Mechanics of drawdown: ISA vs Pension?

[Gilgongo]

Stupid question time: I plan to retire with a SIPP and an ISA invested in (mainly) ITs and a HYP respectively, and two years in cash ready to go.

Er, then what? I'm trying to understand pension account drawdown (with limited success), but yet work out what to do with an ISA.

G

[JuanDB]

You’ve not really given enough information to comment specifically. So I’ll explain what I’m doing.

Current age 43, and planning to retire from mandatory work in 3-4 years. My pensions are invested in low cost world trackers, seeking to minimise costs and gain market return. My ISAs are invested in a mixture of income and growth and income ITs. I plan to live off the natural yield and will be “Done” when the yield is around 110% of my planned annual expenditure. This will allow me to reinvest the extra 10% and have a growing income without ever drawing down capital. Pension will likely be primarily used to pass wealth down to my kids, tax free withdrawals aside.

Similarly your plan for ISA vs pension will depend on your age, size of the pot(s), investments and their yields, yield relative to living expenses etc.

Cheers,

Juan.

[Gilgongo]

I plan to live off the natural yield and will be “Done” when the yield is around 110% of my planned annual expenditure. ... Pension will likely be primarily used to pass wealth down to my kids, tax free withdrawals aside.

I take it by "done" you mean when yield is around 110% you will retire? That makes sense. My HYP ISA is currently on track to produce maybe 50% of my desired income from dividends by the time I plan to retire. Then SIPP might be able to do the rest, assuming drawdown lets you take from the cash account.