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

Audaxer

michaels said:

Audaxer said:

michaels said:

Sea_Shell said:

Sea_Shell said:

Well....That's All Folks!!!!! I am now officially a non-working person.

Looking at the weather for the next couple of weeks, it appears my timing is just right. So for at least the next week or so, we're just treating it as a "staycation", and chilling out at home. Then we'll start making some plans for Sept/Oct.

It doesn't feel quite REAL just yet, I feel like i'm just having some time off.

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

I know I haven't been doing blow by blow updates, but I thought I'd do one as at end June 23.  (I know a few people are still reading this thread and ploughing their way through it all)

How our pots are looking...

Easy access cash - £11,500
Loanpad P2P - £10,000
1/2 year fixed cash - £26,500
Aviva Drawdown pot - £27,000
S&S ISAs - £211,000
Untouched Pensions - £305,000

Total - £591,000

As at end June 2019, we had £536,000
Over the last 4 years we have spent £61,000

I know you don't like this analysis but I think it is reasonable. 

IN 2023 pounds your pot has gone down from £656k to £591k or about 10% so if the same real terms performance and spending were maintained it should last another 36 years.  Of course if you have state pension provision and any other pensions to come then your need to spend from the savings pot will likely be much diminished in future.

As the starting pot nominal value was £536k and in 4 years it has increased to £591k, despite spending of £61k, I can't see that the pot would ever run dry if the same performance and annual spending levels (say £15k plus inflation) were maintained. In these circumstances I think it is more likely that balance of the pot would continue to increase in value even if there was no DB or State pensions to come.

Which is exactly my point, if you don't look at things in real terms you don't get the real picture.  As above, the pot value has fallen by 10% in real terms so an inflation adjusted drawdown that was for example 3% will now be 3.3%

The way I look at it, and I think from what I've read the the way the SWR calculations are worked out, is that they adjust for inflation just on the spending side rather than adjust the pot value by inflation as well.  So a 3% withdrawal rate with a starting value of £536k would amount to a starting drawdown of just over £16k.  @Sea_Shell's spending at £61k over 4 years is well within 3% plus inflation over these 4 years.

As her pot value has increased over that time, I think that is a very good position to be in with very little chance of her pot running out of money, even is she didn't have a DB pension starting in 8 years time, and SPs not long after.

quirkydeptless

Sea_Shell said:

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

          

michaels

Audaxer said:

michaels said:

Audaxer said:

michaels said:

Sea_Shell said:

Sea_Shell said:

Well....That's All Folks!!!!! I am now officially a non-working person.

Looking at the weather for the next couple of weeks, it appears my timing is just right. So for at least the next week or so, we're just treating it as a "staycation", and chilling out at home. Then we'll start making some plans for Sept/Oct.

It doesn't feel quite REAL just yet, I feel like i'm just having some time off.

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

I know I haven't been doing blow by blow updates, but I thought I'd do one as at end June 23.  (I know a few people are still reading this thread and ploughing their way through it all)

How our pots are looking...

Easy access cash - £11,500
Loanpad P2P - £10,000
1/2 year fixed cash - £26,500
Aviva Drawdown pot - £27,000
S&S ISAs - £211,000
Untouched Pensions - £305,000

Total - £591,000

As at end June 2019, we had £536,000
Over the last 4 years we have spent £61,000

I know you don't like this analysis but I think it is reasonable. 

IN 2023 pounds your pot has gone down from £656k to £591k or about 10% so if the same real terms performance and spending were maintained it should last another 36 years.  Of course if you have state pension provision and any other pensions to come then your need to spend from the savings pot will likely be much diminished in future.

As the starting pot nominal value was £536k and in 4 years it has increased to £591k, despite spending of £61k, I can't see that the pot would ever run dry if the same performance and annual spending levels (say £15k plus inflation) were maintained. In these circumstances I think it is more likely that balance of the pot would continue to increase in value even if there was no DB or State pensions to come.

Which is exactly my point, if you don't look at things in real terms you don't get the real picture.  As above, the pot value has fallen by 10% in real terms so an inflation adjusted drawdown that was for example 3% will now be 3.3%

The way I look at it, and I think from what I've read the the way the SWR calculations are worked out, is that they adjust for inflation just on the spending side rather than adjust the pot value by inflation as well.  So a 3% withdrawal rate with a starting value of £536k would amount to a starting drawdown of just over £16k.  @Sea_Shell's spending at £61k over 4 years is well within 3% plus inflation over these 4 years.

As her pot value has increased over that time, I think that is a very good position to be in with very little chance of her pot running out of money, even is she didn't have a DB pension starting in 8 years time, and SPs not long after.

But her pot value has not increased, it has fallen by 10%

Sea_Shell

quirkydeptless said:

Sea_Shell said:

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

          

Love that!!! ♥️♥️

jimi_man

michaels said:

Audaxer said:

michaels said:

Audaxer said:

michaels said:

Sea_Shell said:

Sea_Shell said:

Well....That's All Folks!!!!! I am now officially a non-working person.

Looking at the weather for the next couple of weeks, it appears my timing is just right. So for at least the next week or so, we're just treating it as a "staycation", and chilling out at home. Then we'll start making some plans for Sept/Oct.

It doesn't feel quite REAL just yet, I feel like i'm just having some time off.

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

I know I haven't been doing blow by blow updates, but I thought I'd do one as at end June 23.  (I know a few people are still reading this thread and ploughing their way through it all)

How our pots are looking...

Easy access cash - £11,500
Loanpad P2P - £10,000
1/2 year fixed cash - £26,500
Aviva Drawdown pot - £27,000
S&S ISAs - £211,000
Untouched Pensions - £305,000

Total - £591,000

As at end June 2019, we had £536,000
Over the last 4 years we have spent £61,000

I know you don't like this analysis but I think it is reasonable. 

IN 2023 pounds your pot has gone down from £656k to £591k or about 10% so if the same real terms performance and spending were maintained it should last another 36 years.  Of course if you have state pension provision and any other pensions to come then your need to spend from the savings pot will likely be much diminished in future.

As the starting pot nominal value was £536k and in 4 years it has increased to £591k, despite spending of £61k, I can't see that the pot would ever run dry if the same performance and annual spending levels (say £15k plus inflation) were maintained. In these circumstances I think it is more likely that balance of the pot would continue to increase in value even if there was no DB or State pensions to come.

Which is exactly my point, if you don't look at things in real terms you don't get the real picture.  As above, the pot value has fallen by 10% in real terms so an inflation adjusted drawdown that was for example 3% will now be 3.3%

The way I look at it, and I think from what I've read the the way the SWR calculations are worked out, is that they adjust for inflation just on the spending side rather than adjust the pot value by inflation as well.  So a 3% withdrawal rate with a starting value of £536k would amount to a starting drawdown of just over £16k.  @Sea_Shell's spending at £61k over 4 years is well within 3% plus inflation over these 4 years.

As her pot value has increased over that time, I think that is a very good position to be in with very little chance of her pot running out of money, even is she didn't have a DB pension starting in 8 years time, and SPs not long after.

But her pot value has not increased, it has fallen by 10%

I understand what you’re saying, but I don’t think that Seashell has any problems. Not because they have a lot of money - it isn’t really in normal circumstances - but because their spending is so restrained that I really can’t see them ever running out of money. 

Which is the key point, to them I imagine it feels like a huge amount and relatively speaking it is. 

(SS - Sorry to refer to you in the third person!) 

arnoldy

michaels said:

But her pot value has not increased, it has fallen by 10%

Yes but the last 4 years have been a torrid time in the markets, so a great result considering money is taken out as well. Underwrites a lot of confidence in the future with DBs and SPs round the corner. Well done SS.

DT2001

michaels said:

Sea_Shell said:

Sea_Shell said:

Well....That's All Folks!!!!! I am now officially a non-working person.

Looking at the weather for the next couple of weeks, it appears my timing is just right. So for at least the next week or so, we're just treating it as a "staycation", and chilling out at home. Then we'll start making some plans for Sept/Oct.

It doesn't feel quite REAL just yet, I feel like i'm just having some time off.

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

I know I haven't been doing blow by blow updates, but I thought I'd do one as at end June 23.  (I know a few people are still reading this thread and ploughing their way through it all)

How our pots are looking...

Easy access cash - £11,500
Loanpad P2P - £10,000
1/2 year fixed cash - £26,500
Aviva Drawdown pot - £27,000
S&S ISAs - £211,000
Untouched Pensions - £305,000

Total - £591,000

As at end June 2019, we had £536,000
Over the last 4 years we have spent £61,000

I know you don't like this analysis but I think it is reasonable. 

IN 2023 pounds your pot has gone down from £656k to £591k or about 10% so if the same real terms performance and spending were maintained it should last another 36 years.  Of course if you have state pension provision and any other pensions to come then your need to spend from the savings pot will likely be much diminished in future.

Before I ask a few questions about your analysis I would like to thank SS for the update. With average expenditure below 3% of the current value of the pot and DB’s and SP’s to come on stream the retirement plan works.

How do you work out the pot will last 36 years? Are you assuming inflation continues at 10% and the pot loses value in real terms? Do you need to know SS’s own inflation rate rather than the headline one?

We all hope markets recover in the medium term otherwise all SWR assumptions will be incorrect.

What are you suggesting that should be done if say it was a 30 year plan?

michaels

DT2001 said:

michaels said:

Sea_Shell said:

Sea_Shell said:

Well....That's All Folks!!!!! I am now officially a non-working person.

Looking at the weather for the next couple of weeks, it appears my timing is just right. So for at least the next week or so, we're just treating it as a "staycation", and chilling out at home. Then we'll start making some plans for Sept/Oct.

It doesn't feel quite REAL just yet, I feel like i'm just having some time off.

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

I know I haven't been doing blow by blow updates, but I thought I'd do one as at end June 23.  (I know a few people are still reading this thread and ploughing their way through it all)

How our pots are looking...

Easy access cash - £11,500
Loanpad P2P - £10,000
1/2 year fixed cash - £26,500
Aviva Drawdown pot - £27,000
S&S ISAs - £211,000
Untouched Pensions - £305,000

Total - £591,000

As at end June 2019, we had £536,000
Over the last 4 years we have spent £61,000

I know you don't like this analysis but I think it is reasonable. 

IN 2023 pounds your pot has gone down from £656k to £591k or about 10% so if the same real terms performance and spending were maintained it should last another 36 years.  Of course if you have state pension provision and any other pensions to come then your need to spend from the savings pot will likely be much diminished in future.

Before I ask a few questions about your analysis I would like to thank SS for the update. With average expenditure below 3% of the current value of the pot and DB’s and SP’s to come on stream the retirement plan works.

How do you work out the pot will last 36 years? Are you assuming inflation continues at 10% and the pot loses value in real terms? Do you need to know SS’s own inflation rate rather than the headline one?

We all hope markets recover in the medium term otherwise all SWR assumptions will be incorrect.

What are you suggesting that should be done if say it was a 30 year plan?

SO we all know having read this thread that this is not the only pension vehicle for SeaShell so a straight-line SWR analysis is not relevant.  

My calc was simply a straight line extrapolation, if your pot declines by 10% in real terms over 4 years then at the same rate it will last 36 more years.  Of course the whole point about swr is that it is supposedly the highest rate that has previously always been safe over a given time horizon so the actual size of the pot over any given period can fluctuate wildly up or down without meaning that the SWR will fail.  However when looking at progress over time, ignoring inflation and simply looking at pot value in money terms gives even less idea of how the pot is actually performing against the SWR longevity target.  The whole point of an SWR is that it is constant in real terms rather than a constant nominal amount that might become virtually worthless sin a high inflation era.

Personally if I were SeaShell and I thought I could get value from spending more then I would do as at present given the extra pensions coming later she is likely to end up with a large unspent pot later in life.  Our figures as a couple are not a million miles away from hers but we will not spend 15k pa prior to pensions cutting in and then potentially being able to spend say 35k pa.  Instead we will try an spend 25k pa throughout.  I can't see the benefit in only spending 15k for the rest of ones life if one could afford to spend 25k - assuming that one can get pleasure from spending that extra 10k.  On the other hand, if spending 25k rather than 15k gives exactly the same pleasure then no point spending more than 15k.

Sea_Shell

michaels said:

DT2001 said:

michaels said:

Sea_Shell said:

Sea_Shell said:

Well....That's All Folks!!!!! I am now officially a non-working person.

Looking at the weather for the next couple of weeks, it appears my timing is just right. So for at least the next week or so, we're just treating it as a "staycation", and chilling out at home. Then we'll start making some plans for Sept/Oct.

It doesn't feel quite REAL just yet, I feel like i'm just having some time off.

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

I know I haven't been doing blow by blow updates, but I thought I'd do one as at end June 23.  (I know a few people are still reading this thread and ploughing their way through it all)

How our pots are looking...

Easy access cash - £11,500
Loanpad P2P - £10,000
1/2 year fixed cash - £26,500
Aviva Drawdown pot - £27,000
S&S ISAs - £211,000
Untouched Pensions - £305,000

Total - £591,000

As at end June 2019, we had £536,000
Over the last 4 years we have spent £61,000

I know you don't like this analysis but I think it is reasonable. 

IN 2023 pounds your pot has gone down from £656k to £591k or about 10% so if the same real terms performance and spending were maintained it should last another 36 years.  Of course if you have state pension provision and any other pensions to come then your need to spend from the savings pot will likely be much diminished in future.

Before I ask a few questions about your analysis I would like to thank SS for the update. With average expenditure below 3% of the current value of the pot and DB’s and SP’s to come on stream the retirement plan works.

How do you work out the pot will last 36 years? Are you assuming inflation continues at 10% and the pot loses value in real terms? Do you need to know SS’s own inflation rate rather than the headline one?

We all hope markets recover in the medium term otherwise all SWR assumptions will be incorrect.

What are you suggesting that should be done if say it was a 30 year plan?

Personally if I were SeaShell and I thought I could get value from spending more then I would do as at present given the extra pensions coming later she is likely to end up with a large unspent pot later in life.  Our figures as a couple are not a million miles away from hers but we will not spend 15k pa prior to pensions cutting in and then potentially being able to spend say 35k pa.  Instead we will try an spend 25k pa throughout.  I can't see the benefit in only spending 15k for the rest of ones life if one could afford to spend 25k - assuming that one can get pleasure from spending that extra 10k.  On the other hand, if spending 25k rather than 15k gives exactly the same pleasure then no point spending more than 15k.

We don't TRY and spend any given amount.   It's not a budget or a target, it just IS.   I just happen to keep track of it.    £15k was a starting figure to work with, as a ballpark, based on our pre-retirement spending history. 

But that £61k over 4 years is the total, so AVERAGE.   Some 12 month periods were as low as £10.5k (lockdown), and others as high as £19.8k (currently - inc one off home refurb costs).   Hence the 3.35% figure in my sig. 

But £16.5k seems more like our current "baseline" spend.

Maybe this will increase further as (our rate of) inflation bites.    Insurances due later in the year, and I'm reading a lot about huge increases (x3) on same details etc. so things like that will add up. 

But it's always good to know that if we needed or wanted to spend more (on something...anything) we could just do it, and not bat an eyelid.    Well, OK, maybe a few blinks...you know...to get our monies worth!! 

First world problems.   

DT2001

michaels said:

DT2001 said:

michaels said:

Sea_Shell said:

Sea_Shell said:

Well....That's All Folks!!!!! I am now officially a non-working person.

Looking at the weather for the next couple of weeks, it appears my timing is just right. So for at least the next week or so, we're just treating it as a "staycation", and chilling out at home. Then we'll start making some plans for Sept/Oct.

It doesn't feel quite REAL just yet, I feel like i'm just having some time off.

I've just realised, it's almost my 4 year retirement anniversary.   Wow that's gone quick.

I know I haven't been doing blow by blow updates, but I thought I'd do one as at end June 23.  (I know a few people are still reading this thread and ploughing their way through it all)

How our pots are looking...

Easy access cash - £11,500
Loanpad P2P - £10,000
1/2 year fixed cash - £26,500
Aviva Drawdown pot - £27,000
S&S ISAs - £211,000
Untouched Pensions - £305,000

Total - £591,000

As at end June 2019, we had £536,000
Over the last 4 years we have spent £61,000

I know you don't like this analysis but I think it is reasonable. 

IN 2023 pounds your pot has gone down from £656k to £591k or about 10% so if the same real terms performance and spending were maintained it should last another 36 years.  Of course if you have state pension provision and any other pensions to come then your need to spend from the savings pot will likely be much diminished in future.

Before I ask a few questions about your analysis I would like to thank SS for the update. With average expenditure below 3% of the current value of the pot and DB’s and SP’s to come on stream the retirement plan works.

How do you work out the pot will last 36 years? Are you assuming inflation continues at 10% and the pot loses value in real terms? Do you need to know SS’s own inflation rate rather than the headline one?

We all hope markets recover in the medium term otherwise all SWR assumptions will be incorrect.

What are you suggesting that should be done if say it was a 30 year plan?

SO we all know having read this thread that this is not the only pension vehicle for SeaShell so a straight-line SWR analysis is not relevant.  

My calc was simply a straight line extrapolation, if your pot declines by 10% in real terms over 4 years then at the same rate it will last 36 more years.  Of course the whole point about swr is that it is supposedly the highest rate that has previously always been safe over a given time horizon so the actual size of the pot over any given period can fluctuate wildly up or down without meaning that the SWR will fail.  However when looking at progress over time, ignoring inflation and simply looking at pot value in money terms gives even less idea of how the pot is actually performing against the SWR longevity target.  The whole point of an SWR is that it is constant in real terms rather than a constant nominal amount that might become virtually worthless sin a high inflation era.

Personally if I were SeaShell and I thought I could get value from spending more then I would do as at present given the extra pensions coming later she is likely to end up with a large unspent pot later in life.  Our figures as a couple are not a million miles away from hers but we will not spend 15k pa prior to pensions cutting in and then potentially being able to spend say 35k pa.  Instead we will try a spend 25k pa throughout.  I can't see the benefit in only spending 15k for the rest of ones life if one could afford to spend 25k - assuming that one can get pleasure from spending that extra 10k.  On the other hand, if spending 25k rather than 15k gives exactly the same pleasure then no point spending more than 15k.

Thank you for your explanation. 

So from your analysis, if the pot was the only source of income, given a straight line continuation it would last a further 36 years? Is the presumed SWR about 2.5% over 40 years?

If we look at general portfolio performance since 2019 it has been below the long term average so hopefully a higher % is sustainable but how do you suggest we monitor progress?

I agree that we shouldn’t generate a fixed inflation linked amount each year as it does not reflect the reality of SP, DB and say later life annuities. I have a figure in mind for when all DB’s and SP’s are on stream (OH is 5 years younger) and have borrowed from Linton’s pots for different timescales and am using a higher withdrawal rate as assuming shorter term and reduced expenditure for part. The balance then needs to cover the various gaps over the next 10 years.
Having said that I think we will struggle to spend the amount ‘allowed’ under the plan.