quite a few HYPers deliberately shift to investing in fund-of-diversified-underlying-investments types of investments such as non-specialist investment trusts, and need some moderator persuasion that they need to move to another board than HYP Practical to discuss their changed approach and new investments.)

Personally, I don't have much at stake on this, as I only very rarely read the Retirement Investing board and even more rarely post to it. But from the moderators' point of view, I would suggest that avoiding causing people to have to change boards for external-circumstances reasons is preferable.

And I think it can be done quite easily, because there's an ambiguity in the existing "Retirement Investing" board name - does it mean "investing for (future) retirement" or "investing after retirement"? An "Investing After Retirement" board would allow discussion of both the accumulation and decumulation problems that can happen after retirement, including people shifting between them either as a result of changes in investment conditions or changes to their personal circumstances (e.g. becoming disabled can increase outgoings and so affect the income vs outgoings balance just as much as income cuts due to financial crises can). And that would IMHO make it a more workable change - if change is needed.

Allitnil wrote:Can I humbly suggest that we have 3 boards:
- Pensions – Practical Problems
- Financial Independence, Retire Early
- Decumulation

(or similar – I must admit that I can’t come up with a good name for the third one and it needs something better than I've offered!)

If my suggestion above were adopted, the third board's "Investing After Retirement" name is easy - though it would mean that it would not be a pure decumulation-only board, but rather cover both decumulation to top up inadequate income and accumulation of surplus income.

I would not be in favour of the board name "Financial Independence, Retire Early", though it is better than the rather cryptic "(inc FIRE)" in the existing board name, as the acronym "FIRE" won't be familiar to all readers of the TLF home page's list of available boards. The reason I'm not in favour of it is that it leaves a hole in the board structure: no board is provided for those who are investing for future retirement but aiming to retire at a normal retirement age rather than early. So I would instead name the board "Investing For Future Retirement" and restrict the mention of FIRE to the board's subtitle - and preferably also make that mention clear about not being restricted to FIRE, e.g. "Including both Financial Independence, Retire Early (FIRE) and slower methods".

Finally, I should emphasise that I'm not expressing any preference about whether the board should be split, because my use of it is so minor that I don't care whether it is or not. Rather, I'm expressing my opinions on what would be the most workable split would be if a decision were made, and on what could be good board names to use for such a split.

Gengulphus

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Re: Retirement Investing board question

#421307

Postby DrFfybes » June 22nd, 2021, 12:23 am

Some interesting comments so far, but I am in favour of a post retirement board.

I no longer work, and live on investments, plus MrsF's DB pension and part time income. After spending years saving, investing, and planning our strategy changed massively after talking to an adviser who came up with several suggestions, some of which were blindingly obvious with hindsight. One upshot being that Covid hasn't affected our income. We had been very focussed on Accumulation, dividends, decumulation, ISAs and tax minimisation, but had been looking at Silos rather than money as a whole. Events like Covid mean our wealth fluctuates by a significant amount, but an amount we were prepared to tolerate and could cope with

As for the name, "Living the dream" sounds like a good title to me, although "Gardening, tools and tips" would be of more day to day use :)

Paul

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Re: Retirement Investing board question

#421446

Postby 1nvest » June 22nd, 2021, 7:12 pm

DrFfybes wrote:I no longer work, and live on investments, plus MrsF's DB pension and part time income. After spending years saving, investing, and planning our strategy changed massively after talking to an adviser who came up with several suggestions, some of which were blindingly obvious with hindsight.

Ah! What a tease! Care to share?

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Re: Retirement Investing board question

#421460

Postby DrFfybes » June 22nd, 2021, 8:50 pm

1nvest wrote:
DrFfybes wrote:I no longer work, and live on investments, plus MrsF's DB pension and part time income. After spending years saving, investing, and planning our strategy changed massively after talking to an adviser who came up with several suggestions, some of which were blindingly obvious with hindsight.

Ah! What a tease! Care to share?


I'm not sure there is a board for that :)

Basically he looked at money as a whole, rather than the 'investment pots' we had been concentrating on building up to generate income to live on. So rather than concentrate solely on generating income, have some 'good' divi paying holdings for Income(eg CTY), and Invest in some lower yield/higher growth (eg ATST, Marlborough micro-cap) which if required can be sold down to maintain the level of income you want.

Rather than take dividend income from ISAs, sell down non-ISA holdings for income, thus effectively topping the ISA up by the dividend income we would have taken (this was the balatantly obvious bit we hadn't thought about, being focussed on generating Income)!

Within the ISA have automated divi reinvestment or buy Acc units, and when the time comes take divis and sell Acc units to generate the required steady income.

Also worth investing into a SIPP for potential future IHT mitigation - only small amount for me but with no children to leave the house to, if the rules are the same in 30 years it will make a difference. And if we need the money, everything else will be ISAd by then so fewer tax complications. MrsF already does salary sacrifice but can increase that to take herself to minimum wage.

Actually, with a bit more thought about it, I'm not sure there is enough mileage in decumulation for its own board.

Paul

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Re: Retirement Investing board question

#421490

Postby UncleEbenezer » June 22nd, 2021, 11:46 pm

Alaric wrote:
Allitnil wrote:- Decumulation

(or similar – I must admit that I can’t come up with a good name for the third one and it needs something better than I've offered!)


"Living off (accumulated) wealth and savings" perhaps?


Or more succinctly, and in the modern idiom of ungendered language, Fools of Leisure?

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Re: Retirement Investing board question

#421506

Postby DrFfybes » June 23rd, 2021, 8:17 am

UncleEbenezer wrote:
Alaric wrote:
Allitnil wrote:- Decumulation

(or similar – I must admit that I can’t come up with a good name for the third one and it needs something better than I've offered!)


"Living off (accumulated) wealth and savings" perhaps?


Or more succinctly, and in the modern idiom of ungendered language, Fools of Leisure?


"Leisure"??

You should see the list of jobs MrsF has drawn up for the next couple of months/years/decades.

Paul

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Re: Retirement Investing board question

#421520

Postby Dod101 » June 23rd, 2021, 9:40 am

DrFfybes wrote:
1nvest wrote:
DrFfybes wrote:I no longer work, and live on investments, plus MrsF's DB pension and part time income. After spending years saving, investing, and planning our strategy changed massively after talking to an adviser who came up with several suggestions, some of which were blindingly obvious with hindsight.

Ah! What a tease! Care to share?


I'm not sure there is a board for that :)

Basically he looked at money as a whole, rather than the 'investment pots' we had been concentrating on building up to generate income to live on. So rather than concentrate solely on generating income, have some 'good' divi paying holdings for Income(eg CTY), and Invest in some lower yield/higher growth (eg ATST, Marlborough micro-cap) which if required can be sold down to maintain the level of income you want.

Rather than take dividend income from ISAs, sell down non-ISA holdings for income, thus effectively topping the ISA up by the dividend income we would have taken (this was the balatantly obvious bit we hadn't thought about, being focussed on generating Income)!

Within the ISA have automated divi reinvestment or buy Acc units, and when the time comes take divis and sell Acc units to generate the required steady income.

Also worth investing into a SIPP for potential future IHT mitigation - only small amount for me but with no children to leave the house to, if the rules are the same in 30 years it will make a difference. And if we need the money, everything else will be ISAd by then so fewer tax complications. MrsF already does salary sacrifice but can increase that to take herself to minimum wage.

Actually, with a bit more thought about it, I'm not sure there is enough mileage in decumulation for its own board.

Paul


This is shaping up for a subject for the new board if it ever comes about because I am not sure that selling down non ISA holdings is so blindingly obvious at least once you get to a certain level. I have been transferring directly held holdings into my ISAs for many years and have now reached a stage where I am content to leave my directly held holdings exactly where they are now. The income is not much more than the dividend tax allowance and I am happy to have some holdings in certificated form as it avoids having to rely on the security of a platform and besides, I get all the bumph direct to me including dividends to my bank account. I have no pension except for the State Pension and have lived off my investments for the last 25 years or so so have plenty of experience.

Dod

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Re: Retirement Investing board question

#421605

Postby 1nvest » June 23rd, 2021, 1:23 pm

If you hold for instance US stocks then 15% dividend withholding tax is paid. Not so in SIPP that being pension funds are exempt, but is so in ISA. If ourside of ISA then you can you can offset that against other income taxes paid, in effect 'reclaim it'. Combined with using yearly capital gains tax allowance to 'tax harvest' ... raise the average cost per share, maybe across multiple accounts (partner and self) and as Dod indicated if the amount of dividends received are below the dividend tax threshold(s), then that can uplift overall rewards.

Otherwise for instance consider a low cost US S&P500 index tracker with a 0.07% fund fee, but that then also has to bear 15% US dividend withholding tax on perhaps 2% dividends. Combined that's a 0.37% lag factor. £740/year on a £200,000 portfolio value that might otherwise have been just the £140 fund fee. Non trivial £600/year difference.

There's also SIPP £2880/year allowance that can be paid in even if earning nothing. £720 tax credit x 2 (again assuming partner and self) = £1440/year. Combined with the above ... and £2K/year. And with some slight of hand that SIPP money can be migrated over to your ISA account. This is neutral based click the annual returns tab in that link and consider if SDS (short) was in your SIPP whilst SSO (long) was in your ISA. That can be tilted to make it less neutral, such as being slightly (or considerably) more long than short.

Yet other options might be to hold taxable versions combined with non taxable versions and tax harvest losses to offset capital gains elsewhere. Asset value down then sell taxable to register a capital loss that might offset capital gains elsewhere, whilst buying the same asset inside tax exempt so overall your exposure to the asset remains unchanged. Later if prices have risen you might sell some in tax exempt, buy in taxable to again maintain the same overall exposure but having cost averaged up the average cost of stock/asset value of non-tax-efficient account holdings so less capital gains tax to pay if/when sold.

Maybe I should, but personally I don't bother with all of that however, don't even have a SIPP, and rules keep changing. I like zero dividends for the simplicity of tax reporting (and wish other firms would follow BRK lead to offer such for investor who would rather that be the case). I just sell down some of total returns in a regular manner from whatever is the most above target weighting at the time using my 'free' once/month trade ii account a few days before 'payday' and then after T+3 transfer that over to my regular bank account. SWR type mindset, but where the SWR is well below the 4% level that is suggested as being safe, so a nice inflation adjusted regular income with a relatively safe outlook.

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Re: Retirement Investing board question

#421624

Postby chas49 » June 23rd, 2021, 2:35 pm

Moderator Message:
Please stick to the subject of this topic which is about a suggestion to split a board. Discussion of your personal circumstances and 'banter' is off-topic on this board. Thanks


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