Shocked

Notepad_Phil

tacpot12 said:

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.  

Presumably your SWR will drop marginally when you start getting the small DB pensions and rather more of a drop when you start getting the state pensions -  hopefully there isn't a sustained downturn coming up to impact you on this.

I'm simply taking the natural yield from my global portfolio and am hoping that won't be hit to the same degree in any downturn - though I do have several years of cash saved away to help if needed. The natural yield is currently less than 3% and I'll hopefully be quids in when my small DB company pension and state pension starts (though the company pension has very limited inflation proofing which could be under strain if inflation comes back to some of the higher levels its been in over the last 50 years). 

DairyQueen

... and I betcha that all the discussion on SWR goes straight over OP's head. Which is one of the many reasons why transferring-out is a bad idea for most people most of the time.

Benny2020

You would be wrong to believe that, I am a successful trader of aim and other stocks for several years, bitcoin also.
So market savvy.

mcc100

DairyQueen said:

... and I betcha that all the discussion on SWR goes straight over OP's head. Which is one of the many reasons why transferring-out is a bad idea for most people most of the time.

What an arrogant post !!!!!!!! 

Triumph13

Benny2020 said:

You would be wrong to believe that, I am a successful trader of aim and other stocks for several years, bitcoin also.
So market savvy.

Now I'm worried.

cfw1994

Benny2020 said:

You would be wrong to believe that, I am a successful trader of aim and other stocks for several years, bitcoin also.
So market savvy.

So: aside from DQs somewhat unfounded comment: what are your thoughts now?

SWR is obviously part of the picture....but as said in the thread, this isn’t a precise science!
I like a comment I read somewhere that said “the question isn’t how much do I need to retire?, the question is how little do I need?” 

If you are handy with spreadsheets and would like a sanitised version of one I’ve been using to try to project possibilities over years ahead, feel free to message me!

Benny2020

I have done some drawdown calculations and the truth is that over a 30+ year retirement period I would be better off taking my pensions as income, however I want extra years of retirement and the drawdown calculations show that if I draw what I need there would be a massive surplus at the end.
I have used 2% growth rate and increasing drawdown each year and I don't know how I would spend that much money.
I guess I will just have to take more out.

Thrugelmir

cfw1994 said:

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

I naturally assumed that you knew the full facts behind SWR  without the need to spell them out. Any investor should do their own research and make a fully informed decision. That's applicable to them personally. Not latch onto the current fad and blindly follow the herd. Invest for long enough and you'll realise that ideas are cyclical. They come and go with market conditions. 

PS. You reference historic data based on a 50/50 holding of the S&P 500 and US Treasury bonds from an article published in 2012. What's the relevance to a UK investor?  

Thrugelmir

mcc100 said:

DairyQueen said:

... and I betcha that all the discussion on SWR goes straight over OP's head. Which is one of the many reasons why transferring-out is a bad idea for most people most of the time.

What an arrogant post !!!!!!!! 

Reinforcement theory perhaps........
Those that don't share the same views or dare to cast dispersations get shouted down. If only investment decisions were that straightforward to make. 

atush

Benny2020 said:

You would be wrong to believe that, I am a successful trader of aim and other stocks for several years, bitcoin also.
So market savvy.

Market savvy and bitcoin are counter intuitive