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GrahamL Posted 10 months ago
Pension pot growth after starting drawdown.

For anyone that has already started drawdown from your pension, what % has your pot been growing each year on average? Guidance that I’ve read advises me to drawdown 4-5% each year but that would not give me a comfortable retirement yet so I’d need to work 3-4 more years. However, I’ve also heard people saying they’ve been drawing 8-10% for several years and their remaining pot hasn’t reduced that much. 8% would give me a comfortable retirement now so curious as to what people’s views and experiences are. Thank you

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2 likes & 9 replies
    • Team Rest Less 18th March 2021 at 1:51 pm

      Hi Graham.

      Thank you for your post, very interesting questions.

      You may want to look at our articles on the subject here https://restless.co.uk/money/retirement-planning/new-pension-drawdown-rules-explained/ and here https://restless.co.uk/money/retirement-planning/how-pension-drawdown-works/

      If the answers are not there, there are contact details to organisations that we recommend for further help.

      Hope that helps.

      Gaetano

      Reply
    • Kev Fit 21st March 2021 at 6:11 pm

      my pot has grown around 19% in 3 years and taking into consideration the massive covid sell off a year ago, I am quite happy with that, just started flexi access drawing down and looking at 3 – 4% pa as being sustainable and has allowed me to retire 3 years earlier than planned, there will undoubtedly be some ups and downs along the way for sure but personally would not want to be drawing down 8 – 10% as its hopefully got to last a long time, I am very optimistic than growth of 7 -8% is achievable year on year.
      I hope all goes well for you.

      Reply
    • Seadog 25th March 2021 at 9:52 pm

      Depends on the size on the pot and yields people are getting.

      Reply
    • Martine-N 5th April 2021 at 1:28 pm

      That depends on many factors … if your pension pot is with a provider that moves your investments based on your age, you will gradually move from risky to less risky investment funds, meaning that the risk will be lower, but so will the yield.
      You should have a conversation with them and express your preference. While you’re still early on in your retirement, you may want to increase the risk and the potential yield, but remember that this means your pot could actually shrink …
      To give you an example of high risk&yield: my pot grew by 14% in 2017 and 2019, but I lost 2% and 0.5% in 2018 and 2020.
      If I had been in bonds and cash at that time, I probably would have made a steady 2 to 4% each year.
      So, in all fairness, you can’t expect to have a steady growth of more than 5% if you stick with bonds/cash, and you can’t rely on any kind of % with a more risky portfolio.
      It all depends on how willing you are to gamble.
      Hope this helps!

      Reply
    • GrahamL 5th April 2021 at 9:04 pm

      Great information. Yes, I need to speak to my pension provider as prefer to take more risk. Like you, I’ve seen growth very high at 17% and 12% and a couple of poor years with small losses but on average, I’ve seen just under 8% average growth over 10 years. I’d rather take a little more risk rather than see tiny growth that is eaten away with inflation. Thanks for your response. Graham

      Reply
      • KR 5th April 2021 at 11:06 pm

        I’ve been wondering the same thing about save withdrawal rates, and looked at some of the monte carlo simulators out there – although they’re more aimed at a US portfolio. There are several which allow you to model the income you want to withdraw vs simulations across historic returns to give you an idea of how risky your withdrawal rate is. Of course, past returns are far from a guarantee of what will happen, but I find it an interesting perspective on how far my pension pot is likely to go. https://www.retirementsimulation.com/ is quite simple to use.

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    • GrahamL 6th April 2021 at 3:15 pm

      Thank you. I’ll have a play around to see what I find.

      Reply
    • vindaloohot 7th April 2021 at 12:44 pm

      I think a big issue is timing of spend as you will spend more in early retirement ticking off your bucket list, and only get your state pension at 66/67.
      Spend your ISA’s early on and let your pension continue to grow? (Assuming you have cash savings)

      Reply
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