It's time to start digging up those Squirrelled Nuts!!!!

Sea_Shell

Stubod said:

I based our long term planning on the assumption that the value of our "pot" is 40% less than its real value when we started... 

The wisdom of being a "glass half empty" person?!?

ex-pat_scot

Bravepants said:

ex-pat_scot said:

Sea_Shell said:

Anyone else feel that their current investments are looking a bit too good to be true??

Certainly modelling a decent crash in the value of assets (per Westv above) would be sensible. How would you cope? What would be the impact on your income, expenditure and remedial actions (eg part time work etc)
Hedge where you can and derisk where you can. That means owning your home, ideally with low / no mortgage. Hold your investments in denominations matching your future expenditure. 

Surely, one should just stick to the inflation adjusted Safe Withdrawal Rate, and have 2 or 3 years' worth of drawdown in cash?

Crashes and volatility are what that strategy is designed for.

Indeed.
My approach is to remain invested, in a globally-diversified fund, with the plan for 4-5% SWR. (higher early on, then lower once SP kicks in).
If there's a large crash before I get to my point of access, then my 4% SWR will clearly be on a smaller pot. I'd be looking to perhaps stay a little longer, or take part time job if necessary, so that my starting pot gets to my number.

michaels

Sea_Shell said:

Anyone else feel that their current investments are looking a bit too good to be true??

There was a pieceon the news about 'wealth' having increased globally by 7.5% last year.  Given the world produced less than normal last year but probably saw a smaller fall in consumption, the real stuff that wealth is a measure of probably fell rather than grew...

Of course 'wealth' by another definition is the value of future 'cash flows' rather than todays stock of assets but again how that has increased in real terms in a covid year is again not really clear to me. 

Perhaps current wealth in nominal terms prices in future inflation?!

Sea_Shell

I've closed off the figures for June 2021, and the scores on the doors are in...

Total pot - £628,000   (as at June 2020 - £556,000)

DC Pensions - £368,245  (£314,862)
ISAs - £194,742  (£148,057)
Locked Cash - £59,885  (£65,595)
Ready cash - £5,167  (£27,625)

12 months spends to date £13,000 (£10,518)

Crazy numbers!!!

savingmore

i really appreciate you posting your exact figures, andy how much you spend.   it’s giving me confidence as we still ponder when we retire, sometime in next 26 months.   can’t remember, don’t think you get sp yet?

Sea_Shell

savingmore said:

i really appreciate you posting your exact figures, andy how much you spend.   it’s giving me confidence as we still ponder when we retire, sometime in next 26 months.   can’t remember, don’t think you get sp yet?

Glad you're enjoying my thread.

We currently have no income from anywhere, as both still under 55 and not doing any paid work.   

So all our spends are coming from our cash float at the moment.    The large fixed term savings account matures in September, so we'll be investing £40,000 in the ISA's and keeping £20,000 in cash for now.    

Then in September DH will start to draw bits and bobs from his DC pensions.  So we'll re-evaluate our cash holdings levels later in the year.

Amateurretiree

Shell you should be running the Treasury!

OldScientist

Sea_Shell said:

Glad you're enjoying my thread.

We currently have no income from anywhere, as both still under 55 and not doing any paid work.   

So all our spends are coming from our cash float at the moment.    The large fixed term savings account matures in September, so we'll be investing £40,000 in the ISA's and keeping £20,000 in cash for now.    

Then in September DH will start to draw bits and bobs from his DC pensions.  So we'll re-evaluate our cash holdings levels later in the year.

Very enjoyable and interesting thread. We retired not long after after you and the similarities and differences between our retirements may be interesting.

We are similar in that at about £14k our expenditure is fairly low (slightly higher than you, but, excluding pets, there are currently 4 of us in the house). We're a bit older, but not by too much (upper 50s).

However, our funding is very different with over 80% of our income (before tax) coming from a DB pension and the remaining from various S&S ISA pots. Although, so far, we have not had to withdraw anything from the ISAs (in fact we've continued to save and have been able to contribute to the house fund savings of our children).

One significant difference in planning is that in the event of my demise, the OH will only have half the DB income, so I've had to take out life insurance (two policies - a level term and a decreasing term the combination of which reduces premiums but allows reasonable inflation proofing) to cover the income gap until the OH can draw the SP. While DB pensions may be 'gold plated', they do have some downsides!

Sea_Shell

OH has got an element of DB pensions to come, but not for another 10 years.   They are currently valued at £8,500 p.a. in today's money, and will be indexed.    They will provide 50% widow pension.

We've tried to ensure that I have plenty of provision in my own name should anything happen to OH, so we have no need for any life cover (no mortgage, no dependents).

Ibrahim5

I dumped life cover when I retired. One of my most difficult decisions. I had paid it for years when I was unlikely to die. A small monthly payment that could hit the jackpot but I wouldn't know about it. I wanted to reduce my outgoings and we didn't need the payout so it went. 50/50 decisions are always the hardest.