Investing and retirement plans

ruperts

Audaxer wrote: »

If you mean an average return of say 6.5% (4% plus 2.5% average inflation) that does seem optimistic, especially after a strong bull run for the last 10 years.

Yes that's what I mean. I'm also including dividend reinvestment in that. Seems reasonable to me given what research says about historical returns. I take the point about the bull run, but it's a very long term portfolio so if I tried to make adjustments for all the factors that might impact returns or my contributions I'd be there all day.

Audaxer

ruperts wrote: »

Yes that's what I mean. I'm also including dividend reinvestment in that. Seems reasonable to me given what research says about historical returns.

Being retired that would certainly be a good average return for me as I could take 4% income with the remaining portfolio still growing by about 2.5% per annum. But I fear that won't be possible in the near future.

Thrugelmir

Manesova83 wrote: »

Do people just guess what investments will return when planning for retirement?

Plenty of calculators that illustrate what a given amount would grow to over x years with income reinvested. Personally I have always assumed a return of 2% above inflation after fees. That way I'm unlikely to be disappointed by what my final pot amounts to. Easier to spend the excess (should there be one) that spend retirement worrying about every last penny.

short_butt_sweet

Thrugelmir wrote: »

Personally I have always assumed a return of 2% above inflation after fees. That way I'm unlikely to be disappointed by what my final pot amounts to. Easier to spend the excess (should there be one) that spend retirement worrying about every last penny.

i take a similar approach. it's a good approach, if you can afford it.

but it doesn't work for people with low incomes, who may (or may not) be able to put aside a little bit for retirement, but certainly can't afford to leave a huge margin for error. this is IMHO where the whole idea of self-provision for pensions (e.g. via auto-enrolment) falls down. bring back SERPS, i say!