Stress Testing your Retirement plan....have you??

goRt

A_Nice_Englishman wrote: »

Main risks are high inflation (future Government inflating debt away?) devaluing my savings or a collapse in property prices. I can't see both of those happening.

IMHO it's likely to be both or neither!

Thrugelmir

Triumph13 wrote: »

Some of us quite like fiddling with spreadsheets!

Wouldn't the time be better spent monitoring ones investments though?

Spent decades building speadsheet models. Forecasts more often or not are obsolete before you've even finished them.

Thrugelmir

A_Nice_Englishman wrote: »

Main risks are high inflation (future Government inflating debt away?) devaluing my savings or a collapse in property prices. I can't see both of those happening.

Control over inflation is limited, when put into a global context. House prises have no need to collapse. Extended stagnation could produce a similar outcome.

Marine_life

Two DB pensions funding our day to day expenses.

Job done.

seacaitch

Probably the greatest threat to the retirement plans of someone who's been pretty sensible and done the usual scenario modeling is that the governance of the nation takes a drastic and sustained turn for the worse such that the fabric of contemporary national life is torn up.

Numerous countries in the world have experienced this at one time or another, turning them into basket cases to such an extent that the retirement plans of anyone bar the extremely wealthy might be derailed.

Not a huge amount you can do about such an eventuality. Spotting such a budding catastrophic national decline in the embryonic stages, when a swift decamp might dodge the bullet, would be tricky as you'd periodically face lots of false positive signals of doom that never descended into outright sustained calamity, so you'd soon get tired/penniless fleeing the scene each time.

Luckily for us, such a dramatic and rapid decline is unlikely, although we are perhaps further up the DEFCON levels than we have been for a while and than is ideal.

JoeEngland

OldMusicGuy wrote: »

I have a spreadsheet that projects forward 32 years. I can vary the inflation rate, investment returns, interest rate, personal tax allowance and our required income in every year of the 32 years. I have done quite a bit of stress testing but to be honest, a lot of it is academic. However it does give me assurance we should be ok in many negative circumstances.

It's worth bearing in mind that inflation is an average measure and will affect people differently. So a headline figure of say 2% doesn't necessarily mean your expenditure will increase by 2%.

JoeEngland

Thrugelmir wrote: »

Buy an annuity that coupled with your other secure income guarantees a comfortable base level. Then anything else in the pot is expendable. Who wants to spend their retirement fiddling with spreadsheets! Using the time enjoyably while you still can is far more important. Even the healthiest can be struck down without prior warning.

I can afford to retire earlyish by fiddling with spreadsheets, but would have to work several more years if I relied on buying an annuity. An hour or so a week is a small price to pay for the rest of the week I won't have to spend doing groundhog days at the office.

Audaxer

Triumph13 wrote: »

My plan is tested to cope with an immediate 40% drop in stocks and returns just matching inflation thereafter.

That would be pretty drastic if you mean the portfolio drops from £100k to £60k and then doesn't get back to £100k for many years. Even after the 2008 crash I think stocks recovered within a year or two at the most.

OldMusicGuy

Thrugelmir wrote: »

Wouldn't the time be better spent monitoring ones investments though?

Yes if you're a stock/fund picker. Not if you're a long term investor using low-cost passive multi-asset funds. That's probably the worst thing to do...... Fire and forget is the way to go.

michaels

Marine_life wrote: »

Two DB pensions funding our day to day expenses.

Job done.

If Corbyn does a Venezuela then I suspect the most value you will get from your DB pension is the heat generated by burning the paperwork. :eek: