Retiring in 6 months- AVC bond risk

P

Persia

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Hi, wife retiring in 6 months, main pension is safe in its a semi state pension after 42 years working.

There is a Zurich AVC account with €144k in it.
It's mostly bonds at this stage (90%) with small amt in equities/cash.

Will likely make additional contributions in July.

I'm tempted to move all to cash as bond markets under Trump could go south very quickly (I'm a layperson so know little about this).

Is this the correct thinking/approach to take...can't see any downside considering 6 months to retirement.
 
Undecided, quite conservative in that regard. My view would be ARF but not my pension.

Lifestyling has paid off on this occasion.

Edit- ARF decided upon just now.
 
Persia said:
Don't understand this ?
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There is an entitlement to take a lump sum; based on >40 years of service it would be 150% of salary. The pension can be commited to a lump sum, but that's usually not at a favourable rate so the common use of an AVC to a DB scheme is to pay the lump sum and keep the pension intact.
 
Completely unaware of this, thank you, I will mention to my wife and see if she knows about this.

We both attended a 2 day pre retirement thingy, AVCs came up fleetingly. The whole event lacked substance though and a lot of " great question...will get back to you on that"

Will see about how this applies to her.

In terms of bonds, hold or move 100% to cash and what are potential disadvantages?
 
ClubMan said:
, it has probably unnecessarily put the brakes on long term ARF growth?
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Only became aware of this lifestyling in last few years and have changed my pensions out of that lane.

My wife being do close to retirement seemed risky to do so with little upside and this has been proven correct.

Take trump out of the equation and you'd be 100% correct...leaving the lifestyling status quo intact has preserved the monies but now the risk is the bonds.

Should she move everything tp cash or leave in bonds? Seems to me safety in cash for now and can reevaluate in 5 months time.

Not sure if this is correct approach hence post.
 
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ClubMan said:
Timing the market is a mug's game.
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Get that, probably the most repeated mantra on this site and i agree with it ordinarily but..

...5 months to retirement, a Lunatic in the white house, bond markets already tricky so last thing needed is to get the money wiped out if bonds turn sour.

Not bothered about timing the market just want to hit pause until ramifications are understood...
 
Persia said:
5 months to retirement
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Do you need the money in 5 months time though? Tbh, if my needs were being met by the DB pension, I’d be more inclined to think of the AVC of this size as a backup for later life - rainy day fund, nursing care, etc. Hopefully that’s 20+ years away yet, in which case lifestyling away from higher growth investments might not be the best choice, regardless of the immediate volatility.
 
If you have a DB pension you can afford to take more risk with your ARF than someone who doesn’t and is fully reliant on it for retirement income.

Personally I expect to draw down a few DB pensions and two state pensions. As a result for my pension fund from an old employer I am fully in equities and plan to stay that way for life.


It takes a while to get your head around it but it makes a lot of sense.
 
Thanks for replies thus far....for some odd reason putting the money 100% into equities at this stage didn't occur to me (blind spot due to imminent retirement and focus on heavy dilution of bonds).
Will discuss with her later. Makes sense if continuing with ARF especially when stocks are down.
 
T McGibney said:
I can never understand the attraction of bonds as an investment option.
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100% agree however it's a default lifestyling strategy. Only recently woke up to this but because my wife was so close to retirement let it go.

Presumed it was mostly in cash at this stage and dismayed to see nearly 90% in bonds given there could be significant disruption due to comrade trumpski.
 
T McGibney said:
I can never understand the attraction of bonds as an investment option.
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Persia said:
100% agree however it's a default lifestyling strategy.
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It depends, as always, on your investment objectives.

If you're near or at the point where your other earnings are going to cease, and you'll be relying on your savings to generate income, and you want some predictability and stability as to the level of income they will generate, bonds do have their attractions.
 
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