Pension Cashflow Retirement Planner - Key Info?

coyrls

jamesd said:

GSP said:

It seems with drawdown you have to be flexible and react when necessary. ... Pound cost ravaging appears deadly to the pot. Those withdrawals at this time have to be the minimal, perhaps just drawing very small monthly amounts if you need to get by until the fund recovers somewhat. Maybe take a loan out!
At the other end of the scale and in my other thread on drawdown of £750k, we don’t want to die ‘rich’ either.

You only have to be as flexible as required by whatever drawdown rules you're using. Pound cost ravaging is only a problem if you're not using a safe withdrawal rate or Guyton's sequence of returns risk reduction method.

Even without a formal method you'd just draw the income from cash and bonds when equities are down. No need to make big spending reductions (if using SWR).

Yes, I think that point is being missed.  The original SWR studies were designed to avoid changes in income.  Subsequent refinements looked to increase the base SWR at the cost of varying income.  You can choose a strategy based on your willingness to adjust income.  In practice, just as with income from employment, you will be unlikely to exactly match your spending to your income.  People don't talk about "cash buffers" with income from employment, they talk about "savings", the same discipline applies to drawdown income.  With employment income, savings are used to fund things like home improvements / maintenance, it should be no different with drawdown income / savings.

GSP

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
I think your last line on being sensible is near the mark. I’d say withdraw when times are good, huncker down when they are not and do what you have to do. Has anyone ever known someone getting a loan when markets have crashed and they need money, to pay it back when it improves and so protected their fund from pound ravaging? Think there are still options.

BritishInvestor

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
I think your last line on being sensible is near the mark. I’d say withdraw when times are good, huncker down when they are not and do what you have to do. Has anyone ever known someone getting a loan when markets have crashed and they need money, to pay it back when it improves and so protected their fund from pound ravaging? Think there are still options.

"So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis."
That's the whole point of the ongoing planning process - it's not a one-off exercise.

LHW99

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
I think your last line on being sensible is near the mark. I’d say withdraw when times are good, huncker down when they are not and do what you have to do. Has anyone ever known someone getting a loan when markets have crashed and they need money, to pay it back when it improves and so protected their fund from pound ravaging? Think there are still options.

Trouble is loans can be more difficult to get as you get older. If your income reduces due to market stress, you become a worse risk in the eyes of banks etc.

dunstonh

BritishInvestor said:

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
I think your last line on being sensible is near the mark. I’d say withdraw when times are good, huncker down when they are not and do what you have to do. Has anyone ever known someone getting a loan when markets have crashed and they need money, to pay it back when it improves and so protected their fund from pound ravaging? Think there are still options.

"So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis."
That's the whole point of the ongoing planning process - it's not a one-off exercise.

But people often get bored of it and stop.    Whether it be DIY investing in a bespoke portfolio or cashflow modelling.  Many will start out with good intentions but give up and let it drift.

Linton

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
.......

The problem is that to make an accurate retirement plan you need to know the future behaviour of the markets, inflation and when you are going to die.  No one knows, there is no "other data".  The best one has is historical data and the life expectancy predictions from the ONS.  There is no good reason why the future should match the past especially over the relatively short term of your life in retirement compared with the perhaps 150 years of fairly solid data.  The past includes 2 world wars, the rise and fall of empires,countries and economies and revolutions in technology.  What the next 30 years or so will see is a pure guess. As to life expectancy data, that just tells you about the average.  Where you fit in wont be known until the grim reaper knocks on your door.

GSP

Really interesting reading the above consensus that cashflow models are not very good. Then there are people saying you shouldn’t do this or that based on these models just because ‘the computer says’. There needs to be another way to predictdunstonh said:

BritishInvestor said:

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
I think your last line on being sensible is near the mark. I’d say withdraw when times are good, huncker down when they are not and do what you have to do. Has anyone ever known someone getting a loan when markets have crashed and they need money, to pay it back when it improves and so protected their fund from pound ravaging? Think there are still options.

"So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis."
That's the whole point of the ongoing planning process - it's not a one-off exercise.

But people often get bored of it and stop.    Whether it be DIY investing in a bespoke portfolio or cashflow modelling.  Many will start out with good intentions but give up and let it drift.

Or perhaps reading how these models ‘aren’t very good’ in the first place, over time they have found they have had to do so much remodelling to get projections back on track they have said what’s the point.

GSP

BritishInvestor said:

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
I think your last line on being sensible is near the mark. I’d say withdraw when times are good, huncker down when they are not and do what you have to do. Has anyone ever known someone getting a loan when markets have crashed and they need money, to pay it back when it improves and so protected their fund from pound ravaging? Think there are still options.

"So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis."
That's the whole point of the ongoing planning process - it's not a one-off exercise.

Yes can imagine these look quite different to when first set out.

GSP

Linton said:

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
.......

The problem is that to make an accurate retirement plan you need to know the future behaviour of the markets, inflation and when you are going to die.  No one knows, there is no "other data".  The best one has is historical data and the life expectancy predictions from the ONS.  There is no good reason why the future should match the past especially over the relatively short term of your life in retirement compared with the perhaps 150 years of fairly solid data.  The past includes 2 world wars, the rise and fall of empires,countries and economies and revolutions in technology.  What the next 30 years or so will see is a pure guess. As to life expectancy data, that just tells you about the average.  Where you fit in wont be known until the grim reaper knocks on your door.

All good points. What a lot of uncertainty!

BritishInvestor

dunstonh said:

BritishInvestor said:

GSP said:

dunstonh said:

GSP said:

BritishInvestor said:

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.

"The OP does say that the adviser did say that it is just the start."
It's really easy to pick holes in someone else's work, but I'm not aware of many planners working in the retirement planning space that would operate this way, especially given that it's not the start of the relationship (I believe).

Nope, I am into my fourth year and the first I have seen of this. Even his words quick and dirty and using just a few metrics to base my future on does seem ‘a bit light’. That’s where I am going to try develop my own spreadsheets, as I know myself better. I won’t try and work it so I get the answer  I want. I’d prefer something that reflects more the truth, good or bad.

Some advisers and some consumers really buy into the cashflow software and take it to an extreme.   Others do a basic cashflow planning as they have no need to go so in-depth.  Over the years I have seen cashflow planning outputs that were highly detailed but reality turned out to be nothing of the sort.  Indeed, I don't think I have ever seen a long term cashflow planner reflect anything close to reality.    So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis.  However, sensible cashflow planning can be very useful.   

Interesting as you say you haven’t see a long term cash flow planner reflecting anything close to reality. It makes you wonder why a number will act on them then. I suppose it’s because they use it in the absence of anything else, but from my time in management information you always seek ‘other data’ to back up your results. Not just rely on that ‘one version of the truth’, especially with so many variables, calculations, market forces, life events to go through.
I think your last line on being sensible is near the mark. I’d say withdraw when times are good, huncker down when they are not and do what you have to do. Has anyone ever known someone getting a loan when markets have crashed and they need money, to pay it back when it improves and so protected their fund from pound ravaging? Think there are still options.

"So, personally, I don't put much faith in the comprehensive cashflow planning model unless it is something that is continuously updated on a very regular basis."
That's the whole point of the ongoing planning process - it's not a one-off exercise.

But people often get bored of it and stop.    Whether it be DIY investing in a bespoke portfolio or cashflow modelling.  Many will start out with good intentions but give up and let it drift.

Just to be clear I was referring to paying a professional to do it on an ongoing basis. If the professional were to get bored then they should do something else!!