How long will your savings last?

mgdavid

Please_explain... wrote: »

Oh for pity's sake, read what I wrote, everything you say was covered!!!!!!!!

far too long to read, and not overly-well structured to my eye.
If invested, annual withdrawal of 4% is the rule of thumb.

Please_explain...

mgdavid wrote: »

far too long to read, and not overly-well structured to my eye.
If invested, annual withdrawal of 4% is the rule of thumb.

Oh, well pardon me for not meeting your exacting standards - clearly not everyone is as perfect as you.


A lot of the length was to fend off morons who would make the wrong argument - it clearly didn't work. And being as concise as your post leads to utter nonsense - taking 4% would make a lot of sense if you were 100 years old or inflation were 25% or ...

Please_explain...

AnotherJoe wrote: »

Hmm, here's precisely what you did say, my emphasis:

But, for the example you posted, that doesn't work does it? And rather than admit that, you've made up a different scenario, one that doesn't appear in your first post at all and then bizarrely stated you based your argument on £100k or even £10k !! Your words are there to see

Jeez, I was allowing for some common sense from the reader. All I'm saying is that if you can get a return that matches inflation from whatever you choose to invest in you can take a set cut of your capital each year in real terms for a number of years of your choosing. It doesn't matter a fig if it's £10,000 or £600,000, or 10 years or 40. I have no idea why you're getting worked up about it. Giving two examples isn't bizarre as far as I can see. And writing in red doesn't make you right! I found something that has helped me a lot and thought it would be a good thing to share it in the hope it might benefit others too. Why do so many feel the need to write rubbish just to have the last word. I refer you back to my post about offensive people forcing me off MSE in the past. Write what you want, I'm off. I hope you all have happy retirements.

HappyMJ

mgdavid wrote: »

far too long to read, and not overly-well structured to my eye.
If invested, annual withdrawal of 4% is the rule of thumb.

4%? 4% of what figure? I get 5% annual returns so the money would only grow if I were to withdraw only 4% each year. I was planning on spending 10% of the original capital amount invested each year which should last at least 12 years from 55 to 67.

My plan is ...to claim all of my private pension as soon as I can and live on that until I can claim the state pension.

mgdavid

HappyMJ wrote: »

4%? 4% of what figure?...... .

4% of anything -
is the rule of thumb for a safe withdrawal rate of invested money such that it does not run out before death.
Wanting to use it all up in a shorter timespan is a specific set of personal circumstances, for which a rule of thumb is unsuitable.
The rule of thumb is a generalisation and a starting point for further thought and consideration when making retirement income plans.

atush

I agree, it is a starting point.

We plan to draw 6% initially, then lower to 3-4% after state pensions kick in.

AnotherJoe

mgdavid wrote: »

4% of anything -
is the rule of thumb for a safe withdrawal rate of invested money such that it does not run out before death.
Wanting to use it all up in a shorter timespan is a specific set of personal circumstances, for which a rule of thumb is unsuitable.
The rule of thumb is a generalisation and a starting point for further thought and consideration when making retirement income plans.

I thought 4% was the RoT for retaining the full initial capital amount ? Obviously by definition it also wont then run out Because you could go higher if you were prepared for it to run down at say 25 years out.

Like most here my plan is a high rate withdrawal initially, whilst I'm still able to enjoy it, lowering once SP kicks in. With a 3 year or more buffer in cash, topped up if investments are doing well.

saver861

mgdavid wrote: »

4% of anything -
is the rule of thumb for a safe withdrawal rate of invested money such that it does not run out before death.

On the general proviso that invested money makes more than 4% per year, on this 'thumb' then the capital would never be touched! Not sure what the point of that would be other than specific circumstances of wanting to leave the capital to survivors.

The OP was referring to being able to spend the capital without running a high risk of running out too early - a situation many will find themselves in.

Equally there comes a point where it is not prudent to be invested, certainly not any form of risk, after a certain age. That age will be different for everyone of course but for the regular John Doe in good health and a life expectancy well into his 80's might do well to be pulling his investments in his early 70's at latest.

westv

It's interesting to see such a simple and straightforward idea get debated to 3 pages so far.

Malthusian

saver861 wrote: »

On the general proviso that invested money makes more than 4% per year, on this 'thumb' then the capital would never be touched!

Even if investments are going up by 4% a year they're not going up by 4% every year. The capital would be touched in any year in which the markets went down or grew by less than 4%.

Drawing more than 4% a year can be risky if you're not prepared to shut the income off if there is a sustained downturn - the combination of a high withdrawal rate and a falling market can have a devastating effect on the capital. I believe the idea behind the 4% rule of thumb is that it's low enough to be sustainable even if you are unlucky with the timing of investment returns.