Pension Planning Assumptions

SMcGill

I found it useful to run my numbers using somewhat pessimistic assumptions. A long life expectancy, investments do no better than keep up with 2.5% inflation, cash savings lose ground against 2.5% inflation each year. I’ve also assumed my income needs remain the same, I may go on holiday less but my health costs may increase. Doing that exercise gave me real confidence that I’ll have what I need.

Notepad_Phil

DoctorStrange said:

I'm trying to do my own pension sums as I don't like the online calculators.

If you were putting your own data into a calculator, what would your assumptions be?

If I was working out potential problems with LTA then I'd opt for what may perhaps in hindsight prove to be optimistic figures so that I can see where any problems may reside - so I'd probably go for similar figures to you but boost the nominal return to 7%.

However to work out scenarios such as whether I was in a position where I could safely retire then I'd put in pessimistic figures so that I didn't get carried away with what may in hindsight prove to be a too rosy view of the next 30 to 40 years of retirement - so maybe put the growth rate down to just inflation + 1% or even less (in my case one of the scenarios I did before retiring was of an immediate 50% market fall in share prices and dividends followed by only inflationary increases from then on).