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

FIREDreamer

Pat38493 said:

pterri said:

SouthCoastBoy said:

pterri said:

Very please with the DB I’ve got due as the main pension! 

Yes, it's interesting, over the next 10 to 20 years I think people will start to realise how valuable the public sector pensions are as the private sector has moved almost completely to dc pensions and the exposure to the associated vagaries of the stock market 

My daughter is a school teacher, just completed 3 years, she has already got a pension that would have needed tens of thousands of pounds in a dc pension to buy a fully index linked annuity. While in comparison I changed jobs a year ago, earn a £60k+ salary and have a dc pension of about 6k for the year. It just illustrates the disparity.

Feeling very lucky I have to say. There are discussions about whether there is a way to share some risk for DC pensioners. At the moment all the investment/income risk is on them whereas for DB it all on the employer (with the pension bailout scheme as a back stop admittedly). Neither is desirable really. 

Yes - it seems to me that one issue with this kind of approach is that it forces anyone who actually looks into the situation, to save up significantly more for their retirement than they will probably need, in order to cover off the worst case scenarios.

I guess some might argue that this is not a bad thing if that money is invested in the economy through the stock markets abut I am not an economist.

Annuity rates are still reasonable at the moment though down slightly on last year.

Recent gilt yields drop mean that this might not last long.

westv

Sea_Shell said:

We've been 20% cash for a while.

Enough for about 7 years of spends.

Is that 20% of your SIPP (assuming it's in a SIPP) or 20% of your total funds available?

SouthCoastBoy

Sea_Shell said:

We've been 20% cash for a while.

Enough for about 7 years of spends.

I'm 40% cash or STMM, enough for a while, not too sure how long, depends on inflation and interest rate return etc. the STMM will be gone in 7 years after drawdown starts.

Many will say I have too much cash, but I have a spreadsheet that maps cash returns of 2% below inflation per annum and when factoring in 40% stock market crashes etc. it means I should not run out of money. So for me it is a strategy I am content with, however I do still have a substantial amount invested in equities.

Sea_Shell

westv said:

Sea_Shell said:

We've been 20% cash for a while.

Enough for about 7 years of spends.

Is that 20% of your SIPP (assuming it's in a SIPP) or 20% of your total funds available?

20% of the total.    Mostly in a ladder of fixed rates.  Sadly, the 6%+ ones are up for maturity soon.

Our cash is earning about £18 a day at the moment.

Pat38493

FIREDreamer said:

Pat38493 said:

pterri said:

SouthCoastBoy said:

pterri said:

Very please with the DB I’ve got due as the main pension! 

Yes, it's interesting, over the next 10 to 20 years I think people will start to realise how valuable the public sector pensions are as the private sector has moved almost completely to dc pensions and the exposure to the associated vagaries of the stock market 

My daughter is a school teacher, just completed 3 years, she has already got a pension that would have needed tens of thousands of pounds in a dc pension to buy a fully index linked annuity. While in comparison I changed jobs a year ago, earn a £60k+ salary and have a dc pension of about 6k for the year. It just illustrates the disparity.

Feeling very lucky I have to say. There are discussions about whether there is a way to share some risk for DC pensioners. At the moment all the investment/income risk is on them whereas for DB it all on the employer (with the pension bailout scheme as a back stop admittedly). Neither is desirable really. 

Yes - it seems to me that one issue with this kind of approach is that it forces anyone who actually looks into the situation, to save up significantly more for their retirement than they will probably need, in order to cover off the worst case scenarios.

I guess some might argue that this is not a bad thing if that money is invested in the economy through the stock markets abut I am not an economist.

Annuity rates are still reasonable at the moment though down slightly on last year.

Recent gilt yields drop mean that this might not last long.

It sort of depends on what is meant by reasonable.

Last time I looked, the amount you would need to buy an annuity, was hardly any higher than the minimum safe withdrawal rate using historical simulations.  Therefore whether you buy an annuity or use drawdown, you need to save up more than "should" be needed for the average person, if risk was pooled.

westv

Pat38493 said:

FIREDreamer said:

Pat38493 said:

pterri said:

SouthCoastBoy said:

pterri said:

Very please with the DB I’ve got due as the main pension! 

Yes, it's interesting, over the next 10 to 20 years I think people will start to realise how valuable the public sector pensions are as the private sector has moved almost completely to dc pensions and the exposure to the associated vagaries of the stock market 

My daughter is a school teacher, just completed 3 years, she has already got a pension that would have needed tens of thousands of pounds in a dc pension to buy a fully index linked annuity. While in comparison I changed jobs a year ago, earn a £60k+ salary and have a dc pension of about 6k for the year. It just illustrates the disparity.

Feeling very lucky I have to say. There are discussions about whether there is a way to share some risk for DC pensioners. At the moment all the investment/income risk is on them whereas for DB it all on the employer (with the pension bailout scheme as a back stop admittedly). Neither is desirable really. 

Yes - it seems to me that one issue with this kind of approach is that it forces anyone who actually looks into the situation, to save up significantly more for their retirement than they will probably need, in order to cover off the worst case scenarios.

I guess some might argue that this is not a bad thing if that money is invested in the economy through the stock markets abut I am not an economist.

Annuity rates are still reasonable at the moment though down slightly on last year.

Recent gilt yields drop mean that this might not last long.

It sort of depends on what is meant by reasonable.

Last time I looked, the amount you would need to buy an annuity, was hardly any higher than the minimum safe withdrawal rate using historical simulations.  Therefore whether you buy an annuity or use drawdown, you need to save up more than "should" be needed for the average person, if risk was pooled.

Don't forget that, for a long period, the RPI with survivor benefits annuity rate was well below the "safe" withdrawal rate of around 3%-3.5%.

FIREDreamer

westv said:

Pat38493 said:

FIREDreamer said:

Pat38493 said:

pterri said:

SouthCoastBoy said:

pterri said:

Very please with the DB I’ve got due as the main pension! 

Yes, it's interesting, over the next 10 to 20 years I think people will start to realise how valuable the public sector pensions are as the private sector has moved almost completely to dc pensions and the exposure to the associated vagaries of the stock market 

My daughter is a school teacher, just completed 3 years, she has already got a pension that would have needed tens of thousands of pounds in a dc pension to buy a fully index linked annuity. While in comparison I changed jobs a year ago, earn a £60k+ salary and have a dc pension of about 6k for the year. It just illustrates the disparity.

Feeling very lucky I have to say. There are discussions about whether there is a way to share some risk for DC pensioners. At the moment all the investment/income risk is on them whereas for DB it all on the employer (with the pension bailout scheme as a back stop admittedly). Neither is desirable really. 

Yes - it seems to me that one issue with this kind of approach is that it forces anyone who actually looks into the situation, to save up significantly more for their retirement than they will probably need, in order to cover off the worst case scenarios.

I guess some might argue that this is not a bad thing if that money is invested in the economy through the stock markets abut I am not an economist.

Annuity rates are still reasonable at the moment though down slightly on last year.

Recent gilt yields drop mean that this might not last long.

It sort of depends on what is meant by reasonable.

Last time I looked, the amount you would need to buy an annuity, was hardly any higher than the minimum safe withdrawal rate using historical simulations.  Therefore whether you buy an annuity or use drawdown, you need to save up more than "should" be needed for the average person, if risk was pooled.

Don't forget that, for a long period, the RPI with survivor benefits annuity rate was well below the "safe" withdrawal rate of around 3%-3.5%.

I secured 3.8% on 2/3 of my drawdown pot.

I was under 60 at the time.

Allowing for the current purchase price and annuity payments received I am slightly up on the deal. Not the aim, I just wanted secure income to retire. I have now retired.

SouthCoastBoy

Sea_Shell said:

westv said:

Sea_Shell said:

We've been 20% cash for a while.

Enough for about 7 years of spends.

Is that 20% of your SIPP (assuming it's in a SIPP) or 20% of your total funds available?

20% of the total.    Mostly in a ladder of fixed rates.  Sadly, the 6%+ ones are up for maturity soon.

Our cash is earning about £18 a day at the moment.

Some of our cash is in premium bonds, last mth was a good mth, won 625 so £20/day. Best win I have had to date is £1000, I'm still hoping for a "big win". For me the good thing about premium bonds are the fact the wins are tax free. Most of our other cash investments are tied up in fixed rate bonds (I would guesstimate the average return on these is about 5% per annum), plus some instant access savings that currently pay around 4%, so currently beating inflation, most are tax free, but not all

westv

FIREDreamer said:

westv said:

Pat38493 said:

FIREDreamer said:

Pat38493 said:

pterri said:

SouthCoastBoy said:

pterri said:

Very please with the DB I’ve got due as the main pension! 

Yes, it's interesting, over the next 10 to 20 years I think people will start to realise how valuable the public sector pensions are as the private sector has moved almost completely to dc pensions and the exposure to the associated vagaries of the stock market 

My daughter is a school teacher, just completed 3 years, she has already got a pension that would have needed tens of thousands of pounds in a dc pension to buy a fully index linked annuity. While in comparison I changed jobs a year ago, earn a £60k+ salary and have a dc pension of about 6k for the year. It just illustrates the disparity.

Feeling very lucky I have to say. There are discussions about whether there is a way to share some risk for DC pensioners. At the moment all the investment/income risk is on them whereas for DB it all on the employer (with the pension bailout scheme as a back stop admittedly). Neither is desirable really. 

Yes - it seems to me that one issue with this kind of approach is that it forces anyone who actually looks into the situation, to save up significantly more for their retirement than they will probably need, in order to cover off the worst case scenarios.

I guess some might argue that this is not a bad thing if that money is invested in the economy through the stock markets abut I am not an economist.

Annuity rates are still reasonable at the moment though down slightly on last year.

Recent gilt yields drop mean that this might not last long.

It sort of depends on what is meant by reasonable.

Last time I looked, the amount you would need to buy an annuity, was hardly any higher than the minimum safe withdrawal rate using historical simulations.  Therefore whether you buy an annuity or use drawdown, you need to save up more than "should" be needed for the average person, if risk was pooled.

Don't forget that, for a long period, the RPI with survivor benefits annuity rate was well below the "safe" withdrawal rate of around 3%-3.5%.

I secured 3.8% on 2/3 of my drawdown pot.

I was under 60 at the time.

Allowing for the current purchase price and annuity payments received I am slightly up on the deal. Not the aim, I just wanted secure income to retire. I have now retired.

Yes, I remember the thread I think. That was last year?? I was referring to before then.

Pat38493

FIREDreamer said:

westv said:

Pat38493 said:

FIREDreamer said:

Pat38493 said:

pterri said:

SouthCoastBoy said:

pterri said:

Very please with the DB I’ve got due as the main pension! 

Yes, it's interesting, over the next 10 to 20 years I think people will start to realise how valuable the public sector pensions are as the private sector has moved almost completely to dc pensions and the exposure to the associated vagaries of the stock market 

My daughter is a school teacher, just completed 3 years, she has already got a pension that would have needed tens of thousands of pounds in a dc pension to buy a fully index linked annuity. While in comparison I changed jobs a year ago, earn a £60k+ salary and have a dc pension of about 6k for the year. It just illustrates the disparity.

Feeling very lucky I have to say. There are discussions about whether there is a way to share some risk for DC pensioners. At the moment all the investment/income risk is on them whereas for DB it all on the employer (with the pension bailout scheme as a back stop admittedly). Neither is desirable really. 

Yes - it seems to me that one issue with this kind of approach is that it forces anyone who actually looks into the situation, to save up significantly more for their retirement than they will probably need, in order to cover off the worst case scenarios.

I guess some might argue that this is not a bad thing if that money is invested in the economy through the stock markets abut I am not an economist.

Annuity rates are still reasonable at the moment though down slightly on last year.

Recent gilt yields drop mean that this might not last long.

It sort of depends on what is meant by reasonable.

Last time I looked, the amount you would need to buy an annuity, was hardly any higher than the minimum safe withdrawal rate using historical simulations.  Therefore whether you buy an annuity or use drawdown, you need to save up more than "should" be needed for the average person, if risk was pooled.

Don't forget that, for a long period, the RPI with survivor benefits annuity rate was well below the "safe" withdrawal rate of around 3%-3.5%.

I secured 3.8% on 2/3 of my drawdown pot.

I was under 60 at the time.

Allowing for the current purchase price and annuity payments received I am slightly up on the deal. Not the aim, I just wanted secure income to retire. I have now retired.

Right but that kind of proves the point - the median possible withdrawal rate on an investment that size is a lot higher than 3.8% - in fact it would be well higher than 4%.  I guess that in the end this reflects what happens when each individual retiree needs to carry all the timing risk for their chosen retirement date, on their own.