Pensions Planning: The NUMBER

SouthCoastBoy

I will be happier when we get interest rates to a more realistic long term level and see what impact that has to economy etc. I'm not holding my breath though. I am expecting to have to work until at least 60, unfortunately my current job is relatively precarious so imagine I will need to find a new job within the next 6 to 12 mths. 

Anonymous101

SouthCoastBoy said:

I will be happier when we get interest rates to a more realistic long term level and see what impact that has to economy etc. I'm not holding my breath though. I am expecting to have to work until at least 60, unfortunately my current job is relatively precarious so imagine I will need to find a new job within the next 6 to 12 mths. 

I understand your reasoning but it does appear to be overly cautious to me.

Have you thought about potential mitigations for your concerns? For example you could easily put 10 years of expenses into inflation linked bonds and use that as a bridge to the state pension. During that time any effects on your Equity holdings would have materialised and potentially been recovered from and your fixed income position would improve due to State pension and wife's DB.

SouthCoastBoy

Personally I think bond prices are too high at the moment, and therefore in some instances creating negative yields. I have some of my portfolio in cash which is fine in the short term, but if inflation remains high > 2.5% and interest rates don't catch up I will have to re-evaluate that approach.

I think all these issues highlight the challenges a DC pension brings, the responsibility falls onto the employee rather than the employer. Annuities are a no go due to the poor rates for any joint life index linked annuity

Anonymous101

Yes I agree. For some its a driver to self educate which can be interesting but for others it can be worrying. It is a lot of responsibility to be shifted onto the individual without any structured guidance in place.

That being said I couldn't imagine going back to being forced into buying an annuity so overall I think its a good thing we are now self managing.

SouthCoastBoy

Agreed. The other issue I have is a mental one, having been a life time saver it is very difficult to have the confidence in seeing the depletion of savings.

Anonymous101

SouthCoastBoy said:

Agreed. The other issue I have is a mental one, having been a life time saver it is very difficult to have the confidence in seeing the depletion of savings.

Yes that is a whole other topic and perhaps the main issue as to why you are hesitant around stepping way from employment? In all likelihood due to your pot size and drawdown rates your net worth will continue to grow even whilst you are drawing down.

I know when the time comes for me I will struggle with that switch. With broadly similar forecast numbers to you it does shed some light on a position I think will find myself in.

PJM_62

I also know people who talk about retirement but are struggling to step away from work.  Some wont even work out their Number because they dont want to see that they could have retired years ago.

For me, after some close to home tragedies over the years, and now covid, I'm looking forward to a fulfilling life beyond work.
YOLO as the kids say
 
This topic is about folks working out The Number they need to retire early. But it is for sure interesting to see that there is more to stepping away from work than just getting to The Number. 
 

crv1963

PJM_62 said:

I also know people who talk about retirement but are struggling to step away from work.  Some wont even work out their Number because they dont want to see that they could have retired years ago.

For me, after some close to home tragedies over the years, and now covid, I'm looking forward to a fulfilling life beyond work.
YOLO as the kids say
 
This topic is about folks working out The Number they need to retire early. But it is for sure interesting to see that there is more to stepping away from work than just getting to The Number. 
 

I have been absent since November so have 40 pages to catch up on! My view is you are totally spot on. Mrs CRV and I have been busy sorting and saving, due to covid there has been the chance for some serious saving and Mrs CRV has taken the plunge and is retiring next month. She will live off of savings between August and April next year when she hits 55, then she will access her pension pots and draw down. I on the other hand am enjoying work having moved bases and teams again so I'm giving it 3 years more then going at 60, putting as much as I can into my SIPP and Mrs CRV SIPP as I go.

We've found we really can live on a lot less than we thought and travel abroad apart don't feel we've missed out on much that we spent money on. I've been to the pub once but it doesn't feel the same so I don't even miss that much!

PJM_62

Congratulations Mrs CRV ! 

Terron

SouthCoastBoy said:

Personally I think bond prices are too high at the moment, and therefore in some instances creating negative yields. I have some of my portfolio in cash which is fine in the short term, but if inflation remains high > 2.5% and interest rates don't catch up I will have to re-evaluate that approach.

I think all these issues highlight the challenges a DC pension brings, the responsibility falls onto the employee rather than the employer. Annuities are a no go due to the poor rates for any joint life index linked annuity

As someone who remembers the 70s the idea of 2.5% inflation being high makes me smile.

Also my DC pension has fewer problems with inflation than any of my others:

a fixed annuity (to get the full GAR);

a FS with no likelyhood of any rises;

a DB pension with a 5% cap on inflation based rises.