Done IT- is the pot big enough

westv

Thrugelmir wrote: »

A certain quote springs to mind.

"You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch

Well nobody has said that won't happen at some point.

westv

AndyAdams wrote: »

As mentioned I think i need £2500 per month when factoring everyting in plus a bit of a safety buffer.

I have cash of around £200k, rest is in mixture of acc and income funds (income is reinvested). I am planning on running the pot down.

Mortgage free or still some left?

ischofie1

Thrugelmir wrote: »

Legal and General Investment Managers today suggested bracing for a market correction of 30% next year. Uncertainty as to how Central Banks are going to unwind years of support (cheap money) will make for interesting times.

Christ let's all panic because L&G think the floor's going to collapse.
I'm sure if we trawled the net we'd find some other expert advice saying it's going up 30%.

cloud_dog

I don't think a 30% correction is unreasonable, and is probably highly likely.

You need to remember that the mighty UK has benefited from a turbo boosted rise in the market over the last 18 months due to the weaker GBP. If we get weakness and the GBP strengthens then we will get a bit of a double whamy (though why anyone would think the GBP will be a strong currency is beyond me).

IanSt

AndyAdams wrote: »

Got 37 years contibutions but only 34 years for the new pension, so currently 1 year short.

Just a quick question on this - do the 34 years include this tax year?

If it doesn't then you might get a pleasant surprise depending on what national insurance you've paid this year.

If it does then you can always purchase a year's extra contributions, but I'd probably wait a while until you've found whether you're definitely out of the working-game!

Anonymous101

Very well done.
I'd give up work now at 36 if I had those funds. I think I need around £2,500 a month too.

p00hsticks

AndyAdams wrote: »

W Got 37 years contibutions but only 34 years for the new pension, so currently 1 year short.

Get a personal State Pension forecast if you haven't done so already.
The '35 years = full new State Pension' only works for those starting their working lives now. Depending on whether you've been contracted in or out in the past you may find you can get more pension with more than 35 years (in which case it's usually good value to buy those years even if not working) or that you have already reached the maximum.

https://www.gov.uk/check-state-pension

Thrugelmir

ischofie1 wrote: »

Christ let's all panic because L&G think the floor's going to collapse.
I'm sure if we trawled the net we'd find some other expert advice saying it's going up 30%.

Little point in going OTT. Sensible to factor all view points in account when making a decision. Over confidence has been the down fall of many.

PS. Just happened to read that particular article yesterday.

bostonerimus

At 4% withdrawal your pot should produce your income needs.....add in your SP and your wife's earnings and pensions and you are in fine shape. The only danger might be a crash soon after you retire; so make sure you have a diversified portfolio and access to a good buffer of cash and/or short term bonds. A plan to cut spending would be useful too.

ex-pat_scot

cloud_dog wrote: »

I don't think a 30% correction is unreasonable, and is probably highly likely.

You need to remember that the mighty UK has benefited from a turbo boosted rise in the market over the last 18 months due to the weaker GBP. If we get weakness and the GBP strengthens then we will get a bit of a double whamy (though why anyone would think the GBP will be a strong currency is beyond me).

Certainly a 30% drop is a buying opportunity...
My investment strategy is to match broadly my pot to my future spending, which I expect would be best modelled by a globally diversified portfolio (as much of the stuff and services will be globally sourced or pegged to global prices through unrestricted trade driving demand etc). As such, my approach therefore is to look at low-cost global ETFs such as VWRL from Vanguard.
Sterling is inherently unstable and will be for many years until Brexit implications become eventually clearer. Perhaps. I have a little more faith in the approach that drip feeds £3,500 odd per month into that pot.




The TFLS approach is valid, as Sandsy points out. I didn't want to introduce that - it is part of a more detailed cash flow requirement and modelling approach that the OP needs to do in his own time.




The online tools such as cfiresim can deal with multiple income streams for you and spouse, each coming online at different times.
You will have to determine your underlying assumptions including:
- inflation
- long term asset performance
- investment strategy (simplistically, the portion of equities to bonds to cash)
- your likely requirement (£2,500), how variable this is (ie what's the Must Have amount, what's the Nice to Have, what's the Great to Have - £2,000 -> £2,500 -> £3,000 perhaps).
- your likely longevity. Again take a look online at vairous calculators, and build in a bit of scepticism
- what will change if / when each of you die (loss of SP, differing spend levels)


That will tell you the success rate for various withdrawal rates (eg running 3 times for the Must, Nice, Great scenarios).
It will therefore give you the shortfall that must be found from your ISAs.


You can therefore get the answer to a number of similar questions:


- how certain can I be that my current assets can support a £2,500 per month level of spend?
- if I spent more, what would that do to my chances of success?
- if I spent less, what would that do?
- if I changed my investment strategy, what would that do to the scenarios?


You can then either:
- spend the £2,500 if the funds allow (perhaps with a certain dip into the ISA if the pension does not currently cover)
- reduce (or increase) the amount if success is indicated
- make up any shortfall through other means (part time work perhaps)
- work out the impact of a "life event" - moving house, taking a big retirement trip, buying a holiday home or camper van etc.