More bad news for savers.

masonic

colsten wrote: »

How long do you reckon a million lasts?

If you have a million, you should be able to withdraw £40k per year (index linked) for 30 years with a >90% probability of not running out of money - that's at around 60-80% equities. If you can drop your withdrawal rate to £35k, you would be able to take the income with a negligible chance of running out of capital and about an 80% probability that after 30 years you'll have more capital in real terms than you started with.

So if you need £35k (after any state pension is factored in) for a 'very comfortable' retirement, then a million is a good target.

I'm aiming for about a third of that.

masonic

Glen_Clark wrote: »

When looking at how much you need for a comfortable retirement some people still seem to expect future investment gains to be as good as past ones. But the indications are that they won't, because past returns have been boosted by unprecedented QE.
Genuinely safe investments like Index linked bonds backed by strong economies have all turned negative, so capital loss is guaranteed.
In addition, the possibility that Britain will have the money to fund the state and public sector pensions its politicians have promised is coming into serious doubt. Attempts to bring public sector pensions back into proportion to what the country is likely to afford have been met with strong trade union opposition, leading the Government to back down and kick the can down the road as another problem for the next Government to deal with, along with a record National Debt and Housing Crisis.

I think that is a fair point. Holding bonds is pretty unattractive at present, which is where high interest current accounts and other consumer products can play a role as a proxy for bonds. In terms of looking at projected gains, looking at the past 5 years is obviously going to paint a very skewed picture, but looking at the worst case scenarios in during the 20th century, for example, should still lead to a realistic answer, especially if one avoids those asset classes that have been overinflated by QE.

whattochoose

colsten wrote: »

Totally agree, some people could make it net 4%+. Everyone can make it 4%+ gross unless they have a problem getting accepted for some of the current accounts. This is highly unlikely though not entirely impossible for someone who has tens of thousands in cash.

I would, of course, not advocate that people stick to cash savings for their retirement provisions. It's been discussed countless times here and in other places that cash is unlikely to perform as well as equities over any prolonged period of time. Aside from that, £50,000 will not see you through very many retirement years.......you need about 20 times that amount for a really comfortable retirement, and that's only at today's prices.

I wish I lived in your world.:)