Retirement fund
Discussion
Most of the calculators seem to be hosted by financial services institutions who have a vested interest in holding your money
Similarly much of the advice linked to, including one blog post that basically says “use all your other savings first in retirement and keep the money invested with us until last”
Similarly much of the advice linked to, including one blog post that basically says “use all your other savings first in retirement and keep the money invested with us until last”
I've tried to build my own model, but it's not easy, so have just settled on trying to put it all in todays values & hoping that's worst case & investments will exceed inflation - but its a big assumption.
I have a mix of DC & DB with the DB starting at different ages, then state pension (hopefully) starting at a different age, then my wife's pension. Then I expect my spending pattern to be non-linear, with more in the early years. I've yet to find anything I can use with all those variables.
I have a mix of DC & DB with the DB starting at different ages, then state pension (hopefully) starting at a different age, then my wife's pension. Then I expect my spending pattern to be non-linear, with more in the early years. I've yet to find anything I can use with all those variables.
Carbon Sasquatch said:
I've tried to build my own model, but it's not easy, so have just settled on trying to put it all in todays values & hoping that's worst case & investments will exceed inflation - but its a big assumption.
I have a mix of DC & DB with the DB starting at different ages, then state pension (hopefully) starting at a different age, then my wife's pension. Then I expect my spending pattern to be non-linear, with more in the early years. I've yet to find anything I can use with all those variables.
Knock 2% off your forecasted investment return and that should be fine to keep it in today’s prices, no? Then don’t index any of the other variables (state pension, LTA etc) to inflation either. I have a mix of DC & DB with the DB starting at different ages, then state pension (hopefully) starting at a different age, then my wife's pension. Then I expect my spending pattern to be non-linear, with more in the early years. I've yet to find anything I can use with all those variables.
Or am I massively oversimplifying and missing something big?
I'm just doing everything on todays value - what's in the DC funds right now & the 'todays money' DB prediction & 9K state.
I know there's 4% rules etc, but I'm a simpleton so just assuming I spend what's there with any growth equalling inflation - so 1k now will have the same spending power as 1k at any point in the future - hope that makes sense. Or 120k gives me 1k per month for 10 years type thing - and that 1k in 10 years time might be 1.5k, but the 120k still lasts 10 years and buys the same throughout.
I know there's 4% rules etc, but I'm a simpleton so just assuming I spend what's there with any growth equalling inflation - so 1k now will have the same spending power as 1k at any point in the future - hope that makes sense. Or 120k gives me 1k per month for 10 years type thing - and that 1k in 10 years time might be 1.5k, but the 120k still lasts 10 years and buys the same throughout.
Jawls said:
Carbon Sasquatch said:
I've tried to build my own model, but it's not easy, so have just settled on trying to put it all in todays values & hoping that's worst case & investments will exceed inflation - but its a big assumption.
I have a mix of DC & DB with the DB starting at different ages, then state pension (hopefully) starting at a different age, then my wife's pension. Then I expect my spending pattern to be non-linear, with more in the early years. I've yet to find anything I can use with all those variables.
Knock 2% off your forecasted investment return and that should be fine to keep it in today’s prices, no? Then don’t index any of the other variables (state pension, LTA etc) to inflation either. I have a mix of DC & DB with the DB starting at different ages, then state pension (hopefully) starting at a different age, then my wife's pension. Then I expect my spending pattern to be non-linear, with more in the early years. I've yet to find anything I can use with all those variables.
Or am I massively oversimplifying and missing something big?
Certainly not a trivial exercise but I've a learnt a lot doing it. Just need to get my head around crystallisation sequencing, especially if LTA gets reduced. It really shouldn't have to be this complicated!
GadgeS3C said:
Exactly the approach I've been taking - Excel spreadsheet, use a reduced growth to capture inflation and don't index DB & state pensions. Trying to stay on the conservative side and happy to take upsides.
Certainly not a trivial exercise but I've a learnt a lot doing it. Just need to get my head around crystallisation sequencing, especially if LTA gets reduced. It really shouldn't have to be this complicated!
That's exactly what I do although lack of inflation-linked pay increases and the LTA freeze adds to the complexity.Certainly not a trivial exercise but I've a learnt a lot doing it. Just need to get my head around crystallisation sequencing, especially if LTA gets reduced. It really shouldn't have to be this complicated!
mikef said:
Similarly much of the advice linked to, including one blog post that basically says “use all your other savings first in retirement and keep the money invested with us until last”
You're thinking of the Vanguard order of spending article? If so I think blog post rather denigrates it, and it certainly seems plausible that spending the non tax sheltered stuff first will be most efficient, albeit with the caveat you'd ned to weigh that up against getting good use out of tax allowances, so probably a blend is optimal.Carbon Sasquatch said:
I know there's 4% rules etc, but I'm a simpleton so just assuming I spend what's there with any growth equalling inflation - so 1k now will have the same spending power as 1k at any point in the future - hope that makes sense. Or 120k gives me 1k per month for 10 years type thing - and that 1k in 10 years time might be 1.5k, but the 120k still lasts 10 years and buys the same throughout.
What kind of investment are you using with that approach?Although that's much shorter than the 30 years that the 4% rule is normally considered with, that's 10%, which means the odds of either running out, or having some left over really start to depend on how lucky/unlucky you are with investment returns over those 10 years.
I’m pretty sceptical of the 4% SWR guide. While as a general rule you’d have been wrong to bet against equity markets over the last few decades, it’s hard for me to believe we’re on the cusp of a period of high returns given where asset prices are right now. Personally I’m using 3% and hoping for a much longer time frame.
If you like modelling investment scenarios on your retirement fund this is good
https://www.firecalc.com/
for simplicity start at the top right and just input your pot and how much you intend to spend per year.......
https://www.firecalc.com/
for simplicity start at the top right and just input your pot and how much you intend to spend per year.......
xeny said:
What kind of investment are you using with that approach?
Although that's much shorter than the 30 years that the 4% rule is normally considered with, that's 10%, which means the odds of either running out, or having some left over really start to depend on how lucky/unlucky you are with investment returns over those 10 years.
My dead simple approach is just to run out - a couple of DC pots - one to be spent in 10 years (55-65) - then the other to smooth the ramp down to my DB + state which then lasts forever.Although that's much shorter than the 30 years that the 4% rule is normally considered with, that's 10%, which means the odds of either running out, or having some left over really start to depend on how lucky/unlucky you are with investment returns over those 10 years.
My DB+state at todays values will be fine from 75-80 onwards & I'll take my chances with nursing home costs etc. So I want to spend the rest whilst I can enjoy it.
BobToc said:
I’m pretty sceptical of the 4% SWR guide. While as a general rule you’d have been wrong to bet against equity markets over the last few decades, it’s hard for me to believe we’re on the cusp of a period of high returns given where asset prices are right now. Personally I’m using 3% and hoping for a much longer time frame.
"I’m pretty sceptical of the 4% SWR guide. "You are right to be, it's pretty much irrelevant for most investors
"it’s hard for me to believe we’re on the cusp of a period of high returns given where asset prices are right now."
But, bear in mind the market scenarios that gave us the historical SWR weren't just a period of subdued/not high returns, but typically long periods of brutal market falls combined with lumpy inflation occurring in early retirement.
bogie said:
If you like modelling investment scenarios on your retirement fund this is good
https://www.firecalc.com/
for simplicity start at the top right and just input your pot and how much you intend to spend per year.......
How do you select UK data (including inflation)?https://www.firecalc.com/
for simplicity start at the top right and just input your pot and how much you intend to spend per year.......
BobToc said:
I’m pretty sceptical of the 4% SWR guide. While as a general rule you’d have been wrong to bet against equity markets over the last few decades, it’s hard for me to believe we’re on the cusp of a period of high returns given where asset prices are right now. Personally I’m using 3% and hoping for a much longer time frame.
I also think 4% is optimistic. The flip side is that with recent returns having been so good, it's easier to accumulate a proportionately larger pot.
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