Early-retirement wannabe

hugheskevi

Also true, but the SP and DB are both inflation-proof (currently, could easily change in 20+ years) so it's only the SIPP that could be affected, and as before, working 6 months to a year longer should cover that.

The SP is, for the time-being, earnings inflation proof, but the DB pension is only inflation-proof.

You may wish to consider your proposed pension relative to the level of the minimum wage for a person working 40 hour weeks, 52 weeks of the year.

At the moment, a £16,000 pension would be very close to that minimum wage income. But if earnings increase by 4% p/a over the next 30 years and prices by 2% p/a, that £16,000 would have increased to be only just above half the minimum wage income which would be a very different level of living standards relative to the wider population.

Over longer planning periods, there is a very strong argument for planning either in constant earnings terms, or at some level between constant price terms and constant earnings terms.

Terron

atush wrote: »

You should always have a cash buffer of at least one years income, just for that reason. So that you dont have to draw income during a downturn.

If you havent got that much yet, work and save until you do.

Whilst having such a buffer is important I wouldn't hold that much as cash. Rather I would (and do) keep 2-3 months as cash use a relatively low risk fund for the rest.

Terron

mjfp509 wrote: »

How much you'll need is all very subjective. Some people would struggle on 16K; others would find that amount a luxury !

If your mortgage is paid off and you don't have high outgoings, you could live easily on that amount.

I had a chance to try out various levels after loosing my job in 2013.
On £300 pm (JSA) I was having to did into my capital to keep going.
Similar on £400 pm (one rental propertt).
On £900 pm (2 rental properties) I could cover day to day costs but had to use capital to cover things like the service charge on my flat.
On £1500pm/18k pa (3 rental properties) I could cover all my normal costs, but no treats like holidays.
I am single and my mortgage was down to £17pm.I was not paying tax at that time due to the lag before self assessment kicked in.
Next year ,y DB pensions and GAR annuities will kick in andwith my property income I should get around £46k, which will be plenty.


Last tax year I took £5k tax free out of my flexible pension to cover the costs from a fall and my first overseas holiday since I lost my job,

pricew1970

kangoora wrote: »

My tipping point was being given a project to install Voice over IP system, around 500 users over 4 sites. First meeting with the customer and they were desperate to have it completed by end December (this was end October).

Contract was signed weeks, if not months, before and I then found out that the sales person hadn't placed the pre-orders and we were looking at a 12 week lead-time on circuits and kit (not counting Xmas delays also). Created the project plan, looked at my options, threw my hands in the air in disgust and resigned/retired that day........

Best decision I ever made. Luckily I was in a position to be able to just walk away...........

Sounds like a VF-UK proect

atush

Terron wrote: »

Whilst having such a buffer is important I wouldn't hold that much as cash. Rather I would (and do) keep 2-3 months as cash use a relatively low risk fund for the rest.

There is no relatively low risk fund in a major downturn.

If you want to skate by with just 2 months income, do so. But it isnt prudent.

You dont have to keep all your cash easy access, you can use a ladder of savings accts with 6-12 months dates, and high interest current accounts.

Terron

atush wrote: »

There is no relatively low risk fund in a major downturn.

So all funds carry the same risk? If not some are lower than others and thus are relatively low risk. There are plenty of adverts for such funds - such as this one https://www.thebalance.com/vanguard-funds-for-conservative-investors-2466333

OldMusicGuy

There are some that are lower risk for sure. My core holding is one of the lower risk Vanguard funds, as I am trying to protect against downside risk in the long term. That dropped by nearly 3% during the recent correction (compared to its December 2017 level). My highest risk fund dropped by nearly 5%. So it's relatively lower risk, but if there was a major downturn I would still be facing a significant loss. Which is why I have at least 5 years of cash in a combination of my SIPP, various cash accounts, ISAs and fixed interest bonds.

But I have just retired and have no source of income apart from my DC pot and savings, so that suits me. Probably not appropriate if (like many people on here) you have some form of guaranteed income floor like a DB pension.

kidmugsy

Terron wrote: »

So all funds carry the same risk?

No; but you won't really know which were carrying what risk until afterwards. The comforting notion, for instance, that long maturity bonds are low risk might prove completely wrong.

runninglea

off topic slightly but everyone goes on about their 'number'. Where is link to work this out or thread please

Lungboy

runninglea wrote: »

off topic slightly but everyone goes on about their 'number'. Where is link to work this out or thread please

The number thread

Thanks to the people that responded to my post, it looks like I'm not too far off the mark so I've taken the plunge with a Cavendish sipp invested in Vanguard Global All Cap.