Early-retirement wannabe

Linton

I agree 2% return is a sensible return after inflation on which to model retirement. For my own retirement I used 3% inflation and 4% return which so far has proved to be reassuringly pessimistic on both counts.

The calculator I used was the one built into MSMoney. It shouldnt be too difficult to put together something good enough with Excel.

gadgetmind

I'm using CPI of 3% (for boosting pension and allowances), inflation of 3.25% and investment returns of 5%.

I'm assuming that 5% drawdown for 12 years and then 3.5% drawdown after state pension age is sustainable. Firecalc says it is and it feels about right.

itm2

I have a fairly simple spreadsheet that I've been using to model retirement income drawdown scenarios (I'm working on my own early retirement plan). I'm working on assumptions of 3.5% inflation and 5.5% return on investments. I was wondering whether anyone had anything a bit more sophisticated that they wouldn't mind sharing? Alternatively I'd be happy to share mine, for what it's worth...

gadgetmind

itm2 wrote: »

I was wondering whether anyone had anything a bit more sophisticated that they wouldn't mind sharing?

A crystal ball?

atush

I think my biggest problem in retirement planning is on how much money I will need in income. it is hard to predict, as I m currently spending so much with feeding and clothing 5, plus twin at Uni etc. I may need to refine things in a few years once I get a better handle on my expenses with them gone.

peterg1965

atush wrote: »

I think my biggest problem in retirement planning is on how much money I will need in income. it is hard to predict, as I m currently spending so much with feeding and clothing 5, plus twin at Uni etc. I may need to refine things in a few years once I get a better handle on my expenses with them gone.

An interesting point. I have my three children living at home, I sometimes wonder actually how much it costs out of the household budget to keep them, ie food, electric, clothes etc. I have a 17 year old son who can eat for Britain, a 20 year old daughter at Uni who lives at home. I would give a ballpark figure of roughly £150-£200/month is what it cost over and above my wife and I. Maybe this is a little conservative. Not that I want them out of course, but I would assume that they will not be around when we retire, so that is a potential saving of £2k over and above what we pay now.

BLB53

However, it got me to thinking - a lot of those blogs also talk about assuming investment returns of 7-9% on average over a longer period of time (i.e. 4-6% real after inflation) but looking at how things have developed over the last 5-6 years does that seem like a reasonable long term target still? It seems quite aggressive to me and I suspect actually getting 1-2% above inflation may be a more realistic goal and matching inflation probably the more conservative strategy.

I think inflation + 2% would be realistic in the current low interest climate.

I was reading a summary of the latest Credit Suisse Yearbook over the weekend and one of the conclusions was low returns on cash and gilts will mean lower returns on all asset classes including equities - they suggest a prospective return after inflation of around 3%.

Calculators - candidmoney have quite a good selection.

atush

peterg1965 wrote: »

An interesting point. I have my three children living at home, I sometimes wonder actually how much it costs out of the household budget to keep them, ie food, electric, clothes etc. I have a 17 year old son who can eat for Britain, a 20 year old daughter at Uni who lives at home. I would give a ballpark figure of roughly £150-£200/month is what it cost over and above my wife and I. Maybe this is a little conservative. Not that I want them out of course, but I would assume that they will not be around when we retire, so that is a potential saving of £2k over and above what we pay now.

I think that is conservative as it doesn't cover their transportation and holiday costs (it cost a lot to fly 3 extra adults long haul and then you have to rent a bigger car etc not to mention other costs like activities/food).

I do know that with 3 of us in the house, I spend a lot less on groceries. at least 200 a month if not more. But one is working and living at home to save, and although he pays me abt 240 per month, I am not certain that covers his food and utilities completely. And last week was my bday so we went out of a pub lunch, so of course the OH paid for all 3 of us.

Hopefully he will take us out occasionally, I used to take my parents out once every so often when I was living at home after UNI but working (and paying rent). I have suggested that he start this practice soon, given he has just won 450 on an 8 match football accumulator on a 1 quid bet

Marine_life

peterg1965 wrote: »

An interesting point. I have my three children living at home, I sometimes wonder actually how much it costs out of the household budget to keep them, ie food, electric, clothes etc. I have a 17 year old son who can eat for Britain, a 20 year old daughter at Uni who lives at home. I would give a ballpark figure of roughly £150-£200/month is what it cost over and above my wife and I. Maybe this is a little conservative. Not that I want them out of course, but I would assume that they will not be around when we retire, so that is a potential saving of £2k over and above what we pay now.

Well I KNOW that's conservative.

The problem is that although my daughter left home for Uni about three years ago - we still cook for 4!

Thrugelmir

I target a return of 2% above inflation. (after allowing for management fees) . Some periods are good, some bad. Always invested for income. As it's a cheap way of diversifying the portfolio.