Approaching Retirement....few questions

barnstar2077

Linton said:

barnstar2077 said:

I think it was Pensioncraft that did a video saying that 100% equities, even in retirement, was statistically the best way to go (to have your money last x amount of years.)  It sure would require nerves of steel though! :  /  

And you would need to be willing to lower your expenditure in bad market conditions.

Though perhaps the extra worry would shorten your life to match the money available!

Haha! :  )  

[Deleted User]

I didn’t do the maths, but lets say you have 30k in DB income from 67.  That means you need to draw 20k from your DC pots.  And lets say you have 500k left in DC pots at that point. In that case, you can afford to be quite aggressive with the DC portion, as most of your needs are covered by DB income.  20K makes up 4% of your 500k DC pot.  Its achievable.  Likely to be fine, particularly if you are prepared to be flexible early on.   As some of your DB pensions will lose value to inflation, you may need to move some of your DC pot into fixed income over time. 

Albermarle

Deleted_User said:

I didn’t do the maths, but lets say you have 30k in DB income from 67.  That means you need to draw 20k from your DC pots.  And lets say you have 500k left in DC pots at that point. In that case, you can afford to be quite aggressive with the DC portion, as most of your needs are covered by DB income.  20K makes up 4% of your 500k DC pot.  Its achievable.  Likely to be fine, particularly if you are prepared to be flexible early on.   As some of your DB pensions will lose value to inflation, you may need to move some of your DC pot into fixed income over time. 

Yes, but the more his investments grow the more potential  problem with the LTA tax issue. Basically as said before the OP needs a proper overall plan.

[Deleted User]

Albermarle said:

Deleted_User said:

I didn’t do the maths, but lets say you have 30k in DB income from 67.  That means you need to draw 20k from your DC pots.  And lets say you have 500k left in DC pots at that point. In that case, you can afford to be quite aggressive with the DC portion, as most of your needs are covered by DB income.  20K makes up 4% of your 500k DC pot.  Its achievable.  Likely to be fine, particularly if you are prepared to be flexible early on.   As some of your DB pensions will lose value to inflation, you may need to move some of your DC pot into fixed income over time. 

Yes, but the more his investments grow the more potential  problem with the LTA tax issue. Basically as said before the OP needs a proper overall plan.

Agreed. I would start melting the DC pot by drawing more than necessary and moving investments outside the pension wrapper.  

But in the overall scheme of meeting the objective of retirement income, this is a minor detail.  

cfw1994

barnstar2077 said:

I think it was Pensioncraft that did a video saying that 100% equities, even in retirement, was statistically the best way to go (to have your money last x amount of years.)  It sure would require nerves of steel though! :  /  

I think what I have observed over the past 15+ years would agree.  Yet still I have some gilts & safer funds: madness!
Might look that clip up....I have been wondering whether my plans are "too safe"....bring on the naysayers of doom now!

Deleted_User said:

I didn’t do the maths, but lets say you have 30k in DB income from 67.  That means you need to draw 20k from your DC pots.  And lets say you have 500k left in DC pots at that point. In that case, you can afford to be quite aggressive with the DC portion, as most of your needs are covered by DB income.  20K makes up 4% of your 500k DC pot.  Its achievable.  Likely to be fine, particularly if you are prepared to be flexible early on.   As some of your DB pensions will lose value to inflation, you may need to move some of your DC pot into fixed income over time. 

I did!  That was the point of the spreadsheet clip I posted earlier - yes, if willing to 'risk' some of the DC inheritance, the OP is in a very luxurious place

gm0

McClung has some useful tables on this in Living off Your Money which touch on this for a variety of different income calcluation methods against the backtesting data set.  For the assumptions he uses and examines.  70% and change is a good number before retirements with more such as 100% start failing (for given income draw assumptions) on the worst of all the historic start dates/months with a terrible SOR.  

Clearly they don't deliver quite the same overall growth potential and median death pot.  But they don't start to fail with rising WR as quickly.   I am prepared to believe there are assumption sets where 100% is best.  And there are others where it just isn't.  Devil is in the detail here. Even for known risk vs full risk.

barnstar2077

cfw1994 said:

barnstar2077 said:

I think it was Pensioncraft that did a video saying that 100% equities, even in retirement, was statistically the best way to go (to have your money last x amount of years.)  It sure would require nerves of steel though! :  /  

I think what I have observed over the past 15+ years would agree.  Yet still I have some gilts & safer funds: madness!
Might look that clip up....I have been wondering whether my plans are "too safe"....bring on the naysayers of doom now!

Deleted_User said:

I didn’t do the maths, but lets say you have 30k in DB income from 67.  That means you need to draw 20k from your DC pots.  And lets say you have 500k left in DC pots at that point. In that case, you can afford to be quite aggressive with the DC portion, as most of your needs are covered by DB income.  20K makes up 4% of your 500k DC pot.  Its achievable.  Likely to be fine, particularly if you are prepared to be flexible early on.   As some of your DB pensions will lose value to inflation, you may need to move some of your DC pot into fixed income over time. 

I did!  That was the point of the spreadsheet clip I posted earlier - yes, if willing to 'risk' some of the DC inheritance, the OP is in a very luxurious place

I'm pretty sure it was this one:

https://www.youtube.com/watch?v=fdI59Dv3JUg

JohnWinder

barnstar2077 said:

I think it was Pensioncraft that did a video saying that 100% equities, even in retirement, was statistically the best way to go (to have your money last x amount of years.)  It sure would require nerves of steel though! :  /  

Yes, I'm familiar with that idea also, but I think it needs at least one more 'condition' applied to the statement; a condition about 'being able to spend the most in retirement' or 'leave the most to your heirs' or similar. We can 100%, forget statistically, have our money last x years by withdrawing 1/x of of each years balance where x is the number of years remaining. The other way is to buy a ladder of inflation linked government bonds.

MK62

barnstar2077 said:

I think it was Pensioncraft that did a video saying that 100% equities, even in retirement, was statistically the best way to go (to have your money last x amount of years.)  It sure would require nerves of steel though! :  /  

Statistically it might have been best more of the time, but how often was it the worst?.......and by how much was it best, and by how much was it worst?

In retirement, avoiding the worst outcomes can be more important than chasing the best ones..........you just have to accept that using a 60/40, 70/30, 80/20 etc investment split might mean you miss out on what, statistically, might be the best outcome, in order to make sure you don't suffer the worst one.

For those who are many years from retirement, and still contributing, the situation can be much different though......downturns can then be an opportunity.......

cfw1994

barnstar2077 said:

cfw1994 said:

barnstar2077 said:

I think it was Pensioncraft that did a video saying that 100% equities, even in retirement, was statistically the best way to go (to have your money last x amount of years.)  It sure would require nerves of steel though! :  /  

I think what I have observed over the past 15+ years would agree.  Yet still I have some gilts & safer funds: madness!
Might look that clip up....I have been wondering whether my plans are "too safe"....bring on the naysayers of doom now!

Deleted_User said:

I didn’t do the maths, but lets say you have 30k in DB income from 67.  That means you need to draw 20k from your DC pots.  And lets say you have 500k left in DC pots at that point. In that case, you can afford to be quite aggressive with the DC portion, as most of your needs are covered by DB income.  20K makes up 4% of your 500k DC pot.  Its achievable.  Likely to be fine, particularly if you are prepared to be flexible early on.   As some of your DB pensions will lose value to inflation, you may need to move some of your DC pot into fixed income over time. 

I did!  That was the point of the spreadsheet clip I posted earlier - yes, if willing to 'risk' some of the DC inheritance, the OP is in a very luxurious place

I'm pretty sure it was this one:

https://www.youtube.com/watch?v=fdI59Dv3JUg

Ah yes, I had seen that before (& skimmed the paper), thanks!   
Another look just now: TL/DR summary: rebalancing is overrated, & I need to have more in equity