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Bad news re what I spend
Comments
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Perhaps refining this by subtracting the state pension multiplied by the number of years you expect to live post SPA?
Subtracting the state pension you expect from your number then adding that times the number of years between your retirement and the SPA would likely be better,
But I wouldn't bother. It would be better to aim high and it is a fairly crude target as is. Only when getting close to your desired retirement age without exceeding the target would I start doing things like that.0 -
Subtracting the state pension you expect from your number then adding that times the number of years between your retirement and the SPA would likely be better,
But I wouldn't bother. It would be better to aim high and it is a fairly crude target as is. Only when getting close to your desired retirement age without exceeding the target would I start doing things like that.
Our crude target for Mrs CRV is by using different pots-
SERPS pot roughly 95-100k at the moment plan to draw 3-4k pa on retirement from this pot, stop in event of a crash and use savings.
NEST+ SIPP plan to have around 80k-90k in this pot, draw down at a rate of 8k pa from age 57-67 can be exhausted. SP starts age 67 of 8.5 k pa.
So for her we are planning on saving 10 years or so equal to what her SP will be therefore enabling her to retire age 57.
I will retire at the same time and DB of 16k pa will give joint pension income of 28k pa. When/ if I go first survivors pension will be around 10k pa so she will have income of 22k pa as a single pensioner.
I'm thinking we may put 2880 pa each into a SIPP for later old age in case it is needed to top up in the event of care home fees, along with using the equity in the house, we should be able to fund our care needs in that event. We will decide on savings rate in retirement when we get there!CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!0 -
Yes, I put together the topic Drawdown: safe withdrawal rates to introduce people to the research in this area and related topics. Probably worthwhile for you to read it and the related papers linked from it.Perhaps :rotfl: (& I like the sound of a bigger number....you’ve clearly done some research on this!)
The safe withdrawal rate that would have worked in 100% of past conditions depends on country and planning horizon but also critically on the drawdown rules being used.I’ve read a fair bit about “the 4% Rule”
Country matters in part because of WW2. The worst cases for losers and European countries are greatly affected by their situation. Very bad for Germany and Japan, bad for France and other occupied countries, less so for unoccupied UK and little for the US. Since it's fairly easy to know whether you're engaged in a world war, those in affected countries might want to use 90% instead of 100% success rate to get something more comparable to the US. Then adjust if that war happens.
Drawdown rules matter quite a bit, with constant inflation-adjusted income, the 4% rule, being wasteful: 96% of the historic US cases would produce a higher nominal ending pot than the starting one, while two thirds of the time the ending wealth is at least twice the starting wealth.
The rule is before costs. Kitces found that the effect of costs is to reduce the SWR by about 30% of costs.
Bengen followed his first paper with one that added some small caps and increased the SWR to 4.5%.
So for the US the 4% rule after costs of 1.5% would be 4% with some small caps or 3.5% without.
The difference between the US and UK is about 0.3% so that takes the UK 100% success rate for 30 years with 1.5% costs without small caps to 3.2%
Kitces and Okusanya moved to the more modern and efficient Guyton-Klinger variable spending rules. The answer: 5.5% starting, for 40 years, before costs for the UK. Assume 1.5% costs and that becomes 5%.5%? I’ve never seen that suggested.
Key to those rules is that word "starting". If necessary they will skip the inflation increases, make nominal cuts or increase the acceptable spending.
You can use cFiresim to constrain how low the income will be cut or add in the effect of the state pension and the usual cut in spending as people get older.
It usually will work even with the 4% rule. The bad cases are extremely bad and you probably won't end up living through anything that bad.It is a tricky one. I would avoid too much home (UK) bias in investments...& as an utter amateur here, my view is that 3.5-4% ought to work.0 -
Kitces and Okusanya moved to the more modern and efficient Guyton-Klinger variable spending rules. The answer: 5.5% starting, for 40 years, before costs for the UK. Assume 1.5% costs and that becomes 5%.
Depending on what question you are trying to answer the 4% reule may be better than Guyton-Klinger. Specically if you are trying to work out what is the minimum pension por you need to maintain a particular lifestype. If what you are planning to take out is the minimum needed for your life-style, not increasing it in line with inflation (as Guyton-Klinger sometimes requires) results not maintaining your minimum lifestyle. For that purpose the 4% rule inverted to say you need a pot of 25 times your target income.
If you are using a higher Number than the minimum then using 5% pper Guyton-Klinger, or 20 times your pot is likely safe.0 -
If you use cFiresim with the Guyton-Klinger rules selected you can specify an income floor below which the rules won't go. This cuts the starting income to accommodate it. Early retirement @ 55 what to do with £ 380000 has a worked example of cFiresim drawdown using Guyton-Klinger rules with state pension, property downsizing and an income floor set.Depending on what question you are trying to answer the 4% reule may be better than Guyton-Klinger. Specically if you are trying to work out what is the minimum pension por you need to maintain a particular lifestype.
That example doesn't do it but when using US tools with US investments, set the costs figure to your total costs, then add 1%. The effect of costs is about a third of costs reduction in safe withdrawal rate and the UK 4% rule 30 year SWR is 0.3 lower than the US. So 1% higher costs roughly covers the investment difference.0 -
But how could it be my true figure if my present lifestyle includes expenses that get my figure far higher on other months? The number is what we need to fund current lifestyle and includes many high ticket items.
It is my guess they mean the 1600 or so are your 'base costs' and to that you add 1/12 of your annualized costs incl gifts, holidays, etc?
These 2 numbers together being your 'number'.0 -
Someone above said:Like most people I meet, you come over as totally hooked on all the conveniences and expenses of modern life, and don't want to face that these are probably unaffordable by most pensioners.
Well i say work an extra 6 months to a year just to afford a dishwasher for life. Do i know how to wash dishes? Sure, I wash them for my niece who had a baby recently every time i visit her. Do I want to do it for myself? No, I cook a lot, we dont do ready meals.
Soap and water indeed lol.
As for the OP, the problem i have with your expenses is your OH only paying in 25% of bills. They should pay at least 50%, and more if not helping with mtg or other running costs if they have an income.0 -
You definitely need to sit down and do a proper budget.
1. things you pay for annually split over 12 months (insurance, broadband etc usually cost less if you pay them upfront), typical house maintenace cost 1% of house value per year (not including bigger renovation projects)
2. things you buy/pay monthly
3. no more mortgage in retirement? Reduced travel costs etc..
I currently get about £1500pm (after my additional pension contributions, tax etc), have no mortgage left, but have "luxuries" like private medical insurance, work lunches and a nice dinner out every week, a holiday or two per year in Europe and can afford those from that. Once I retire I don't have to pay travel to work, work clothes etc.. so if I get £1500pm after tax as a pension (adjusted over time of course) I'll live quite nicely....0 -
If you use cFiresim with the Guyton-Klinger rules selected you can specify an income floor below which the rules won't go. This cuts the starting income to accommodate it. Early retirement @ 55 what to do with £ 380000 has a worked example of cFiresim drawdown using Guyton-Klinger rules with state pension, property downsizing and an income floor set.
That is fine for answering the question "What is the maximum income I can take from a given pot?". It is not so useful for answering "What is the minimum size pot I should sim for to achieve a given target income?".0 -
... I would need to do something , otherwise I would not be able to retire ever
You are not alone. UK pensioners are very poorly supported in comparison to those living in other EU countries and this will only get worse :eek:"A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Gandhi
Ride hard or stay home :iloveyou:0
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