800k CETV Figure, is £28k p.a. sensible
Comments
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One question I can't see answered is charges, what is he charging initial and ongoing?
Teh difficulty you have in terms of working out whether he suggests is suitable as he wont tell you before he gets his fee as the risk is you might then use that within paying him.
All you can do is find a good ifa who you seem to get on with, check whether their fees are reasonable and get them to justify the reasoning behind the investments they propose.
One big thing in drawdown is the ability to be flexible, so if you have a bad investment year and can draw less this reduces the risk very much going forward as you are eating into capital less. There might also be the opprotunity to draw slightly more in the good years of course.0 -
If you have a 60/40 asset allocation, and plan a 30 year retirement, then you can probably safely withdraw 3.5% of your pension pot in the first year and increase that amount by inflation each year. The chances of you depleting the pot are very low and you might end up with money to pass on to heirs.
So you should plan on withdrawing 3.5% * 800k = 28k. Of course if you pay an IFA annually and have other investment charges the amount will be less. So how much are you paying the IFA and in fund.platform charges? You could easily lose 50% of your income to these expenses.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
The total charges are 1.75% p.a.
0.5 for the IFA for ongoing advice.
0.85 fund manager.
0.4 (believe that's for the "platform").
Believe reputable poster dunstonh suggests this is around the going rate in another thread a while back.
When these fees come off, assume this means the growth, if possible needs to be between 5-6%.0 -
The total charges are 1.75% p.a.
0.5 for the IFA for ongoing advice.
0.85 fund manager.
0.4 (believe that's for the "platform").
Believe reputable poster dunstonh suggests this is around the going rate in another thread a while back.
When these fees come off, assume this means the growth, if possible needs to be between 5-6%.
Ok, charges aren't silly, my only gripe would be that percentage is fine for smaller sums, you are looking at a large investment so the sums he's getting paid start to look a bit high.
Is there an initial charge, as he would be getting paid £4K a year by you for a review that shouldn't take more than a few hours.
0.85 is right for active funds, id be looking to sue a mixture of active and passive if I were in your shoes, so think that figure might be 0.5% ish, again for the sums you are investing then every 0.1% is £800 per year which isn't insignificant.0 -
The total charges are 1.75% p.a.
0.5 for the IFA for ongoing advice.
0.85 fund manager.
0.4 (believe that's for the "platform").
Believe reputable poster dunstonh suggests this is around the going rate in another thread a while back.
When these fees come off, assume this means the growth, if possible needs to be between 5-6%.
Fund manager charges are included in published fund growth figures, they arent an added extra.0 -
You dont seem to have used cfiresim which carries out a large number of simulations based on starting retirement on different dateswhere the return and inflation are based on actual values over the past 140 years.
When I run it I get a success rate in terms of not running out of money of 75% for taking 36K, inflation adjusted from an 800K pot for 40 years. 75% seems a bit low to me since you dont get a second chance. 28K shows a 98% success rate.
It's not clear to me exactly what we are talking about on this thread. Is it as the title suggests a safe drawdown from 800K or is it what annual expenditure/gross income the OP could reasonably live on including SP, inheritances etc. I am assuming the former.
Do these numbers include state pension?I think....0 -
The total charges are 1.75% p.a.
0.5 for the IFA for ongoing advice.
0.85 fund manager.
0.4 (believe that's for the "platform").
Believe reputable poster dunstonh suggests this is around the going rate in another thread a while back.
When these fees come off, assume this means the growth, if possible needs to be between 5-6%.
The safe withdrawal rate of around 3.5% does not include fees. You will have to pay any financial fees out of that amount. So with 1.75% fees your safe withdrawal income just went down to 1.75% * 800k = 14k.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
Fund manager charges are included in published fund growth figures, they arent an added extra.
But the Trinity Study does not include any fund/manger fees so you take them straight off the top of the safe withdrawal rate.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »But the Trinity Study does not include any fund/manger fees so you take them straight off the top of the safe withdrawal rate.
Neither does it include any allowance for state pension or any flexibility in withdrawals during poor markets.0 -
Neither does it include any allowance for state pension or any flexibility in withdrawals during poor markets.
DB and state pensions are not relevant and the withdrawal rate is index linked. The safe withdrawal rate is usually calculated on a 95% probability of the portfolio lasting for a period such as 30 years. You can always tweak the withdrawal downwards if you want“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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