Retirement Planning Tools

[Phil.]

I'm intending stepping back from full-time employment in around 12 month’s time. Mid-50’s with a mix of pensions and savings.

I want to undertake some financial scenario planning that allows me to better understand the options available and the potential risks over the next 30 years of securing sufficient income.

Rather than build a tool from scratch is there something available (happy to purchase) whereby I can investigate various different income options by vary the likes of inflation rates, interest rates on investments, draw down rates etc?

I already have professional investment guidance and will be consulting a specialist pensions/retirement planning IFA in due course before taking any action but want to explore a few financial scenario’s myself now.

[mikeiow]

https://www.firecalc.com looks a useful tool. Not delved closely enough to look wider: I kind of imagine retiring soon but still spend money a bit too liberally!!
Hopefully some wise heads here will add some useful thoughts....I like my own spreadsheets, but that is for my simple situation, yours may be more complex!

[trickywoo]

I'd have thought a spreadsheet would work if you are just looking at plugging in different rates of return and spending.

You can even use the Goal Seek function to work something backwards.

[red_slr]

Cfiresim will model 30 years for you no problem. You can add SP, SIPP, other income, outgoings, one off / regular outgoings, inflation etc etc.

I use it every 6 months or so to check I am on track.

[Phil.]

Thank you guys. I have a couple of weeks off work soon and aim to spend some time of this getting my ducks in a row before making the final decision.

Having said that I am primarily making the decision to ‘semi-retire’ because life is too short etc., as per other threads on here. So the decision is made only the timing is in question and everything is tell me that it’s going to be next year.

[Ginge R]

Cash flow modelling tools are a vital part of an adviser’s armoury these days. The trick is, using them wisely (garbage in, garbage out etc). I can’t think of any UK ones that are available direct to consumers, but I think there are some tools available in the US. Iffy and variable quality mind.

[Phil.]

I think you’re correct Ginge, as usual

Off to speak to three personally recommended IFA’s in the autumn to find out which one talks sense and communicates best.

[Ginge R]

Glad you're set up.

[x5x3]

I'm in a similar situation OP and after looking around I went down the spreadsheet route. All the free ones just did not seem to cope well with my individual situation. My IFA did suggest a couple of paid for online tool but they seemed quite expensive.

[Ginge R]

I have a mate who owns a cash flow modelling (CFM) company. As an IFA, I could model any number of scenarios with a client, an infinitesimal amount in fact. But, if I modelled, say, 20 possible scenarios, there’s a chance that 20 possible scenarios will be completely wrong. Cash flow modelling is a prime case of ‘garbage in/garbage out’. He’d like to roll out a consumer based version, and I think that it will happen eventually. But in the wrong hands, it’s a potentially catastrophic tool.

CFM can be used as a sales aid in the worse examples, or it can be incredibly helpful and transformational. I sit down with clients and they have a go, and then I offer my input based on experience, and the whole picture changes entirely. I’m not suggesting I know everything, or that I’m always going to be right, but sometimes knowing how to use something isn’t, the same as having the experience to use it wisely. So, I wouldn’t assume that just because a version is available now for 2k, it’s automatically going to help you.

But, I have no doubt that in a few years, with the evolution of AI etc, really good examples will be readily available to consumers.

[x5x3]

indeed - and I would also add that for me it is important to understand both the assumptions and variables used in the CFM. For example in my spreadsheet I have inflation set to a fixed amount over the duration of the timespan - which is clearly not ever going to be true but at least I know it is one of the weaknesses.

[Cheib]

I've been working in finance for the last 30 years (specifically the bond/fixed income markets so am used to understand return analysis over this time frame etc). I've sat down with my IFA recently as am planning retirement....the tool they have is pretty good and allows for lots of different scenario analysis...I looked at some of the online tools and can't say I found any that looked that great.

I think you'd have to be very handy with a spreadsheet to do this yourself because you need to be able to model so many different events and also be able to look at assets differently because of all the different tax treatments and allowances you need to be able to maximise.

It's blinkin complicated! And to be honest if you could do it yourself you need someone to sanity check it properly which in itself would be a big job.