I have just given up fulltime work and am in the process of converting my SMSF from Accumulation to Pension phase (TRIP). I have just opened a new bank account within the fund to hold some cash in and to use as the pension drawdown account.
I have calculated my living expenses for me and the old girl to be about 50K PA. I will be receiving about 50K PA in franked dividends.
Most of my portfolio is made up of equities with very little held in cash (25k).
I have read that one should hold approx 1 to 2 years worth of living expenses in a high interest cash account to draw a pension from just in case the market falls away and you dont have to sell off some of the stocks.
I know I need to keep the account afloat whilst the dividends dribble in and the Tax return is completed for to receive the franking credits. Is this correct or is 2 years too much.
Also are there any important considerations that i must be aware of when converting over from accumulation to pension phase ??
