When to retire......

marathonic

PaulF81 wrote: »

Where is the guarantee that you are going to earn 6.5% in perpetuity?

Where is there a guarantee ANYWHERE with regards to retirement planning? It's all based on assumptions and 6.5% is as good an assumption as any.

In my opinion, 6.5% over the long term is a relatively conservative estimate and, as I said before, if growth rates don't transpire to be that high, I work a few years longer.

N1AK

PaulF81 wrote: »

Where is the guarantee that you are going to earn 6.5% in perpetuity?

Including dividends 6.5% is a low estimated return on investment. Obviously it can't be guaranteed but no retirement plan can be; the best that can be achieved is to plan in such a way that your odds of being far short are minimised.

marathonic

With the £292,032 pot and drawing down £11,681 per year (the figures I quoted earlier) from the age of 55, this (American) calculator shows that, using the standard assumptions, your pot is 84.4% likely to sustain you until the age of 100.

If you decrease your drawdown rate to 3.5% (£10,221), your £340 per week, including state pension, income is 97.9% likely to last you until 100.

http://www.firecalc.com/

grizzly1911

marathonic wrote: »

With the £292,032 pot and drawing down £11,681 per year (the figures I quoted earlier) from the age of 55, this (American) calculator shows that, using the standard assumptions, your pot is 84.4% likely to sustain you until the age of 100.

If you decrease your drawdown rate to 3.5% (£10,221), your £340 per week, including state pension, income is 97.9% likely to last you until 100.

http://www.firecalc.com/

What is the likely chance of living to 80/90/100?

N1AK

marathonic wrote: »

With the £292,032 pot and drawing down £11,681 per year (the figures I quoted earlier) from the age of 55, this (American) calculator shows that, using the standard assumptions, your pot is 84.4% likely to sustain you until the age of 100.

If you decrease your drawdown rate to 3.5% (£10,221), your £340 per week, including state pension, income is 97.9% likely to last you until 100.

http://www.firecalc.com/

I think there is a fair question about what probability and age you should use when deciding what to go with. I tend towards the view that my financial planning should be enough to get me through to about that age (or slightly older) while having a reasonable pot intended for passing on as inheritance that could sustain me if I am too stubborn to die on time!

I suppose if you're retiring at 55-70 with a drawdown that'll last to 100 you can always start moderating your spending if you're still going strong in your mid-80s.

grizzly1911

PaulF81 wrote: »

Where is the guarantee that you are going to earn 6.5% in perpetuity?

@marathonic have you any historical data to back up this long term projection being reliable?

Has a long term depression and stagnant economy been factored in?

What about the impacts of inflation both on growth pre-drawdown and income post drawdown starting?

N1AK

grizzly1911 wrote: »

What is the likely chance of living to 80/90/100?

This site gives an estimated life expectancy. The odds would depend on lots of things like diet, hereditary issues, exercise etc. Chances are if you aren't aware of a big issue then you're more likely to reach 70 than not. 80 is probably a better than 50/50 chance. 90 might be around 1/3 to 1/4 and 100 is getting much less likely.

N1AK

grizzly1911 wrote: »

@marathonic have you any historical data to back up this long term projection being reliable?

Has a long term depression and stagnant economy been factored in?

What about the impacts of inflation both on growth pre-drawdown and income post drawdown starting?

Firecalc runs your figures through every period the stock markets have existed for. When it says for example 99% that means that for 1 in 100 periods it has tested for you would run out too quickly. That period would likely be one that included buying high and hitting both the great depression and a world war.

marathonic

N1AK wrote: »

I suppose if you're retiring at 55-70 with a drawdown that'll last to 100 you can always start moderating your spending if you're still going strong in your mid-80s.

Yeah, this echoes my thoughts. If I have the income I earned for and it lasts me until 100, the state pension can take me from there.

At the end of the day, you want the big income to fund hobbies and social activity from 55 (or whatever age you retire) until you are no longer able to pursue such activities.

I imagine that the average 100 year old is a lot more frugal than the average 55 year old with the main expenses being care related.

I don't see myself going on a caribbean cruise at 104

N1AK

marathonic wrote: »

I don't see myself going on a caribbean cruise at 104

You pessimist you or is that because you'll be skiing in the Alps :rotfl: