pension at 55??

Bootsox

michaels wrote: »

I thought OP was suggesting that he would live on 10k pa from 55 to 66/7 then having exhausted his pension pot live on state pension which for a couple would be a similar amount?

So the plan is to live in abject poverty?

dunstonh

bigfreddiel wrote: »

Pointing out the bleedin' obvious, the point is it's simple to work out what pension you can achieve from a simple bit of arithmetic. So why pay an ifa thousands of pounds for the same information?

fj

I ran a portfolio through a lifetime planner earlier using sensible assumptions and my figures showed the person was likely to run out of money if they kept drawing at their chosen rate. Yet their own figures (which were much cruder) didnt lead to them running out.

They were neither paying thousands and didnt get the same information.

dunstonh

I thought OP was suggesting that he would live on 10k pa from 55 to 66/7 then having exhausted his pension pot live on state pension which for a couple would be a similar amount?

That would mean planning to live at the breadline for 10 years and blowing their pension in one go to then go on to live at the breadline for the next 20-30 years. Not much of a life planned if that is the case.

Loughton_Monkey

slade1961 wrote: »

....my puzzle is should i retire , keep working, or part time work,

4 pensions to date total pot £122000.....

You are effectively asking us how long is a piece of string. There are two ways you can answer this yourself, providing you can do some mathematics and basic calculations using common sense assumptions on inflation, interest rates, investment rates etc.

1. Start with writing down how much money - per year - you consider a 'comfortable' amount to live on. Then you can work out what will happen to your £122K (plus any savings and future income/savings) if you draw that amount out until state pension age, after which you would draw down only the shortfall.

Or....

2. Start with your £122k (plus any savings etc.) and calculate how much income that will produce.... and take account of future state pension amounts. Then decide if the resulting income stream is 'acceptable' to you.

None of us knows whether you could (if you continue working) earn £13K a year, or £35K a year. None of us knows whether your 'normal' spending is £250 a week or ££850 a week.

Given your age, the 'die is already cast' very largely. But I would suggest that you also do some other calculations based upon continuing to work. To give a very simple example of my point, if someone (say) earns £20k, and perhaps being mortgage free only spends (say) £10K, then there is huge 'leverage' in working another year. The earnings of £20K supplies 2 extra years of spending, plus one year less to be funded by your current 'pot'.

torbrex

bigfreddiel wrote: »

Pointing out the bleedin' obvious, the point is it's simple to work out what pension you can achieve from a simple bit of arithmetic. So why pay an ifa thousands of pounds for the same information?

fj

Apparently not obvious to everyone and the IFA was to make it work, not to tell me what I already knew.

Al.

torbrex wrote: »

Take your pension pot, divide it by the number of years that you want it to last then by 12 and that will give you (roughly) what your monthly income will be for that number of years.

There are many risks to effectively drawing down savings, the most insidious being sequential return risk.

Once you have stopped accumulating wealth, once there is no more new money coming in, you go from being in a position where you benefit from pound cost averaging to one where you can be suffering via what's known as volatility drag, sequential return risk, pound cost ravaging.

Namely, if you have two savers, each starting off with identical circumstances but one suffers losses in the early years of drawdown and the other one doesn't, the result further down the line is markedly different.

Broadly, what happens during the first decade of your retirement largely dictates whether you’ll outlive your savings. Invest too much in equities early on, withdraw too much (especially during a period) such as the one we're in, and you might be in a pickle later on.

Whatever you do, don't blindly rely on simplistic linear graphs. Have you constructed a portfolio for withdrawal, or are you still in the same funds that you relied on to grow your wealth? Each can have very distinct and separate characteristics. More here:

http://www.telegraph.co.uk/finance/personalfinance/investing/11210093/Invest-100000-in-shares-and-take-an-annual-income.-How-long-till-youre-bust.html