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

Audaxer

Bravepants wrote: »

I'm in a position to not have to rely on my S&S ISA, it's an extra pot that would make life more confortable even drawing at 3.5%. If you still have a DB pension, and you can afford it, it is worth buying extra pension. An index linked DB pension going forward into retirement is a very valuable asset. This is why transferring out of DB to DC for a CETV, no matter how many zeros you are tempted by, is not good regarding peace of mind.



For the same reason it is not really worth taking lump sum unless it is definitely needed to pay off debt.

It depends on your circumstances. I am retired with second DB pension about to start and no debt, but planning to take a lump sum as I have some big expenditure coming up. I could fund it from savings and investments, but I've calculated it makes more sense to take a lump sum and reduced DB pension.

Thrugelmir

OldMusicGuy wrote: »

Fire and forget is the way to go.

What happens when passive funds are the market?

(Over 30% of the free float of Facebook for example is now held by 3 major US fund groups in passive funds).

In no way anti by the way.

Thrugelmir

JoeEngland wrote: »

I can afford to retire earlyish by fiddling with spreadsheets,

Is your spreadsheet an oracle?

Marine_life

michaels wrote: »

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:

Well....its a good job one of my DB pensions is from Germany then

Thrugelmir

Marine_life wrote: »

Well....its a good job one of my DB pensions is from Germany then

Paid in Euro's?

DairyQueen

Sea_Shell wrote: »

It has been brought to my attention that we should "stress test" our retirement plans to account for a worst case scenario playing out.

How many of you have done this?

I have (no surprises there Sea Shell ). I also love my spreadsheets.

Similar to OldMusicGuy, I have projected income/expenses until age 90. I have tested average inflation over that period up to 6%. I have also ring-fenced a cash buffer sufficient to halt drawdown for up to 5 years to mitigate sequence of returns risk. There is sufficient discretionary spending in the budget to allow us to cut expenses by 20% if Corbyn gets in and we are hit by tax increases, or by a negative change to the method of SP indexation. The drawdown rate on the DC pot will be 2% max in order to replace income on the first death and/or fund at-home/residential care if needed. The house will be the asset of last resort if residential care extends beyond 4 years.

I have also tested the first-death/survivor income scenarios for us both.

The 'care' issue has been the most problematic as old age = care needs and old-age is the likely outcome for at least one of a couple. I have been up-close to recent events in the generation above me. The typical couple-scenario...

Health issues begin around age 70 and accelerate rapidly after age 80, The fittest of a couple cares for their ailing spouse at home until death them do part. The survivor then manages with family support until entering residential care if they survive into mid/late 80s. Support from the state can be summed as s*d all until the last months/weeks of life

The majority of those in residential care are female. So far, only one survivor has been male of these exclusively opposite-sex couples. Single retirees experience the same outcome as the survivor of a couple. We expect to be an exception as I have reduced life expectancy but hopefully we will have sufficient resources to buy some care for one/both of us. Beneficiaries will receive anything that is left (no inheritance ring fencing).

That last decade of life is the most difficult to plan for and so most people don't bother. IMHO that's a mistake as it will likely be expensive for at least one of a couple. I don't want either of us to suffer the limited and inadequate care provided by the state in our final years. Seen it. No ta.

kidmugsy

Novice_investor101 wrote: »

My state pension age currently is 68 (expecting that'll be 70 before I get there).

Why do you expect that?

kidmugsy

Thrugelmir wrote: »

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

It doesn't take much time to check how they are doing once every year.

kidmugsy

seacaitch wrote: »

Probably the greatest threat to the retirement plans of someone who's been pretty sensible ... 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.

I agree. Part of an answer is to hold assets abroad. When I asked for recommendations on that topic here I was flabbergasted to be accused of wanting to evade taxes. Dear God people can be blind!

kidmugsy

Audaxer wrote: »

Even after the 2008 crash I think stocks recovered within a year or two at the most.

The FTSE 100 ended 1999 at near-as-matters 7,000. Where is it now? Near-as-matters 7,000. Of course there have been dividends. But there have also been inflation, taxes, and charges.