750k Drawdown at 58

jamesd

GSP said: Not sure if this is becoming a ‘big thing’ people crying foul if they run out of money?

It isn't. What has been happening is that the Financial Conduct Authority has been applying extremely conservative analysis in audits of DB transfers. The FCA is so far behind what can safely be done that they only recently started looking at approaches using safe withdrawal rat tools and cash flow analysis. That lack can result in criticism of entirely sound plans that leave a client far better off. It's another variation on the agency problem.

kangoora

GSP said:

jamesd said:

.

At the start, there was never any suggestion what amount we should be drawing down.
If we had not withdrawn anything in the last 3 years since we started, I calculate the fund would have grown c13%. Now, it is £60k less than when we started, but we have abused it in truth which is probably given the FA most concern, and not knowing when we will stop, hence his conversations about this. I will pull numbers together when we took amounts out, and the growth of these and if this is coming down year on year.
TBH I look at the fund amount, and where possible have taken amounts out when the figures have recovered somewhat, trying to take the money while it’s there.
I need to create my own realistic planner which I feel may be closer than the FA’s one assumption over time with nothing else built in.
I don’t want to die rich, but at the same time don’t want to run out of money either.

I think you've hit the nail on the head there. It's likely he's concerned you are burning money, will be down to the dregs with 10-15 years of current spending and he's going to be facing a compensation claim about the DB transfer because (it looks like to him) you're going to p**s away your whole pot. Hence he's going for a very cautious withdrawal rate, TBH I don't blame him given your figures above.

In my case, I started drawdown 1 year before you, have withdrawn a 2.5% average p.a. income over 4 years and my pot is still up 6% on it's starting value.

GSP

kangoora said:

GSP said:

jamesd said:

.

At the start, there was never any suggestion what amount we should be drawing down.
If we had not withdrawn anything in the last 3 years since we started, I calculate the fund would have grown c13%. Now, it is £60k less than when we started, but we have abused it in truth which is probably given the FA most concern, and not knowing when we will stop, hence his conversations about this. I will pull numbers together when we took amounts out, and the growth of these and if this is coming down year on year.
TBH I look at the fund amount, and where possible have taken amounts out when the figures have recovered somewhat, trying to take the money while it’s there.
I need to create my own realistic planner which I feel may be closer than the FA’s one assumption over time with nothing else built in.
I don’t want to die rich, but at the same time don’t want to run out of money either.

I think you've hit the nail on the head there. It's likely he's concerned you are burning money, will be down to the dregs with 10-15 years of current spending and he's going to be facing a compensation claim about the DB transfer because (it looks like to him) you're going to p**s away your whole pot. Hence he's going for a very cautious withdrawal rate, TBH I don't blame him given your figures above.

In my case, I started drawdown 1 year before you, have withdrawn a 2.5% average p.a. income over 4 years and my pot is still up 6% on it's starting value.

I can only say well done to your 2.5% avg withdrawal rate, a bit lower than the 3%-5% rates you see being banded around. Just wondering if you have another income or are you getting through on what you have? Reason I ask is that I was awake most of the night thinking about all this. I was thinking do I need to get a job (if I can get one) to help out the pension pot perhaps.
I’m 3 years into drawdown which is relatively new, but can see and waking up this is an important period for us and the fund.

Thrugelmir

BritishInvestor said:

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Perhaps the expenditure plans have changed dramatically from the exercise undertaken prior to DB transfer and what seemed achievable then no longer is.

The global economic outlook has changed somewhat. Not that it was already deteriorating prior to the outbreak of Covid for some time. 

kangoora

I'm in a fortunate position of having DB pension(s) equalling £15k, wife still working for another 18 months (but 75% of her salary going into a pension) so 2.5% worked out fine. In 18 months another £6k in DB pensions kicks in and wife will stop work (maybe 6 months earlier) - then I'll go up to 4% to cover the drop in household income. I'm also getting some lump sums at 59 and 60 which will cover some planned capital spend. We're working on a joint income requirement of £30k, seems to be going fine at them moment (my DC pot is nowhere near yours but the addition of the DB pensions probably puts it in the same ballpark if you multiply them up)

GSP

kangoora said:

I'm in a fortunate position of having DB pension(s) equalling £15k, wife still working for another 18 months (but 75% of her salary going into a pension) so 2.5% worked out fine. In 18 months another £6k in DB pensions kicks in and wife will stop work (maybe 6 months earlier) - then I'll go up to 4% to cover the drop in household income. I'm also getting some lump sums at 59 and 60 which will cover some planned capital spend. We're working on a joint income requirement of £30k, seems to be going fine at them moment (my DC pot is nowhere near yours but the addition of the DB pensions probably puts it in the same ballpark if you multiply them up)

There’s also the comfort value of a db pension as well.

GSP

Thrugelmir said:

BritishInvestor said:

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Perhaps the expenditure plans have changed dramatically from the exercise undertaken prior to DB transfer and what seemed achievable then no longer is.

The global economic outlook has changed somewhat. Not that it was already deteriorating prior to the outbreak of Covid for some time. 

Yes there was always talk of when ‘the crash’ would come. Apart from the sharp fall and rise earlier on this year, I’m not sure if we have had it yet.

GSP

jamesd said:

GSP said: Not sure if this is becoming a ‘big thing’ people crying foul if they run out of money?

It isn't. What has been happening is that the Financial Conduct Authority has been applying extremely conservative analysis in audits of DB transfers. The FCA is so far behind what can safely be done that they only recently started looking at approaches using safe withdrawal rat tools and cash flow analysis. That lack can result in criticism of entirely sound plans that leave a client far better off. It's another variation on the agency problem.

Heard a comment from another FA I was playing against who said if I tried for a transfer now I probably wouldn’t get it as I have no other income. Whether that’s true still, or ever was?

BritishInvestor

Thrugelmir said:

BritishInvestor said:

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Perhaps the expenditure plans have changed dramatically from the exercise undertaken prior to DB transfer and what seemed achievable then no longer is.

The global economic outlook has changed somewhat. Not that it was already deteriorating prior to the outbreak of Covid for some time. 

It will have had minimal impact on a robust retirement plan to date. (Of course that could change in the future).
https://www.timelineapp.co/blog/covid-19s-impact-on-capital-markets-and-sustainability-of-retirement-plans/

Thrugelmir

GSP said:

Thrugelmir said:

BritishInvestor said:

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Thrugelmir said:

GSP said:

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Thrugelmir said:

GSP said:

As an aside, has anyone had any disagreements with their FA? Have you ever overruled them? Did this lead to any friction/a change in FA as the ‘relationship’ was broken?
.

Is this the same FA that gave you the advice to transfer out of the DB scheme? 

Yes it is and we get on really well. 

Just wondering what the ‘experience’ is like. Do you feel they are ‘still on your side’ if you disagree with them? Seems counter productive, but would their behaviour and advice change if you ignore their advice?

Is the advisor treading on thin advice perhaps?  Given the regulatory environment in which transfers are now undertaken. While you pot is sizable , are your income expectations achievable.  Would this require them advising what would be regarded as an extremely high risk potentially very volatile portfolio.  With absolutely no guarantee of a good outcome. 

Perhaps the expenditure plans have changed dramatically from the exercise undertaken prior to DB transfer and what seemed achievable then no longer is.

The global economic outlook has changed somewhat. Not that it was already deteriorating prior to the outbreak of Covid for some time. 

Yes there was always talk of when ‘the crash’ would come. Apart from the sharp fall and rise earlier on this year, I’m not sure if we have had it yet.

No not a crash. There was already a declining level of global trade well under way. Stock markets are not the real economy.  Equities are only worth what one party is prepared to sell it for and another buy it at. As takes two to trade.