Do i have enough for early retirement?

dividendhero

seacaitch wrote: »

yOn a 300k ISA balance, as in your example, a probable sustainable withdrawal rate of ~3% would give you 9k income, which added to the pension withdrawal would give you an annual tax-free income of 24.8k, ie around your 24k spending requirement.

Agree with most of what you say, but I'd have thought if the OP had invested in decent dividend shares (eg CTY) they could withdraw a slightly higher rate - around 4%.

CTY yields 4.16% right now, I'd say it'd be safe to take that as divis and and leave the shares untouched.

seacaitch

dividendhero wrote: »

I'd have thought if the OP had invested in decent dividend shares (eg CTY) they could withdraw a slightly higher rate - around 4%.

CTY yields 4.16% right now, I'd say it'd be safe to take that as divis and and leave the shares untouched.

There's no right or wrong answer when it comes to judging what might be a safe withdrawal rate (SWR), just informed guesswork and personal trade-offs.

My own view is that the earlier you retire, the lower the withdrawal rate you should consider as prudent. A 50 year old man today is looking at another 35 years at average life expectancy. A 35 y.o. woman, 54 more years at avg life expectancy. Obviously many will live longer than this, and some a lot longer.

That's a long time to be retired, and a lot of opportunity for the future to serve up stuff and events that may challenge your investment plans, in particular the danger posed by a really unfortunate and sustained initial sequence of returns. Plus, if retired for a long time, you may become deskilled and unemployable in anything that you might wish to do, such that if you were ever forced back into the workplace it might entail doing something very low paying and not very enjoyable.

So, my view is that prudence is warranted to help insure against this, and I actually use a lower rate than I suggested above.

But that's just a personal choice of mine, to ensure I sleep well at night, and a choice I'm prepared to pay for by taking lesser income today in order to improve my future income and my odds of not depleting my portfolio and ending up in poverty.

Others will make different choices!

Thrugelmir

dividendhero wrote: »

Agree with most of what you say, but I'd have thought if the OP had invested in decent dividend shares (eg CTY) they could withdraw a slightly higher rate - around 4%.

CTY yields 4.16% right now, I'd say it'd be safe to take that as divis and and leave the shares untouched.

You need to watch the capital value as well. Not just focus on the dividends. Any improvement in sterling would be detrimental on both counts.

Long term gains are made from reinvesting the income.