Outliving your pension

bostonerimus

jamesd wrote: »

Requires no more than an hour or two a year once set up:

1. Work out the new payments from your drawdown rule and adjust your monthly "pay" from your buffer savings account to this.
2. Change investments a required by the drawdown rule.
3. Adjust monthly payments from pension to savings account as required, selling a little if appropriate.

No particular deadline to do it either once the payments are set up.

Yes it is pretty simple, but if you don't need to do drawdown from DC and can reply on something like a DB pension then it's even simpler.

1) Maybe annual rebalancing and let the pot grow.

I've actually stopped rebalancing and the only activity on my DC pensions and regular account for the last few years has been to reinvest dividends and me depositing some money left over from my DB pension.

GunJack

jamesd wrote: »

Requires no more than an hour or two a year once set up:

1. Work out the new payments from your drawdown rule and adjust your monthly "pay" from your buffer savings account to this.
2. Change investments a required by the drawdown rule.
3. Adjust monthly payments from pension to savings account as required, selling a little if appropriate.

No particular deadline to do it either once the payments are set up.

Really?? So you wouldn't be taking a more active role in monitoring what's going on, markets, etc? I would have thought as it's your money/investments/income you're talking, you'd want a more granular view on those things? Which takes a lot more than a couple of hours a year, surely??

jamesd

It's been more than a year since I last changed investments inside my pensions and that's not unusual even though I pay a lot of attention to what's happening.

You certainly could do more but it's not generally thought to be good to make lots of change beyond maybe periodic big picture tweaking.

I intervene far more in my P2P lending investing but that's due to the choices of where to invest.

stamboy

Sorry for being dumb but what's DB? Not Deutsche Bank I'm assuming.

Sea_Shell

stamboy wrote: »

Sorry for being dumb but what's DB? Not Deutsche Bank I'm assuming.

Defined Benefits. Final salary schemes etc.

itwasntme001

jamesd wrote: »

YES! Though preferably within not as a fork because that will increase adoption rate.

Some ideas:
1. More than ten what if trials, I'll often need more when exploring someone's options, 20 should suffice.
2. Easier provision for reducing income gradually while using Guyton-Klinger or other rules would be useful; you can fake it by adding false income at the moment.
3. Option to use Guyton's sequence of returns risk reduction method in addition to drawdown rules
4. A small cap percentage for investments, adding some small caps took the US SWR from 4% to 4.5% and Bill Bengen himself now normally writes of the 4.5% rule and includes them in his modelling.

Those are the main things I normally want to tell people to do.

Thanks jamesd. Sorry what do you mean by fork?


Also in terms of whatif trials do you mean run scenarios where returns/inflation are different to what is there in the historical data? E.g. a significant negative return on stocks in the first few years of retirement to capture sequence of returns risk? With the output being x amount of income that can be drawn annually without running out of money with y% confidence?

OldMusicGuy

GunJack wrote: »

Really?? So you wouldn't be taking a more active role in monitoring what's going on, markets, etc? I would have thought as it's your money/investments/income you're talking, you'd want a more granular view on those things? Which takes a lot more than a couple of hours a year, surely??

It depends how you DIY. You can do it on an "active" basis like you describe, or you can do what I do, which is invest in a small number of well diversified multi-asset funds and leave well alone for 10 years or more.

The worst thing an investor like me can do is to keep switching funds and pretending they are a market expert (and I have a degree in economics and a lot of accounting and finance experience :rotfl:). I don't need to do anything.

jamesd

itwasntme001 wrote: »

Thanks jamesd. Sorry what do you mean by fork?

Different version on a new web site.

itwasntme001 wrote: »

Also in terms of whatif trials do you mean run scenarios where returns/inflation are different to what is there in the historical data? E.g. a significant negative return on stocks in the first few years of retirement to capture sequence of returns risk? With the output being x amount of income that can be drawn annually without running out of money with y% confidence?

Each time you change some setting and click on run simulation a results page is generated. There's a cap on how many results pages you can have.

bostonerimus

GunJack wrote: »

Really?? So you wouldn't be taking a more active role in monitoring what's going on, markets, etc? I would have thought as it's your money/investments/income you're talking, you'd want a more granular view on those things? Which takes a lot more than a couple of hours a year, surely??

Monitoring the markets and having a "granular view" are best avoided. If you have a good plan and understand the probabilities and statistics involved with income drawdown then very little work is involved beyond maybe monitoring your balance and whenever you make withdrawals doing so with rebalancing in mind. If you get retirement income from final salary pensions, state pension or rental etc then even the DC income drawdown can be minimal. In 5 years of retirement I've yet to change investments or make a withdrawal because I just cash the rent and pension cheques each month. Looking at my return over those 5 years its an average annual 8% which is far better than I need and right in line with my expectations.