Shocked

Benny2020

Wasn't clear about that was I? .
It's what I would get at 67 if I quit paying in now, I think it said the maximum I could get was £168.

Gary1984

I'd probably take the bigger CETV and put the smaller pension into immediate payment. 3% drawdown plus small DB is £24k with SP to come later.

You say you can live comfortably on £12k and earn £50k. You also don't mention any other savings other than a £10k Sipp. What else have you been spending on? Are you sure you can live comfortably on a much lower amount? 

Albermarle

Surely that depends on your lifestyle and expectations? With an £850k pot and 2 x state pensions, my Wife and I would be bathing in champagne every Friday.

With about £40K net a year for two of you , then maybe bathing in Tesco Cava once a month might be more realistic 

cfw1994

SonOf said:

Actuarial advice in the UK is that 3% is considered more suitable for someone in their 50s and 3.5% in their 60s as a withdrawal rate using medium risk investments or above.

Using a the credit crunch as an example of before and after is good on the one hand.  However, there are two other scenarios that are worth modelling.   1 - dot.com style decline.  i.e. three negative years in a row.  and 2) Japan style decline. i.e. a drop in value with no recovery.
Most people making posts on DB transfers do not have any past experience of investing and virtually no understanding.  So, I make no apology about my comments and I suspect other regular posters here giving similar warnings feel the same way.

I've often wondered about this SWR topic.......it is often said that the US suits 4%, the UK 3.5%.   I've not seen research suggesting 3%, so that is new to me..
 
However......if your investments are global.....why would it mean aiming for the lower % numbers?
(& FWIW, before y'all bark at me, I do think there is much more to retirement finances than SWR )

SonOf

cfw1994 said:

SonOf said:

Actuarial advice in the UK is that 3% is considered more suitable for someone in their 50s and 3.5% in their 60s as a withdrawal rate using medium risk investments or above.

Using a the credit crunch as an example of before and after is good on the one hand.  However, there are two other scenarios that are worth modelling.   1 - dot.com style decline.  i.e. three negative years in a row.  and 2) Japan style decline. i.e. a drop in value with no recovery.
Most people making posts on DB transfers do not have any past experience of investing and virtually no understanding.  So, I make no apology about my comments and I suspect other regular posters here giving similar warnings feel the same way.

I've often wondered about this SWR topic.......it is often said that the US suits 4%, the UK 3.5%.   I've not seen research suggesting 3%, so that is new to me..
 
However......if your investments are global.....why would it mean aiming for the lower % numbers?
(& FWIW, before y'all bark at me, I do think there is much more to retirement finances than SWR )

The 3% reasoning was the greater impact of inflation due to the increased term it will be in place and countering the erosion of capital.   Most drawdown models use much lower growth rates than those achieved in recent times.      
Global can giveth and it can taketh away.   Sterling has fallen and that has aided global investments. As Sterling rises, global investments will be hit.    So, when modelling for a 30-40 year retirement period, you have to take into account currency fluctuations that can work for you and against you.  Plus, most consumers in the UK only invest to 40-60% equities.  

cfw1994

SonOf said:

cfw1994 said:

SonOf said:

Actuarial advice in the UK is that 3% is considered more suitable for someone in their 50s and 3.5% in their 60s as a withdrawal rate using medium risk investments or above.

Using a the credit crunch as an example of before and after is good on the one hand.  However, there are two other scenarios that are worth modelling.   1 - dot.com style decline.  i.e. three negative years in a row.  and 2) Japan style decline. i.e. a drop in value with no recovery.
Most people making posts on DB transfers do not have any past experience of investing and virtually no understanding.  So, I make no apology about my comments and I suspect other regular posters here giving similar warnings feel the same way.

I've often wondered about this SWR topic.......it is often said that the US suits 4%, the UK 3.5%.   I've not seen research suggesting 3%, so that is new to me..
 
However......if your investments are global.....why would it mean aiming for the lower % numbers?
(& FWIW, before y'all bark at me, I do think there is much more to retirement finances than SWR )

The 3% reasoning was the greater impact of inflation due to the increased term it will be in place and countering the erosion of capital.   Most drawdown models use much lower growth rates than those achieved in recent times.      
Global can giveth and it can taketh away.   Sterling has fallen and that has aided global investments. As Sterling rises, global investments will be hit.    So, when modelling for a 30-40 year retirement period, you have to take into account currency fluctuations that can work for you and against you.  Plus, most consumers in the UK only invest to 40-60% equities.  

In a nutshell: there's a lot of variables in play, eh!   How does any IFA 'safely' advise clients with all that going on?
I guess you can always press low: 2.5-3% maximum for the first few years, see how things go....but it isn't a precise science, & the risk is them delaying retiring and losing out on the "go-go" years.   The OMY (one more year) syndrome is very alive and well, I believe......& the only guarantee is that none of us get out alive! 
https://monevator.com/what-is-a-sustainable-withdrawal-rate-for-a-world-portfolio is an interesting read on SWR.   
Also gets to around 3%....but if you have an appetite for risk, a 10% chance of failure can raise that a bit

Thrugelmir

cfw1994 said:

SonOf said:

Actuarial advice in the UK is that 3% is considered more suitable for someone in their 50s and 3.5% in their 60s as a withdrawal rate using medium risk investments or above.

Using a the credit crunch as an example of before and after is good on the one hand.  However, there are two other scenarios that are worth modelling.   1 - dot.com style decline.  i.e. three negative years in a row.  and 2) Japan style decline. i.e. a drop in value with no recovery.
Most people making posts on DB transfers do not have any past experience of investing and virtually no understanding.  So, I make no apology about my comments and I suspect other regular posters here giving similar warnings feel the same way.

I've often wondered about this SWR topic.......it is often said that the US suits 4%, the UK 3.5%.   I've not seen research suggesting 3%, so that is new to me..
 
However......if your investments are global.....why would it mean aiming for the lower % numbers?
(& FWIW, before y'all bark at me, I do think there is much more to retirement finances than SWR )

What research are you basing the US 4% SWR on. The original research dates back to the early 90's. Based on a portfolio split 50% US Equities and 50% US Government bonds. With the data points being annual and no allowance for fees. Since then it's taken on a life of it's own. With a series of rules attached. 

Increase the bond weighting and the overall return of any portfolio will most certainly diminish. 
Investing is an art not a science. 

mcc100

Dazed_and_C0nfused said:

Benny2020 said:

Because I want to retire early and not at 60 or 65 and that is a lot of money, if I retired now and took the income it would be £15k per year and no lump sum or £210,000 lump and £640,000 to invest.

Why would take the £210k up front?

What would you be doing with it?

You'd take the £210k up front to protect yourself against the 30% market crash you warned about.
Or am I missing something?

tacpot12

SonOf said:

cfw1994 said:

SonOf said:

Actuarial advice in the UK is that 3% is considered more suitable for someone in their 50s and 3.5% in their 60s as a withdrawal rate using medium risk investments or above.

Using a the credit crunch as an example of before and after is good on the one hand.  However, there are two other scenarios that are worth modelling.   1 - dot.com style decline.  i.e. three negative years in a row.  and 2) Japan style decline. i.e. a drop in value with no recovery.
Most people making posts on DB transfers do not have any past experience of investing and virtually no understanding.  So, I make no apology about my comments and I suspect other regular posters here giving similar warnings feel the same way.

I've often wondered about this SWR topic.......it is often said that the US suits 4%, the UK 3.5%.   I've not seen research suggesting 3%, so that is new to me..
 
However......if your investments are global.....why would it mean aiming for the lower % numbers?
(& FWIW, before y'all bark at me, I do think there is much more to retirement finances than SWR )

The 3% reasoning was the greater impact of inflation due to the increased term it will be in place and countering the erosion of capital.   Most drawdown models use much lower growth rates than those achieved in recent times.      
Global can giveth and it can taketh away.   Sterling has fallen and that has aided global investments. As Sterling rises, global investments will be hit.    So, when modelling for a 30-40 year retirement period, you have to take into account currency fluctuations that can work for you and against you.  Plus, most consumers in the UK only invest to 40-60% equities.  

One of the fundamental questions that ALWAYS needs answering when considering a SWR for any particular investor is what other income do they have. I have two small DB pensions that kick in at 60 and 62, a full state pension entitlement that kicks in at age 67, and two residential rental properties. My SWR is 5.6% and this takes into account a 45 year term (I retired at 55), erosion of capital, etc. 3% is too conservative for someone with a full state pension entitlement. who is retiring at their State Retirement Age.  

I fully understand that there is no such thing as a 'safe' withdrawal rate, but I am confident that for the majority of situations, my pension will provide an generous income that rises in line with inflation and will outlast me, and if circumstances are going to cause this not to be the case, there will be enough notice of this that I can reduce the withdrawal from the portfolio and still live. I have a portfolio performance model in place so I know whether I am on-track or if things are going off-track.

My portfolio is currently 80% equities and 20% bonds and is on a glidepath to be 100% equities by the time I am 65 -equities are the only real hedge against inflation. Where inflation is less of an issue, but sequence of return risk is more of a factor (i.e. in the early stages of retirement), some bond holdings make sense. I was expecting to have to sell bond holdings to fund about 20% of my drawdown per annum, but my investments have had better yields than expected, so I'm selling the bond holdings and buying more equity funds (actually ITs) each year to get to 100% equity investments. (Some of the ITs I invest in hold some bonds but it never more than about 4% of their portfolio). At the moment I'm drawing down £19,000 pa out of natural income and the portfolio is worth 2.7% more than I paid for it. So while my SWR is 5.6%, I'm only actually drawing out 5.25% because the portfolio is not growing quite a quick as it needs to. 

cfw1994

Thrugelmir said:

cfw1994 said:

SonOf said:

Actuarial advice in the UK is that 3% is considered more suitable for someone in their 50s and 3.5% in their 60s as a withdrawal rate using medium risk investments or above.

Using a the credit crunch as an example of before and after is good on the one hand.  However, there are two other scenarios that are worth modelling.   1 - dot.com style decline.  i.e. three negative years in a row.  and 2) Japan style decline. i.e. a drop in value with no recovery.
Most people making posts on DB transfers do not have any past experience of investing and virtually no understanding.  So, I make no apology about my comments and I suspect other regular posters here giving similar warnings feel the same way.

I've often wondered about this SWR topic.......it is often said that the US suits 4%, the UK 3.5%.   I've not seen research suggesting 3%, so that is new to me..
 
However......if your investments are global.....why would it mean aiming for the lower % numbers?
(& FWIW, before y'all bark at me, I do think there is much more to retirement finances than SWR )

What research are you basing the US 4% SWR on. The original research dates back to the early 90's. Based on a portfolio split 50% US Equities and 50% US Government bonds. With the data points being annual and no allowance for fees. Since then it's taken on a life of it's own. With a series of rules attached. 

Increase the bond weighting and the overall return of any portfolio will most certainly diminish. 
Investing is an art not a science. 

“A series of rules attached”?  & yet it’s “an art, not a science”.  

What a tricky conundrum you pose!

Nothing is guaranteed, nothing is perfect.....going with a 90% chance of success, FireCalc would generally imply 4% is okay.  
As I said, I believe retirement finances are much more than just SWR...but there are plenty of good reads still suggesting 4% (generally with some flexibility) is okay.  

https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ is not a bad start: the comments bring it more up to date....
...including a link to http://www.gocurrycracker.com/the-worst-retirement-ever/, another good read!

https://www.gocurrycracker.com/what-is-your-retirement-number-the-4-rule/ - some sage words here too!

My *personal* view is that 4% may be okay, but it is more important to be flexible enough to go with less when needed and have a backup plan.  I expect to put off accessing pension funds, then possibly take a bit more than 4% in some early years, and a bit less later (when other DB funds kick in).   Hence my “nervousness” about the sequence of returns risk  

All that said, if you have the “new series of rules” in a simple language a fool like me can absorb, please share