Pension Cashflow Retirement Planner - Key Info?

GSP

Hi,
This was raised by my FA in my thread on drawdown.
He has provided what he calls ‘a quick and dirty cashflow projection”, and also concedes it’s just a start. But he has based his warning of running out of cash on it. From what I can see, he has used real return of 1% throughout based on 2% inflation throughout, outgoings of £36,000 throughout and pension when it kicks in in 9 years time of £9k throughout. He has also combined my fund with my wife’s, though that does not start until two years time.
I have started to pull together a planner with more information and adjustments and separated both our funds , but can see this will take a few goes before I am comfortable with it.
For those that create their own, what would you consider the main components of a planner like this to be? On inflation of 2% on my outgoings of say £36,000, this is coming out to something nearer £100k when near a 100 years old. Yes,  I can see the compound effect really boosts the number up as you go on, but in the later years surely you wouldn’t have outgoings based on £36,000. It’s probably just household bills and shopping by then!

BritishInvestor

GSP said:

Hi,
This was raised by my FA in my thread on drawdown.
He has provided what he calls ‘a quick and dirty cashflow projection”, and also concedes it’s just a start. But he has based his warning of running out of cash on it. From what I can see, he has used real return of 1% throughout based on 2% inflation throughout, outgoings of £36,000 throughout and pension when it kicks in in 9 years time of £9k throughout. He has also combined my fund with my wife’s, though that does not start until two years time.
I have started to pull together a planner with more information and adjustments and separated both our funds , but can see this will take a few goes before I am comfortable with it.
For those that create their own, what would you consider the main components of a planner like this to be? On inflation of 2% on my outgoings of say £36,000, this is coming out to something nearer £100k when near a 100 years old. Yes,  I can see the compound effect really boosts the number up as you go on, but in the later years surely you wouldn’t have outgoings based on £36,000. It’s probably just household bills and shopping by then!

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!
If you want a spreadsheet that is used for data input to create a financial plan let me know. There is some info on retirement spending patterns etc. 

cfw1994

I think a simple spreadsheet can model things rather better than this sounds.   I've got one ('sanitised' version of my own) I can share later if you message me.   Mine allows for inflation as you move forwards, and lets you put in sample growth expectations, etc

GSP

BritishInvestor said:

GSP said:

Hi,
This was raised by my FA in my thread on drawdown.
He has provided what he calls ‘a quick and dirty cashflow projection”, and also concedes it’s just a start. But he has based his warning of running out of cash on it. From what I can see, he has used real return of 1% throughout based on 2% inflation throughout, outgoings of £36,000 throughout and pension when it kicks in in 9 years time of £9k throughout. He has also combined my fund with my wife’s, though that does not start until two years time.
I have started to pull together a planner with more information and adjustments and separated both our funds , but can see this will take a few goes before I am comfortable with it.
For those that create their own, what would you consider the main components of a planner like this to be? On inflation of 2% on my outgoings of say £36,000, this is coming out to something nearer £100k when near a 100 years old. Yes,  I can see the compound effect really boosts the number up as you go on, but in the later years surely you wouldn’t have outgoings based on £36,000. It’s probably just household bills and shopping by then!

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!
If you want a spreadsheet that is used for data input to create a financial plan let me know. There is some info on retirement spending patterns etc. 

Thanks BI, too true! It seems to be “the computer says”, so it must be right! Perhaps if it gives you the answer you seek, then that’s job done! Is a real return of 1% throughout realistic? Is that too safe?
With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same.

BritishInvestor

GSP said:

BritishInvestor said:

GSP said:

Hi,
This was raised by my FA in my thread on drawdown.
He has provided what he calls ‘a quick and dirty cashflow projection”, and also concedes it’s just a start. But he has based his warning of running out of cash on it. From what I can see, he has used real return of 1% throughout based on 2% inflation throughout, outgoings of £36,000 throughout and pension when it kicks in in 9 years time of £9k throughout. He has also combined my fund with my wife’s, though that does not start until two years time.
I have started to pull together a planner with more information and adjustments and separated both our funds , but can see this will take a few goes before I am comfortable with it.
For those that create their own, what would you consider the main components of a planner like this to be? On inflation of 2% on my outgoings of say £36,000, this is coming out to something nearer £100k when near a 100 years old. Yes,  I can see the compound effect really boosts the number up as you go on, but in the later years surely you wouldn’t have outgoings based on £36,000. It’s probably just household bills and shopping by then!

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!
If you want a spreadsheet that is used for data input to create a financial plan let me know. There is some info on retirement spending patterns etc. 

Thanks BI, too true! It seems to be “the computer says”, so it must be right! Perhaps if it gives you the answer you seek, then that’s job done! Is a real return of 1% throughout realistic? Is that too safe?
With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same.

"Is a real return of 1% throughout realistic? Is that too safe?"
It really depends on what you are invested in, what your total fees are and longevity assumptions.
My "default" cashflow assumptions are used to create a high-level plan and evaluate "what if" scenarios but then Timeline is used to evaluate sustainability for a specific case (based on fees and portfolio) and really "stress test" the plan.

"With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same."

And that's surely the key part of his job - to educate you on what the assumptions are, and more importantly, why they were chosen (that's assuming you are interested and want to know). And you're right, everyone has a different outcome, so quick and dirty assumptions may not cater for your case.

GSP

BritishInvestor said:

GSP said:

BritishInvestor said:

GSP said:

Hi,
This was raised by my FA in my thread on drawdown.
He has provided what he calls ‘a quick and dirty cashflow projection”, and also concedes it’s just a start. But he has based his warning of running out of cash on it. From what I can see, he has used real return of 1% throughout based on 2% inflation throughout, outgoings of £36,000 throughout and pension when it kicks in in 9 years time of £9k throughout. He has also combined my fund with my wife’s, though that does not start until two years time.
I have started to pull together a planner with more information and adjustments and separated both our funds , but can see this will take a few goes before I am comfortable with it.
For those that create their own, what would you consider the main components of a planner like this to be? On inflation of 2% on my outgoings of say £36,000, this is coming out to something nearer £100k when near a 100 years old. Yes,  I can see the compound effect really boosts the number up as you go on, but in the later years surely you wouldn’t have outgoings based on £36,000. It’s probably just household bills and shopping by then!

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!
If you want a spreadsheet that is used for data input to create a financial plan let me know. There is some info on retirement spending patterns etc. 

Thanks BI, too true! It seems to be “the computer says”, so it must be right! Perhaps if it gives you the answer you seek, then that’s job done! Is a real return of 1% throughout realistic? Is that too safe?
With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same.

"Is a real return of 1% throughout realistic? Is that too safe?"
It really depends on what you are invested in, what your total fees are and longevity assumptions.
My "default" cashflow assumptions are used to create a high-level plan and evaluate "what if" scenarios but then Timeline is used to evaluate sustainability for a specific case (based on fees and portfolio) and really "stress test" the plan.

"With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same."

And that's surely the key part of his job - to educate you on what the assumptions are, and more importantly, why they were chosen (that's assuming you are interested and want to know). And you're right, everyone has a different outcome, so quick and dirty assumptions may not cater for your case.

Before inflation but after fees are taken off I estimate my fund has grown by c15% in the last three years since I started. It’s 5/10 risk strategy.

BritishInvestor

GSP said:

BritishInvestor said:

GSP said:

BritishInvestor said:

GSP said:

Hi,
This was raised by my FA in my thread on drawdown.
He has provided what he calls ‘a quick and dirty cashflow projection”, and also concedes it’s just a start. But he has based his warning of running out of cash on it. From what I can see, he has used real return of 1% throughout based on 2% inflation throughout, outgoings of £36,000 throughout and pension when it kicks in in 9 years time of £9k throughout. He has also combined my fund with my wife’s, though that does not start until two years time.
I have started to pull together a planner with more information and adjustments and separated both our funds , but can see this will take a few goes before I am comfortable with it.
For those that create their own, what would you consider the main components of a planner like this to be? On inflation of 2% on my outgoings of say £36,000, this is coming out to something nearer £100k when near a 100 years old. Yes,  I can see the compound effect really boosts the number up as you go on, but in the later years surely you wouldn’t have outgoings based on £36,000. It’s probably just household bills and shopping by then!

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!
If you want a spreadsheet that is used for data input to create a financial plan let me know. There is some info on retirement spending patterns etc. 

Thanks BI, too true! It seems to be “the computer says”, so it must be right! Perhaps if it gives you the answer you seek, then that’s job done! Is a real return of 1% throughout realistic? Is that too safe?
With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same.

"Is a real return of 1% throughout realistic? Is that too safe?"
It really depends on what you are invested in, what your total fees are and longevity assumptions.
My "default" cashflow assumptions are used to create a high-level plan and evaluate "what if" scenarios but then Timeline is used to evaluate sustainability for a specific case (based on fees and portfolio) and really "stress test" the plan.

"With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same."

And that's surely the key part of his job - to educate you on what the assumptions are, and more importantly, why they were chosen (that's assuming you are interested and want to know). And you're right, everyone has a different outcome, so quick and dirty assumptions may not cater for your case.

Before inflation but after fees are taken off I estimate my fund has grown by c15% in the last three years since I started. It’s 5/10 risk strategy.

I'd very, very roughly estimate it as equivalent to 40% global equity (assuming no withdrawals), but without knowing the funds I could be wildly out.

GSP

BritishInvestor said:

GSP said:

BritishInvestor said:

GSP said:

BritishInvestor said:

GSP said:

Hi,
This was raised by my FA in my thread on drawdown.
He has provided what he calls ‘a quick and dirty cashflow projection”, and also concedes it’s just a start. But he has based his warning of running out of cash on it. From what I can see, he has used real return of 1% throughout based on 2% inflation throughout, outgoings of £36,000 throughout and pension when it kicks in in 9 years time of £9k throughout. He has also combined my fund with my wife’s, though that does not start until two years time.
I have started to pull together a planner with more information and adjustments and separated both our funds , but can see this will take a few goes before I am comfortable with it.
For those that create their own, what would you consider the main components of a planner like this to be? On inflation of 2% on my outgoings of say £36,000, this is coming out to something nearer £100k when near a 100 years old. Yes,  I can see the compound effect really boosts the number up as you go on, but in the later years surely you wouldn’t have outgoings based on £36,000. It’s probably just household bills and shopping by then!

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!
If you want a spreadsheet that is used for data input to create a financial plan let me know. There is some info on retirement spending patterns etc. 

Thanks BI, too true! It seems to be “the computer says”, so it must be right! Perhaps if it gives you the answer you seek, then that’s job done! Is a real return of 1% throughout realistic? Is that too safe?
With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same.

"Is a real return of 1% throughout realistic? Is that too safe?"
It really depends on what you are invested in, what your total fees are and longevity assumptions.
My "default" cashflow assumptions are used to create a high-level plan and evaluate "what if" scenarios but then Timeline is used to evaluate sustainability for a specific case (based on fees and portfolio) and really "stress test" the plan.

"With the drawdown calculators, okay it produces nice graphs but what is exactly behind it you can’t see. No two people’s pensions journey’s are the same."

And that's surely the key part of his job - to educate you on what the assumptions are, and more importantly, why they were chosen (that's assuming you are interested and want to know). And you're right, everyone has a different outcome, so quick and dirty assumptions may not cater for your case.

Before inflation but after fees are taken off I estimate my fund has grown by c15% in the last three years since I started. It’s 5/10 risk strategy.

I'd very, very roughly estimate it as equivalent to 40% global equity (assuming no withdrawals), but without knowing the funds I could be wildly out.

I have gone through my holdings and everything with the name equities in it adds to around two thirds of the total. Does that sound right?

dunstonh

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!

The OP does say that the adviser did say that it is just the start.

Is a real return of 1% throughout realistic? Is that too safe?

What investment assets are you using?  are you at the lower risk end or the higher risk end?    What margin of safety do you want to include?

Before inflation but after fees are taken off I estimate my fund has grown by c15% in the last three years since I started. It’s 5/10 risk strategy.

Long term average on that sort of risk profile would be around 5.5%.   Knock off 2% for inflation and you have 3.5%.  Knock off any extra you feel happy with for margin of error.

NottinghamKnight

I think you'd want to vary the numbers to determine sensitivity and also look at sequence of return, the latter for an initial few years of poor returns to see the long term impacts. 

GSP

dunstonh said:

You are not paying him to do  ‘a quick and dirty cashflow projection'”, you are paying him to create a robust retirement plan that stops you having to spend time fretting and posting on here!

The OP does say that the adviser did say that it is just the start.

Is a real return of 1% throughout realistic? Is that too safe?

What investment assets are you using?  are you at the lower risk end or the higher risk end?    What margin of safety do you want to include?

Before inflation but after fees are taken off I estimate my fund has grown by c15% in the last three years since I started. It’s 5/10 risk strategy.

Long term average on that sort of risk profile would be around 5.5%.   Knock off 2% for inflation and you have 3.5%.  Knock off any extra you feel happy with for margin of error.

That’s not too far off the mark with your 5.5% figure. Omitting withdrawals, it’s grown c15% over 3 years, though that’s with fees taken off as well.