How much pension will you get? Build your own dashboard to keep track of your progress

MSE_Chris_D

What's the best way to work out if you'll have enough pension when you retire? Start by finding out what your retirement nest eggs are currently worth. It can be a challenge keeping track of the different pots of pension cash you accumulate over your working life. Here's how to use a simple spreadsheet to see at a glance how much pension you've built up so far.

Read the full blog: How much pension will you get? Build your own dashboard to keep track of your progress

Thrugelmir

Care to substantiate this ?

This calculation is based on the "safe withdrawal rate" – one where you shouldn't run out of money before you die. The rule of thumb has been that this is 4% a year, hence the divide-the-total-by-25 calculation,

westv

The sooner we talk of the Suggested Withdrawal Rate, the better.

Alexland

westv wrote: »

The sooner we talk of the Suggested Withdrawal Rate, the better.

Suggested for whose circumstances and asset allocation? There are lots of different situations.

Brynsam

Since when was a rule of thumb a guarantee?

westv

Alexland wrote: »

Suggested for whose circumstances and asset allocation? There are lots of different situations.

Obviously suggested for the same people who are suggested the "safe" rate.

LHW99

I suspect most of the regulars here will have rather more detailed spreadsheets / "dashboards" than suggested. Those that don't visit won't find the suggestions.

dunstonh

This calculation is based on the "safe withdrawal rate" – one where you shouldn't run out of money before you die. The rule of thumb has been that this is 4% a year, hence the divide-the-total-by-25 calculation, though some experts think 3.5% or less is safer. In that case, you would divide the total by, say, 30.

That is very bold of MSE. Regulated advisers wouldn't dare refer to it as a safe withdrawal rate. The FCA would have a field day. Pretty much auto-upheld complaints if that was used. However, if MSE is prepared to face the flack when it goes wrong then I guess that is fair enough.

Seeing as MSE is playing to mainly DIY investors and not advised and when you consider the recent FCA thematic review which had a number of significant concerns about DIY investing, there are plenty that could find the 4% rate is not "safe".

Maybe MSE should adjust the wording to make it a bit more sensible.

6. How much pension could my fund buy? Forecasting the future pension your DC funds might produce when you retire is like gazing into a crystal ball. While annual statements will include projections of your retirement income, these are often based on complex assumptions that may not prove realistic.

That is fair enough. However, they tend to understate the likely income (often significantly). Although the use of the word "realistic" perhaps makes it sound like they are overstating when its the opposite.

[Deleted User]

I really like this guy’s “cushioned withdrawals strategy”, which is a variation on variable withdrawal.

https://www.michaeljamesonmoney.com/2014/02/cushioned-retirement-investing.html
https://www.michaeljamesonmoney.com/2014/02/working-out-your-retirement-magic-number.html

bostonerimus

Deleted_User wrote: »

I really like this guy’s “cushioned withdrawals strategy”, which is a variation on variable withdrawal.

https://www.michaeljamesonmoney.com/2014/02/cushioned-retirement-investing.html
https://www.michaeljamesonmoney.com/2014/02/working-out-your-retirement-magic-number.html

The guy assumes 0.12% fees in his spreadsheets.......so anyone in the UK paying more than that would need to take that into account. People throwing around 4% or 3.5% initial drawdown rates need to know that those don't include fees.....this have to be paid out of that withdrawal. So 2% fees would be half of your annual income at the start of retirement. As your withdrawals get larger to keep up with inflation you'd hope that the proportion going to fees would go down.

[Deleted User]

We discussed this before... I think 4% wild guesstimate is just fine as long as you are prepared to reduce your expenditure if the market were to tumble just after you retire. Because 4% is so uncertain, other variables like MER don’t need to be accurate either.

Safe constant withdrawal rate does not exist because the future is uncertain. And if you are 55 and really want high confidence of being able to withdraw a constant inflation corrected amount till death then I’d go with something way more conservative like 2% - assuming a balanced portfolio.