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Drawdown: safe withdrawal rates
edited 14 April 2021 at 8:35PM in Pensions, annuities & retirement planning
228 replies 90.1K views
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maybe I'm an outlier but I dont think I am, in my circumstances that makes no sense to me unless its including items like mortgages, helping kids at university and so on, which the plan should be, to have cleared by retirement. Well that was my plan and it worked anyway
If i think about spending from the POV of say the five years before retirement to the 5 years after (and probably up to ten), spending ought to increase as you have more time and opportunity to spend money. Its only as odds of being ill/infirm increase that you might then spend less.
When I retire next year I could take cruises, fly and stay in hotels every night of the next year, I couldn't do that this year since my boss might notice my absence.
One notion you'll see discussed is that lots of spending while you're working is a superficial "cheer me up" exercise to compensate for being fed up at work. Once you are retired you'll be an altogether happier bunny, and learn that the best things in life are free, thus finding no need to be extravagant.
Like most pop psychology it's probably roughly true for some people and quite untrue for others.
Doesnt work if you dont buy frothy coffee, wear "relaxed" clothes for work, bring sandwiches from home, live reasonably close to work etc (as I do).
I have recently retired at 50 and my required withdrawal rate (ignoring state pension) is just under 3%. Though at the moment I have about 30% in cash, I should be fine based on any of the methods I have read about, I am currently trying to establish a high income ISA portfolio to supplement my pension drawdown which I will start in 5 years.
While nothing is certain, betting on higher taxes and getting protection from them does seem like sensible planning.
I think part of the disconnect might be the comparison of yourself as an individual to a massive diverse population of data. The most obvious difference to me is that people who are saving effectively for retirement are likely to be controlling spending more than people who aren't; they are also likely to have the resources to increase spending in retirement when those who didn't save as much need to cut it back.