Pension Cashflow Retirement Planner - Key Info?

GSP

Thrugelmir said:

Never before have so many countries entered a recession at once. Historical data is going to need some updating. 

China are doing quite well, apparently, which is quite a surprise as they must rely on purchases from other countries. No good for them if no one has any money.

Thrugelmir

GSP said:

Thrugelmir said:

Never before have so many countries entered a recession at once. Historical data is going to need some updating. 

China are doing quite well, apparently, which is quite a surprise as they must rely on purchases from other countries. No good for them if no one has any money.

Peoples Party have their own agenda. With a move away from an export led economy to a domestic based one. One Belt One Road initiative is being put into place to ensure that China has access to all the raw commodities etc that it requires.  

BritishInvestor

GSP said:

coyrls said:

There have been a large number of studies on safe withdrawal rates based on historical data.  You are unlikely to improve on the existing literature by canvasing opinions on what returns might be in the future.

As you say, so many studies. Any the same? Who can you trust? I’d like to see where my own calculations stand. That run of rates I am seeking would be very useful if it was available.
Not sure where I read it, but there were suggestions the SWR 4% rule was not considered fit for purpose anymore.

You can only use studies as a guide because they are generic and any plan you create must come down to your objectives/preferences/assumptions etc that you (and your planner) agree on. 

BritishInvestor

Thrugelmir said:

GSP said:

BritishInvestor said:

Thrugelmir said:

Never before have so many countries entered a recession at once. Historical data is going to need some updating. 

In terms of historical data, the type of scenarios that tend to define the SWR tend to have the following in common
1. Falling markets over a long period
2. Inflation
and times such as 1915-1920 and the 1970s were pretty tough

• 1915 and 1920, UK inflation (CPI) averaged 17% a year. This means prices rose 103% in six years.
• 1973 to 1978, UK inflation (CPI) averaged 15%, which means that in six years prices rose a whopping 110%!

"According to Professor Elroy Dimson, UK bond investors lost half their wealth in real terms in the inflationary period from 1972 to 1974! In the period between 1914 and 1920, UK bonds lost over 60% in real terms over seven consecutive years. But the SWR framework would have held its own during this period"
https://www.timelineapp.co/blog/no-qe-didnt-break-the-4-rule/
You could of course be correct, but if we do have to update historical data it's going to be an extraordinarily tough time for all of us. Personally, I'm an optimist

The 1973 to 1978 period you mentioned. At the start of that time, I remember it well in that we were still trying to get to grips with decimalisation. The change from 240 pennies for a pound to 100, shillings, half a crown everything seemed to go up on an instant as the old money to new money conversion seemed to go out the window.Everything seemed to double from a lack of understanding and exploitation.

1973 was the start of the Middle East oil crisis. High inflation in the UK was the result of increasing prices and stagnant growth. 
If you like heavyweight technical reads. Can recommend this one

This Time Is Different: Eight Centuries of Financial Folly

by Carmen Reinhart and Kenneth Rogoff

That's been on my list for years but not got round to reading it yet.

coyrls

GSP said:

coyrls said:

There have been a large number of studies on safe withdrawal rates based on historical data.  You are unlikely to improve on the existing literature by canvasing opinions on what returns might be in the future.

As you say, so many studies. Any the same? Who can you trust? I’d like to see where my own calculations stand. That run of rates I am seeking would be very useful if it was available.
Not sure where I read it, but there were suggestions the SWR 4% rule was not considered fit for purpose anymore.

I would start by reading them, understanding the methods they use and what the conclusions are.  The studies have not been done in isolation from each other; they usually reference previous studies that they are challenging or refining.  You could start with the references in the first posts of jamesd's thread here: https://forums.moneysavingexpert.com/discussion/5466114/drawdown-safe-withdrawal-rates/p1

GSP

coyrls said:

GSP said:

coyrls said:

There have been a large number of studies on safe withdrawal rates based on historical data.  You are unlikely to improve on the existing literature by canvasing opinions on what returns might be in the future.

As you say, so many studies. Any the same? Who can you trust? I’d like to see where my own calculations stand. That run of rates I am seeking would be very useful if it was available.
Not sure where I read it, but there were suggestions the SWR 4% rule was not considered fit for purpose anymore.

I would start by reading them, understanding the methods they use and what the conclusions are.  The studies have not been done in isolation from each other; they usually reference previous studies that they are challenging or refining.  You could start with the references in the first posts of jamesd's thread here: https://forums.moneysavingexpert.com/discussion/5466114/drawdown-safe-withdrawal-rates/p1

I have read these thanks, along with other approaches. Not saying I will be using anything from here. All I would say as I pull information together just look at the effect when the state pension is added in. This amount is probably a quarter, a third of withdrawals, it halts the sharp decline thereafter dramatically.

GSP

Looking at my FA’s ‘quick & dirty‘ planner, he has used a real return of 1% for forty years. Every year for the next forty years my numbers go down anywhere between £20k and £35k until it runs out when I am 94. Does this seem sound? Does anyone have a very ball park run of returns. Thanks

Time4T_Accounts

As an accountant I do lots of cash flow forecasts. The only thing that is consistent among them is that reality and forecasts diverge as time goes on.  What do you, GSP, think is going to happen to taxation in the next couple of years, as the country has to pay for COVID support?  What’s going to happen to public expenditure after the next general election? And the one after that? And the one after that?  What’s going to happen in the USA after the next general election?  And what if North Korea does develop the capability of delivering a nuclear multiple warhead missile to anywhere in the west?  And that’s just the next few years, let alone few decades.  All these things will affect returns.

Past performance is not a guide to future returns  ... etc, etc, etc.

1%? Who knows.  It’s back to that crystal ball.

GSP

Steve_PL_too said:

As an accountant I do lots of cash flow forecasts. The only thing that is consistent among them is that reality and forecasts diverge as time goes on.  What do you, GSP, think is going to happen to taxation in the next couple of years, as the country has to pay for COVID support?  What’s going to happen to public expenditure after the next general election? And the one after that? And the one after that?  What’s going to happen in the USA after the next general election?  And what if North Korea does develop the capability of delivering a nuclear multiple warhead missile to anywhere in the west?  And that’s just the next few years, let alone few decades.  All these things will affect returns.

Past performance is not a guide to future returns  ... etc, etc, etc.

1%? Who knows.  It’s back to that crystal ball.

You missed a few out Brexit, China, bubbles bursting.  I think the main thing of a planner is how your fund has performed determines your next year’s spending. The rest is a forward looking run of data which is altered every year.That’s why I asked if anyone had any run of return forecast data, something typical that happens not a 1% rate which will be altered just about every year.

BritishInvestor

GSP said:

coyrls said:

GSP said:

coyrls said:

There have been a large number of studies on safe withdrawal rates based on historical data.  You are unlikely to improve on the existing literature by canvasing opinions on what returns might be in the future.

As you say, so many studies. Any the same? Who can you trust? I’d like to see where my own calculations stand. That run of rates I am seeking would be very useful if it was available.
Not sure where I read it, but there were suggestions the SWR 4% rule was not considered fit for purpose anymore.

I would start by reading them, understanding the methods they use and what the conclusions are.  The studies have not been done in isolation from each other; they usually reference previous studies that they are challenging or refining.  You could start with the references in the first posts of jamesd's thread here: https://forums.moneysavingexpert.com/discussion/5466114/drawdown-safe-withdrawal-rates/p1

I have read these thanks, along with other approaches. Not saying I will be using anything from here. All I would say as I pull information together just look at the effect when the state pension is added in. This amount is probably a quarter, a third of withdrawals, it halts the sharp decline thereafter dramatically.

Have you read "beyond the 4% rule"?