Depletion of pot in retirement

BritishInvestor

AnotherJoe said:

BritishInvestor said:

AnotherJoe said:

I dont think it makes sense to have one withdrawal rate.

You're going to get (presumably) SP at 66, 67, right? Maybe two SP's if you live with someone.

So you could (for example) take a higher % to start with) and then drop to cater for SP.

And maybe you'd like a higher % initially and then a lower one at SP age and then a lower one at (say) age 80 when you arent going on many world cruise or hiking holidays etc. For those who jump in and say they still walk the pennine way every week aged 95, its a fact, peoples spending does drop off in later life.

And then theres the element of choice, eg maybe markets drop and you can reduce expenditure for a while to cater for that rather than dig too much into your pot.

You could model this in a spreadsheet or there are services you can use - retireeasy for example, so much a month, use it for a couple of months to get you started, or theres a couple of free charting tools (grrr senior moment forget the names) which use previous history of stock market performance to show how you'd have done in previous times as a rough judge of how risky your plans are - eg maybe you'd run out of money in 90% of past scenarios or 1%.

Or pay an IFA for a couple of hours work to run up some projections with you.

TL:DR Too simplistic to have one rate over your lifetime.

p.s. Why on earth is 50% your portfolio UK shares? That isn't going to do your withdrawal rate any favours.

"p.s. Why on earth is 50% your portfolio UK shares? That isn't going to do your withdrawal rate any favours."
vs what alternative?

Having 5% 

And the other 45% being where? Global vs UK there may not be much in it.
https://finalytiq.co.uk/withdrawal-rates-in-retirement-portfolios-is-the-4-rule-safe-for-uk-clients/

BritishInvestor

cfw1994 said:

BritishInvestor said:

cfw1994 said:

AnotherJoe said:

I dont think it makes sense to have one withdrawal rate.

You're going to get (presumably) SP at 66, 67, right? Maybe two SP's if you live with someone.

So you could (for example) take a higher % to start with) and then drop to cater for SP.

And maybe you'd like a higher % initially and then a lower one at SP age and then a lower one at (say) age 80 when you arent going on many world cruise or hiking holidays etc. For those who jump in and say they still walk the pennine way every week aged 95, its a fact, peoples spending does drop off in later life.

And then theres the element of choice, eg maybe markets drop and you can reduce expenditure for a while to cater for that rather than dig too much into your pot.

You could model this in a spreadsheet or there are services you can use - retireeasy for example, so much a month, use it for a couple of months to get you started, or theres a couple of free charting tools (grrr senior moment forget the names) which use previous history of stock market performance to show how you'd have done in previous times as a rough judge of how risky your plans are - eg maybe you'd run out of money in 90% of past scenarios or 1%.

Or pay an IFA for a couple of hours work to run up some projections with you.

TL:DR Too simplistic to have one rate over your lifetime.

p.s. Why on earth is 50% your portfolio UK shares? That isn't going to do your withdrawal rate any favours.

I'm at a similar age to SCB, with a plan to stop my regular paid employment next May....so treat my words with the knowledge that I am Captain Theory on this stuff....
.....but I agree 100% with AnotherJoe here.   

There are so many articles and analyses on the SWR, including some good stuff shown by people on this forum....& yes, if you want a SWR, go with 3%.   Maybe 3.5%.....maybe 4-5% if you have flexibility.   
Oh wait - maybe....maybe...a bit more, if you genuinely can and will rein things in if funds underperform.

However, my personal expectation is that the years from mid-50s to around 65-70 will be the more expensive ones, with more exotic travel (except...Covid....!).  Once I hit the 65-70'ish age, I expect us to be travelling less....then from 80 onwards, if still around, & unless we are particularly fortunate, the costs for things will drop.  Clearly health care could impact that....but hard to plan for that (our plan is the property is the flexible pot of last resort....)
Or to put it another way, the Go-Go, Slow-Go, and No-Go years.....
So: my personal spreadsheet allows me to factor in a plan to reduce the money needed whenever I feel appropriate.
Of course you cannot take 15% out in the first 10 years and realistically hope for things to still look rosy....but 5% is feasible (in my humble and theoretical opinion!)

Will it be right?   Who knows: only time will tell.
Can and WILL we adjust if we need to?   Absolutely yes.   Flexibility is the name of the game!

Oh, final comment - of course none of us know if we might slide into a lengthy flat depression.   No-one expected Covid, and when it struck and markets dropped, no-one knew that within 6 months, monies would be back up or even above the highs before the 'crash'.  I remain an optimist, and whilst some firms will struggle or disappear entirely due to the horrendous impact of Covid, others will thrive.

A worse depression than we've experienced over the last 120 years? Surely if that's a genuine fear you'd look to secure income rather than take investment risk (and hope your annuity provider doesn't go under:))

Not sure I get your point there.   I never suggested a “worse depression than we've experienced over the last 120 years“, did I?

I don’t think someone aiming to retire “early” would find annuities too appealing.   Maybe in your mid-70s, perhaps....

The point is that studies that come up with various SWR numbers have at least one depression in their dataset, so if you follow one of these methods, and the future isn't worse than these previous times, you are unlikely to run out of money.

BritishInvestor

LHW99 said:

BritishInvestor said:

LHW99 said:

Stubod said:

..........a more definitive answer .........

Maybe..... but only if they have a crystal ball and can predict what the stock market will do over maybe 20-30 years.

It's perfectly possible to build a robust retirement plan without this.

Indeed it is, but a plan which will understandably have to adapt to circumstances, rather than being "definitive"

It depends which strategy you go for. You might choose a spending option that increases withdrawals with inflation every year, and if the market doesn't have an extraordinarily bad outcome, there's little else to do.
Other strategies may require more adaption along the way.