cash <\/strong>in my broker accounts, with the hope that I\u2019ll find the courage to dive back into the market when it tanks. I haven\u2019t done this before so no idea how I will feel or react.<\/p>\nThe above screenshot is just from my Freetrade account \u2013 my other accounts with AJ Bell and HL have been similarly adjusted.<\/p>\n
I haven\u2019t finished with the switching and adjustments yet and will continue to tweak my portfolios. I have to say I feel a little less fearful now that I\u2019ve started.<\/p>\n
My default action in investing has always been to do nothing and that\u2019s usually worked out for me in the past, but I think in this case, I needed to do something.<\/p>\n
Whether the \u2018something\u2019 ends up being enough, well we\u2019ll have to wait and see.<\/p>\n
And Finally \u2013 the AI\/ChatGPT draft blog post<\/strong><\/p>\nBelow is the full copy and paste, my comments in [red]<\/span>. It\u2019s not bad, quite incredible considering the short prompt\/instruction that was given. However, I think it sounds a bit clich\u00e9d<\/span>. Or do I really sound like that?! Oh dear, haha!<\/p>\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2013<\/p>\n
Retiring Early in 2027: Starting to Think About Decumulation<\/span><\/em><\/h2>\nI have been working toward early retirement for several years now, and until recently, the focus has mostly been on accumulation. Put money in. Invest regularly. Keep costs low. Avoid lifestyle creep. Repeat. It has always felt like a long-term project. Something that lived somewhere comfortably in a distant future.<\/span><\/em><\/p>\nThe \u201cfuture\u201d part has started to shrink.<\/span><\/em><\/p>\nIf all goes to plan, I want to stop full-time work in 2027. That is just over two years away. Suddenly this idea, which once felt theoretical, has become something with dates attached to it. I can almost see myself handing in my notice. It is exciting, but it has also made me realize how much I need to start thinking about the next phase: decumulation and de-risking.<\/span><\/em><\/p>\nThe Numbers So Far:<\/span><\/em><\/h4>\nAt the moment, my investments are sitting around \u00a3X<\/strong> across a mix of:<\/span><\/em><\/p>\n\n- \n
S&S ISA (global equity trackers mostly)<\/span><\/em><\/p>\n<\/li>\n- \n
SIPP (target-date default fund<\/span> [this is wrong]<\/span> and some global equities)<\/span><\/em><\/p>\n<\/li>\n- \n
Cash savings for emergencies<\/span><\/em><\/p>\n<\/li>\n<\/ul>\nI am still contributing regularly, and I do not plan to stop until I actually leave work. However, the risk profile of my portfolio has been set for accumulation. Almost everything is in equities. That has served me well during the last several years, but I am aware it may not be the right setup for drawing an income.<\/span><\/em><\/p>\nDecumulation Feels Mentally Hard<\/span><\/em><\/h4>\nSaving always had a simple direction: forward. Spending down feels different. I know the maths<\/span> [yes, maths not math!]<\/span> says a sensible withdrawal rate, diversified portfolio, and keeping enough in cash or bonds to cover near-term spending should be fine. Even so, watching the total number reduce will feel strange.<\/span><\/em><\/p>\nIt may take practice. I think I will need to rehearse it, possibly by:<\/span><\/em><\/p>\nThe emotional side of decumulation is not discussed enough. [I\u2019ve mentioned on several occasions that I will struggle to sell my investments]<\/span><\/span><\/em><\/p>\nDe-risking without Going Too Far<\/span><\/em><\/h4>\nI am not planning a dramatic shift into bonds overnight. [correct!]<\/span> I know that I still need growth, especially if I am retiring early and expecting my investments to support me for several decades. However, I am considering gradually increasing the allocation to bonds and gilts over the next two years, so that when I step away from work, I have:<\/span><\/em><\/p>\nThis should limit the impact of a market downturn just as I begin withdrawing.<\/span><\/em><\/p>\nI do not want to become ultra-cautious and lock in lower returns for the long term. I just want to avoid a scenario where the market dips heavily in the first year of retirement. Sequence-of-returns risk is something I would rather plan for now than regret later.<\/span><\/em><\/p>\nNext Steps<\/span><\/em><\/h4>\nOver the next few months, I want to:<\/span><\/em><\/p>\n\n- \n
Define my expected annual spending in retirement more clearly. <\/em><\/span>[done]<\/em><\/span><\/p>\n<\/li>\n- \n
Decide on a target asset allocation for 2027. [getting there]<\/span><\/em><\/span><\/p>\n<\/li>\n- \n
Test a drawdown strategy using my existing figures. [to do]<\/span><\/em><\/span><\/p>\n<\/li>\n- \n
Continue contributions as normal, since I am not there yet. [doing]<\/span><\/span><\/em><\/p>\n<\/li>\n<\/ol>\nRetirement used to feel like a distant concept. Now I find myself imagining normal weekdays that belong entirely to me. I like that idea. I want to enter that stage prepared, calm, and not worried about the markets every time I make a withdrawal. [sadly, I think I will always worry a little!]<\/span><\/span><\/em><\/p>\nSo I suppose this is the beginning of Phase Two.<\/span><\/em><\/p>\nMore thinking ahead. Less sprinting. Still moving forward.<\/span><\/em><\/p>\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014-<\/p>\n
I need to really look at step 3, which will take some time, a new spreadsheet or two, but need an easy to follow plan for me to implement. With various portfolios and moving parts, it was never going to be simple but it needs to be a strategy I can stick to.<\/p>\n
I\u2019m unlikely to document monthly progress of this drawdown simulation, might consider a six month update (quarterly if I feel like it), once I\u2019ve got some months\u2019 worth of data.<\/p>\n
I\u2019m not sure I will be able to get this in place by the end of the year \u2013 I have some days holiday I need to use up and I could use this time constructively and proactively, but this will take a lot of thinking time.<\/p>\n
How go your decumulation plans?<\/p>\n
<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"
\u00a0 [EDIT \u2013 apologies, got some emails and realised that comments had been turned off by accident! Should be right now, I will copy and paste the emails] I wondered what would happen if I asked ChatGPT to write a blog as me: Calm haha! \ud83d\ude00 For the AI draft post, scroll to the bottom […]<\/p>\n","protected":false},"author":1,"featured_media":328406,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[28763,154720,140763,4538],"dealstore":[],"offerexpiration":[],"class_list":["post-328405","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-actions","tag-decumulation","tag-derisking","tag-thoughts"],"yoast_head":"\n
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