Calculator, suggested figures

OldBeanz

https://www.retireeasy.co.uk

You may find it easier to use this.

fizio

OldBeanz wrote: »

https://www.retireeasy.co.uk

You may find it easier to use this.

Is this all secure and legit as I don't fancy entering in loads of personal financial data and then be targeted by scammers and all sorts?

jamesd

TH1878 wrote: »

I agree with this in the main but for planning, it is better to be prudent.

I prefer to be prudent by having a safety margin in the final target pot size. That way you know the implications and potential excess income if things don't go badly.

TH1878 wrote: »

If you're going with a high equity exposure, I would maintain a cash buffer of 2-3 years income requirements to help you ride out any short term market volatility.

At least a year, two or three might be too much. But during drawdown I'd also want to be using the Guyton or Guyton and Klinger rules:

1. "there is no increase in withdrawals following a year in which the portfolio’s total investment return is negative, and there is no make-up for a missed increase in any subsequent year"
2. "the maximum inflationary increase in any given year is 6 percent, and there is no make-up for a capped inflation adjustment in any subsequent year"

OldBeanz

haf63 wrote: »

Is this all secure and legit as I don't fancy entering in loads of personal financial data and then be targeted by scammers and all sorts?

Yes it has been mentioned on here a number of times. I have been using it for a couple of years and if you have any issues with input they eventually come back with a work around e.g. recent changes in drawdown pensions. Their team occasionally pop up in this forum. Saved many a great deal of excel

wotsthat

TH1878 wrote: »

I like that analogy but I'd just encourage someone to save a little more so they achieve financial independence at the age they want to.

It's a question of finding a level of risk that you're willing to tolerate that gives you the highest ratio of number of retirement years to sleepless nights. As you're more than a decade out you have plenty of time to ponder this and focus on accumulation.

Of course the only way to reduce risk is to have more money which means a higher savings ratio or less years in retirement. I'd suggest this board is probably occupied by those of a more cautious nature who would rather have fewer years in retirement than tolerate any risk of running out of money.

I'm going to pack up when 4% meets my needs. This will probably be a decade or so before SPA so maybe I'll dip in and out of work to pay for a few holidays and other expenses to keep the drawdown to a minimum.

DaveMcG

For the post retirement part this calculator simulates the effect of market crashes on various portfolios and income levels.

http://howlongwillmyfundlast.co.uk/Calculator2.html

jamesd

That looks pretty limited. Not sure it even includes a recovery from a market drop, am sure it doesn't include the varying degrees of drop with different frequency or any of the protective measures.

DaveMcG

It is obviously limited, but it is a step forward from the many calculators that simply use one growth rate. It at least differentiates between risky and safer investments and allows the user to experiment with market timing to some extent.

There is a simpler version on http://howlongwillmyfundlast.co.uk/Calculator.html that uses some example scenarios.

FatherAbraham

tony4147 wrote: »

For my pension growth until I retire I'm using 6% / yr and then 2.5% inflation, real growth 4%, is this reasonable?

Too high.

See http://www.bbc.co.uk/news/uk-20176858

And the FSA was advised that the old projections were in any case out of line with economic reality.
It said the new projection rates will be cut to 2%, 5% and 8% to make sure customers are not given exaggerated or potentially misleading information

Warmest regards,
FA

jamesd

tony4147 you might find these past discussions of interest:

• Pension calculation help to get me to 25k pa - introduction to Firecalc among other things
• pension pot size? - general discussion and explaining what the FCA projected rates really are.

FatherAbraham, the PricewaterhouseCoopers March 2012 report is available at Rates of return for FSA prescribed projections
. It's worth a read of at least the initial 7 pages to learn why it's inappropriate for long term pension planning like the 38 years being discussed here:

1. They assume an annuity will be purchased between 10 and 15 years from the date on which the projection was prepared and "we focused on an investment time horizon of around 10-15 years" from March 2012. We already know that there is no plan to buy an annuity in this case.

2. The projection assumes use of a mixture of "57% equity, 23% government bonds, 10% property and 10% corporate bonds". Something moderately similar to UK-centric default balanced managed funds.

3. PWC note that "the yields on offer to government bond investors are now at historic lows" and "our analysis suggests that medium-term real returns on government bonds have reduced from 1¾%-2% in 2007 to ½%- 1%" but instead of doing something about it they still dump 23% of the money there and another 10% in similar corporate bonds instead of doing something more sensible instead. Not sure about you but I'm not inclined to put money in places that I think are going to do badly.

4. The deliberately bias the returns downwards until 2016: "We treat the period to 2016 as one in which the economy returns gradually to its long-term trend path following the financial crisis. We then combine projections for the period to 2016 with longer-term trend estimates to provide a medium-term view (for a 10-15 years investment horizon)" Unfortunately for them their presumptions of what will happen until 2016 have not materialised and the time available for them to happen is now running out.

Overall the projection has turned out to be pretty poor but firms are still required to use it for official projections. To do better than the projection isn't hard, not dumping 33% of the money in government and corporate bonds would be a good start.