Getting Ready to Retire

cfw1994

brokenglasses wrote: »

Thanks for all the responses. This has given me a lot more confidence about retiring plus a some really great points to consider.

Cash Buffer
There are several suggestion that I keep 2-3 years in Cash to draw from in a market correction.

What are peoples views on holding Bonds or REITs instead of putting all of that into Cash?

I'm also going to re-read the sections on holding cash reserves in Beyond the 4% Rule by Abraham Okusanya. If I remember correctly he didn't feel it helped returns in the long run. But perhaps it's worth it just to sleep better night?

Student Loans
I'm going to need to do some research and thinking about the student loans. It may make sense to let the kids build up the debt but help them pay it off afterwards only if it looks like they'll earning well above the £25k threshold to make it worthwhile and our portfolio is in a good condition.

Already lots of good replies to this: one other thing I wonder about is whether any cash 'stored' for emergency drawdown might also be used to feed the amount still allowed (MPAA), particularly perhaps in the event of a market crash - I know it is generally not possible to time the bottom (just as it isn't the top), but if markets fell 25%, then started to pull back up, maybe a good time to re-invest in the funds?

I'm probably over thinking this!

kidmugsy wrote: »

But 12 month ago you weren't pressing up against the LTA.

True....but I'd like to be a bit closer to it before shifting it all to cash: when was that correction due?

bostonerimus

cfw1994 wrote: »

Already lots of good replies to this: one other thing I wonder about is whether any cash 'stored' for emergency drawdown might also be used to feed the amount still allowed (MPAA), particularly perhaps in the event of a market crash - I know it is generally not possible to time the bottom (just as it isn't the top), but if markets fell 25%, then started to pull back up, maybe a good time to re-invest in the funds?

I'm probably over thinking this!

Then where would you get your spending money.? In a down turn you'll use your cash buffer so that you don't have to sell an an enormous loss. Once things have recovered you will replenish the cash buffer.

ferox666

Well done for your savings! A real inspiration and I hope to achieve similar one day but expect to end up with much less.

May I ask over what period and what level you saved to achieve that size of SIPP & investments? Curious if was steady saving over decades or very high contributions in a shorter period. A high salary helps too of course but regardless, you have done well - I know some who spend enormous amounts with little or no pension provision. Genuinely interested to hear how you did it to inspire my own planning.

Good luck with your journey and enjoy retirement & life away from the corporate ladder and all the stuff that goes with it :beer:

cfw1994

bostonerimus wrote: »

Then where would you get your spending money.? In a down turn you'll use your cash buffer so that you don't have to sell an an enormous loss. Once things have recovered you will replenish the cash buffer.

I didn’t mean use ALL the cash buffer.....but a proportion of it perhaps.
A chance to grow the retirement pot somewhat, which is otherwise harder of the stock pot has shrunk 20-30%?

Clearly there would remain living to be done....might depend on the amount in the cash buffer, I guess....

brokenglasses

ferox666 wrote: »

Well done for your savings! A real inspiration and I hope to achieve similar one day but expect to end up with much less.

May I ask over what period and what level you saved to achieve that size of SIPP & investments? Curious if was steady saving over decades or very high contributions in a shorter period. A high salary helps too of course but regardless, you have done well - I know some who spend enormous amounts with little or no pension provision. Genuinely interested to hear how you did it to inspire my own planning.

Good luck with your journey and enjoy retirement & life away from the corporate ladder and all the stuff that goes with it :beer:

Thanks. I started saving in my mid 20's. My savings rate has varied depending upon by income and expenses. I've been reasonably frugal but not excessively and I've invested the rest, buy-and-hold through the ups and down, almost 100% in equities. I tend to stick to Investment Trusts and ETFs now to keep costs low. I gave up trying to time-the-market or pick individual stocks a long time ago. I saved more before I had kids and I've tended to favour investing rather than having a huge house or paying off the mortgage (until now as I get closer to retirement). Retiring comfortably and at a reasonable age was always part of my plan. While I was employed I always made the most of any employee benefits (pensions, share saves) and now I have my own limited company I make the most of the tax advantages that offers. I've always had a pretty decent income but nothing special. I have a few friends my age who have followed very similar career paths to me (and therefore similar earnings) but who didn't prepare and now they're getting quite anxious about their retirement options. The process was simple but not necessarily easy; start early (now!), maximise your earnings, stay reasonably frugal, save & invest in a low-cost tax efficient way, be patient but don't forget to enjoy life as well. Good luck I'm sure you can look forward to a great retirement if you stick with it.

ams25

brokenglasses wrote: »

Thanks. I started saving in my mid 20's. My savings rate has varied depending upon by income and expenses. I've been reasonably frugal but not excessively and I've invested the rest, buy-and-hold through the ups and down, almost 100% in equities. I tend to stick to Investment Trusts and ETFs now to keep costs low. I gave up trying to time-the-market or pick individual stocks a long time ago. I saved more before I had kids and I've tended to favour investing rather than having a huge house or paying off the mortgage (until now as I get closer to retirement). Retiring comfortably and at a reasonable age was always part of my plan. While I was employed I always made the most of any employee benefits (pensions, share saves) and now I have my own limited company I make the most of the tax advantages that offers. I've always had a pretty decent income but nothing special. I have a few friends my age who have followed very similar career paths to me (and therefore similar earnings) but who didn't prepare and now they're getting quite anxious about their retirement options. The process was simple but not necessarily easy; start early (now!), maximise your earnings, stay reasonably frugal, save & invest in a low-cost tax efficient way, be patient but don't forget to enjoy life as well. Good luck I'm sure you can look forward to a great retirement if you stick with it.

+1
I could have written this almost word for word. Start early, stay sensible (avoid buying too much house, excessive cars etc) but no need to be excessively frugal either. Clearly there are a few more here who could also say the same too - so it is very possible. Its seems that if its a priority for you, you can over many years achieve a good outcome by the time you hit your 50s or 60s. If you can start early/mid 20s then 30+ years of saving, investing and compounding goes a very long way.

Good luck to those at the beginning of this journey. By giving it your full attention now..your older self will be forever grateful.

atush

cfw1994 wrote: »

I didn’t mean use ALL the cash buffer.....but a proportion of it perhaps.
A chance to grow the retirement pot somewhat, which is otherwise harder of the stock pot has shrunk 20-30%?

Clearly there would remain living to be done....might depend on the amount in the cash buffer, I guess....

Not entirely certain on using the cash buffer (maybe if you have a 3 year one) but my thoughts would be to reinvest dividend income within the Sipp during the crash/recovery for a period before reverting to building the cash from the dividends.