Pensions Planning: The NUMBER

Storcko14

I know there are tools available but I found it worthwhile to run a few simple macro scenarios for reassurance before pulling the plug on earned income. I didn't need it to be too granular or complex so I just created a spreadsheet that modelled a few scenarios (equity correction = x%, y%, z% which lasts n, n+1 years etc) focussing on the first decade of retirement (specifically covering the period to SP age when guaranteed income is a relatively low %age of need). I wanted to test what those scenarios would do to the required withdrawal rate.

That reassured that with the current asset allocation, an equity correction of up to 50% taking up to 7 years to get back to where it was, was survivable without pushing the withdrawal rate above a level I was comfortable with.

Obviously having only retired a year ago, I haven't yet discovered what my emotional reaction to a significant equity correction in decumulation would be, but rationally I know that it'll probably work out ok.

Moonwolf

https://forums.moneysavingexpert.com/discussion/comment/82097106#Comment_82097106

I couldn’t handle that stress particularly as for me a big reduction before my state pension kicks in in seven years would be particularly painful. As a result I’ve used 50% of my DC to buy an annuity. Added to my other DBs it is a good guaranteed income, particularly as I have 25% of that as tax free cash to offset the missing state pension.

Storcko14

I totally understand that @Moonwolf and annuities are definitely back in play as an option these days. I've also ensured that about 75% of our required spend is covered by 'guaranteed' income. That's mainly ILGs and STMM plus a couple of small DBs to 67 at which point SPs take up more of that role.

As an aside I worked freelance for 30 years so used to having to deal with fluctuations in income and making sure there's a large buffer in case things go quiet for a bit which, when I think about it, has helped with the switch to living mainly from a DC pension and S&S ISAs.