Bad news re what I spend

ermine

I am far from retirement yet - due to both age being relatively young and not having money for it I am afraid.

I would guess this is part of your problem. You are carrying dependents, for one thing, which raises both your base level a lot and also impacts the variable part fo the costs. You also change over the lifecycle. Things I used to spend money on I don't so much now, and you also accumulate stuff over a working life, the rate of needing to purchase new slows. It is very difficult for the mid-career you to have a clear vision of what will be of value to the retired you.

Not everything gets cheaper, perhaps I spend less often but the quality of the item or experience matters more to me now.

lisyloo

justme111 wrote: »

Why not calculate it till you are 100 for example - drawdown not forever but for 45 years let's say if you retire at 55. Surely one would need less money for 45 years than to sustain it forever ? I will not consider annuity so I am not going to look at them .
Re health insurance - past certain level it is simpler to pay as you go. Beyond some cancer treatments I am not even sure why I bother. Just in case I guess

So what happens if you live until 101 or 105? You don’t know the number (and it could possibly be much higher in 50 years time with new medical innovations).

4% is in no way a guarantee of not eating into the capital.
There are many unknown factors such as inflation and investment performance which have a massive impact over 35 years.
You cannot “calculate” this with timescale, inflation, investment returns unknown, you can only come up with a range of estimates.

4% is not a figure to guarantee to keep the capital.
It’s a figure for planning to not run out of money if you live a long time.
Some say it should be a lower figure (this has been considered by many people much cleverer than me).

I was not suggesting you take an annuity but the figures are for a guaranteed income for LIFE so are a useful guide even if used as a worst case.

There are good reasons to have private health insurance especially if your insurer pays (all of mine have) but premiums for the elderly are prohibitive.
You are unlikely to be able to pay as you go as you get elderly e.g. £10k for a knee replacement. However you can selectively pay for tests to jump the queue which is what some people do.
You SHOULD have a clear idea of why you are paying this expense (if you want to be MSE or make a higher priority of your retirement savings).

How close are you to getting the min £700k pot (lowest end of the range)?

Have you decided whether to
Work longer
Save more
Lower your lifestyle expectations

Or come up with any othr ideas?

It seems like you are looking for some mistake in my calcs rather than facing the options you have?

I don’t think you are likely to get better than 4%, indeed some say it’s too high, so the range of 2%-4% seems a good range to me.
Have you worked out your chances of saving £700k-£1.4k? very easy with excel spreadsheets.

No offence but it sounds like you are in denial rather than trying to face facts.
It is extremely expensive to provide a comfortable retirement so we all have to face this issue.
I am personally putting massive amounts away (60%) and I’m not saying that to be smug but to demonstrate the ballpark for the kind of radical action required.
I am also prepared to downsize my home (although NOT relying on that for income).
Many people throw this around casually but aren’t prepare to lose their long time family home and you can’t have both.
So serious thinking and radical action require if you actually want to achieve it.

justme111

I am happy with accepting that it is not possible to ensure oneself from all possible eventualities and trying to do it with 99.9 % certainty will result in a trade of 99.9% chance of working longer than you needed to and dyeing rich. I will think about my plan , for now it is a recent discovery that I am not in track as I thought I was. For a start I will count the expense over the whole year. Then recount them once dependants are there no more...

shinytop

I think sometimes too much precision is applied to plans based around like investment returns, drawdown factors and budgets. These analyses are useful (maybe even essential) guides/starting points but IMO basing plans rigidly around them is not the best thing to do. Trying retire with a 99% probability of having enough money based on a 35 year plan is going to mean you'll probably overshoot and work longer or have a more frugal retirement than you have to. I'd rather aim for 90% and be prepared to be flexible/tighten my belt during bad times to make sure I don't run out. Having said that I'm not 100% reliant on a DC pension so I can get away with being a bit less careful.

Spreadsheetman

shinytop wrote: »

I think sometimes too much precision is applied to plans based around like investment returns, drawdown factors and budgets. These analyses are useful (maybe even essential) guides/starting points but IMO basing plans rigidly around them is not the best thing to do. Trying retire with a 99% probability of having enough money based on a 35 year plan is going to mean you'll probably overshoot and work longer or have a more frugal retirement than you have to. I'd rather aim for 90% and be prepared to be flexible/tighten my belt during bad times to make sure I don't run out. Having said that I'm not 100% reliant on a DC pension so I can get away with being a bit less careful.

I agree with the general point, trying to base future plans on past data can only ever be an approximation.

The trouble is that it is hard to spot that a plan has gone off the rails until quite a way down the track; 10 years maybe to get a realistic idea of investment performance. That is going to be too late for a lot of people, they can't re-start a career or find anything but a low wage job - assuming they are physically capable of that.

I'd much rather over-save a little now to minimise the possibility of having to scrabble for money in my 70s. I don't have a DB pension so the only expected base income is the SP and that is vulnerable to political meddling.

Terron

The 4% figure is based on aiming for a 95% chance of not running out for 30 years for US pensioners. The is evidence that it should be lower for the UK, but we also have the state pension so running out is less of an issue It seems a good rule of thumb for initial planning.


After I lost my job in 2013 I lived on various amounts as I sorted myself out, and £1500 pm is the minimum for me to live comfortabvly but without luxuries. On less than that I had to tap into my savings. My state pension and index linked DB pension will almost provide that - ~£17pa. Add in my other pensions and BTLs and I will be on over £40k pa (before tax), but I don't know how I will spend that much. £28k looks doable if I take several holidays a year.



I had private medical insurance when I was working. I used it just once - to change where I had an operation to a more convenient location for recovering. I was offered the chance to continue that when I lost my job and have done so on a reduced level, but I consider it a luxury.

p00hsticks

Terron wrote: »

The 4% figure is based on aiming for a 95% chance of not running out for 30 years for US pensioners. The is evidence that it should be lower for the UK, but we also have the state pension so running out is less of an issue It seems a good rule of thumb for initial planning.

An article in the Money section of yesterdays Daily Telegraph suggested that 1% plus any dividends might be a safer rule of thumb.

https://www.telegraph.co.uk/investing/news/forget-4pc-rule-real-way-fund-retirement-sustainably/

cns06

To me the pertinent questions are, excuse me for asking... how old are you now and at what age do you plan to retire? Without this information its very difficult to discuss - realistically - any solutions.

Taking a wider view...

Learn some DIY. You seem to be basing a lot of your outgoings on trades. This is fine as I am sure you cant easily replace your boiler or roof... but there are plenty of things you can do AND you will have time in retirement to do these things. Painting, simple plumbing, gardens, tiling, etc its all fairly simple stuff which with a little knowledge and youtube you can actually DIY.

Consider some things are perhaps not worth their value. Eating a 100% organic diet is great and all, but is it really worth that extra? Over a lifetime you could be talking ££,£££. And trust me, unless you are buying organic direct from a small farm you would probably be dissapointed at just what some supermarkets class as organic...

Same goes for medical. The NHS is actially, IMHO, very good. Unless you are planning to pay for very high end medical insurance its not likely that you will get any real difference in treatment other than things like private rooms and better food. Certainly round here you can actually get private treatment under the NHS. My wife has had 2 operations at private hospitals via the NHS. As for GPs just ask for longer appointments.

justme111

I am 45 and was thinking of 55-60. The point of the initial post was to share a bit of an unpleasant surprising discovery that I spend more than I thought I did ; how even someone who is pretty much as on top of financial issues as I am may not be as good as they think they are until they can tell they have lived a year on the money they think they will need. Even few years as someone pointed earlier in the thread.
Indeed considerable part of my outgoings can be DIYd and it is good to have it as a reserve option.
With NHS/private I am afraid it is not as simple as flowers in the private room versus snoring fellow patients in the same room. It is blissful ignorance that keeps things the way they are due to the ethos of cost effectiveness penetrating private medicine and education and the whole philosophy of system - no investigations until it is absolutely clear there is something very wrong, nonexistance of many treatment approaches , acceptance of limitations where there would be options if it was not due to cost , rationing of treatments and medicines etc. And GPs - well, even if it was realistic to ask for double appointments ( just imagine if everybody was aware of this option and taken it) the harangued stressed workforce that is constrained by protocols and tick boxing requirements can function better in double appointment than in a single one of course but it does not resolve the problem. If instead of investigating the reason for a particular symptom in a particular patient a GP is meant to prescribe the cheapest treatment that controls that symptom in the largest proportion of patients then it does not matter whether you have single or double appointment. Mind , private medicine is not a panacea either I am afraid as this ethos is there as well .

happyandcontented

cns06 wrote: »

Same goes for medical. The NHS is actially, IMHO, very good. Unless you are planning to pay for very high end medical insurance its not likely that you will get any real difference in treatment other than things like private rooms and better food. Certainly round here you can actually get private treatment under the NHS. My wife has had 2 operations at private hospitals via the NHS. As for GPs just ask for longer appointments.

The NHS is very good....but not all the time. I can tell you countless stories of those who have fallen through the net and paid the price. We pay for high-end medical insurance for this reason. For routine stuff, we use the NHS but if either of us were diagnosed with a life-threatening illness we have top flight cover in place. We really hope we never need to use it but we pay for the peace of mind.