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

westv

Pat38493 said:

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.

I'm not sure I'd be taking an inflation adjusted 4%+ out of my pot when i come to spend it.

I did a quick quote on the HL website the other day (23/7)  purely out of interest and it quoted 3.58% RPI with 50% survivor and 10 year guarantee or 3.12% for 100% survivor. I'm 61 and wife is 54. 

kempiejon

I've been checking annuity prices for a couple of years. My brother put me on to the idea when rates were more attractive a couple of years back.
He's more conservative/risk adverse than I am and although we both agree the idea of giving up some of the retirement pot for a fixed RPI adjusted amount is attractive I'm not convinced by the rates. But I manage my SIPP and pick my own products so I know how much return I can make in a year. He's with the company vanilla offering and from a previous employer has a DB pension available to him, if it's fairly small it offers him a base.

If it were today I would take 3.8% (not a special number just a function of my required income and current value) likely to change and inflate it each year or more if I wanted extra income or less if the investment doesn't hold up.

westv

The HL best rates page tells me that rates reached a peak 20/10/22 with 6.829% for a 60 year old - level rate
01/08/24 was 6.50%. However, 13/1/22 was only 4.302%.

Pat38493

westv said:

Pat38493 said:

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.

I'm not sure I'd be taking an inflation adjusted 4%+ out of my pot when i come to spend it.

I did a quick quote on the HL website the other day (23/7)  purely out of interest and it quoted 3.58% RPI with 50% survivor and 10 year guarantee or 3.12% for 100% survivor. I'm 61 and wife is 54. 

For sure not, but in theory if you could pool your risk with a bunch of other people who were retiring at different times than you, you would be able to do so.

michaels

Sea_Shell said:

Looks like we're in for some stormy weather on the markets this week.     Hang on to your hats.  

That feeling when your pension pot has lost more in a week than you have earned in the last 2 years....

IamWood

Just transferred 20k from cash ISA to my share ISA.

Let's keep calm and carry on ☺️

Bravepants

I'm doing nothing. I'm just going to continue drip feeding, as I do at the end of each month, from a STMMF into FTSE Global All Cap in my ISA. 

LHW99

I will leave well alone, and just collect up the dividends coming in.

kempiejon

IamWood said:

Just transferred 20k from cash ISA to my share ISA.

Let's keep calm and carry on ☺️

I did wonder about a bit of opportune market timing but generally I am fully invested and cash is all earmarked. I doubt it'll be a long lived economic collapse but let's see if I buy a few more shares than usual this month if prices are nice enough to stay low.

DT2001

SouthCoastBoy said:

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.

If you are content with it AND it meets your goals that is good. So many, including myself, forget that at times.

I check my portfolio irregularly but always look at the chart for the last 12 months (or if things have been particularly dire my little calculation regarding how much the net cost of my contributions have been) to remind myself of the ups as well as downs. One final thought is “it’s only a paper profit or loss until realised”.