DC Pot is 'big enough' but can't see how to lock in the value in real terms?

Linton

michaels said:

JohnWinder said:

Karsten has modelled this 'working a few years more'. He found that with only one year extra work:

'The impact of 'one more year' on the safe withdrawal amounts is surprisingly uniform. Whether it’s a 30-year horizon or 50-year horizon, whether it’s with or without additional cash flows, you boost the failsafe withdrawal amount by about 7.5-8%.'

https://earlyretirementnow.com/2021/01/13/one-more-year-swr-series-part-42/

Which is surprisingly counter intuitive given that 50 year SWRs are not 2/3rds lower than 30 year rates?

 Not really.  SWRs tend to be limited by perhaps one rare severe event.  If your savings survive that you will die rich.  At some point perhaps in the 30-50 year span an SWR becomes sustainable indefinitely.  So one extra year of investment returns of say 8% without loss through drawdown translates directly into an identical rise in SWR.

jamesd

michaels said:

On cfiresim guyton-klinger is giving me much lower average withdrawals than simple rpi linked fixed sum from a pot plus 2 x state pensions - not sure how this makes sense?

1. I think there's a bug in the G-K calculation there because the real income graph never shows the small drops that should be visible when G-K skips inflation increases.

2. If you can post a sample link with fake but reasonable numbers it's easier to analyse and see what might be happening.

Thrugelmir

JohnWinder said:

Karsten has modelled this 'working a few years more'. He found that with only one year extra work:

'The impact of 'one more year' on the safe withdrawal amounts is surprisingly uniform. Whether it’s a 30-year horizon or 50-year horizon, whether it’s with or without additional cash flows, you boost the failsafe withdrawal amount by about 7.5-8%.'

https://earlyretirementnow.com/2021/01/13/one-more-year-swr-series-part-42/

I've never understood the fixation with US web sites. Obviously skimmed over as the portfolio is based on

• A 75/25 portfolio, i.e., 75% in a U.S. S&P 500 index fund (e.g. iShares IVV), 25% in a U.S. Intermediate Treasury ETF (e.g. iShares IEF).

As usefull as a chocolate teapot to a UK based investor looking to create a portfolio in August 2021.  

cfw1994

Thrugelmir said:

JohnWinder said:

Karsten has modelled this 'working a few years more'. He found that with only one year extra work:

'The impact of 'one more year' on the safe withdrawal amounts is surprisingly uniform. Whether it’s a 30-year horizon or 50-year horizon, whether it’s with or without additional cash flows, you boost the failsafe withdrawal amount by about 7.5-8%.'

https://earlyretirementnow.com/2021/01/13/one-more-year-swr-series-part-42/

I've never understood the fixation with US web sites. Obviously skimmed over as the portfolio is based on

• A 75/25 portfolio, i.e., 75% in a U.S. S&P 500 index fund (e.g. iShares IVV), 25% in a U.S. Intermediate Treasury ETF (e.g. iShares IEF).

As usefull as a chocolate teapot to a UK based investor looking to create a portfolio in August 2021.  

Are Brits only able to invest in the UK?
Last I looked, a decent chunk of my DC pot is invested Stateside….has been for 20+ years, wish I’d put more in that side, tbh!

nothing chocolatey about it, provided you are aware of the source and what it is looking at!

Thrugelmir

cfw1994 said:

Thrugelmir said:

JohnWinder said:

Karsten has modelled this 'working a few years more'. He found that with only one year extra work:

'The impact of 'one more year' on the safe withdrawal amounts is surprisingly uniform. Whether it’s a 30-year horizon or 50-year horizon, whether it’s with or without additional cash flows, you boost the failsafe withdrawal amount by about 7.5-8%.'

https://earlyretirementnow.com/2021/01/13/one-more-year-swr-series-part-42/

I've never understood the fixation with US web sites. Obviously skimmed over as the portfolio is based on

• A 75/25 portfolio, i.e., 75% in a U.S. S&P 500 index fund (e.g. iShares IVV), 25% in a U.S. Intermediate Treasury ETF (e.g. iShares IEF).

As usefull as a chocolate teapot to a UK based investor looking to create a portfolio in August 2021.  

Are Brits only able to invest in the UK?
Last I looked, a decent chunk of my DC pot is invested Stateside….has been for 20+ years, wish I’d put more in that side, tbh!

nothing chocolatey about it, provided you are aware of the source and what it is looking at!

Why don't you mirror that portfolio then ? 

JohnWinder

Thrugelmir said:

I've never understood the fixation with US web sites.

Knowing about trans-Atlantic rivalry as I do, I tread carefully when I link to something from outside the UK, but perhaps we should try to get over it as each has a lot to offer the other. Sometimes I can’t find anything that comes close coming from closer to home. If you know any, let us know.  And I’m sure most forum readers are not such concrete thinkers that they can’t see past a US based portfolio to glimpse a situation that might apply to them. Nonetheless, sorry if it annoys you.

cfw1994

The UK is around 4-6% of ‘the world’, the US around 50-60% (example source).
I’ve never understood the desire to be UK-focussed and ignore the broader market.

Albermarle

cfw1994 said:

The UK is around 4-6% of ‘the world’, the US around 50-60% (example source).
I’ve never understood the desire to be UK-focussed and ignore the broader market.

Many people are suspicious of anything foreign, and think British is best. 

ex-pat_scot

Albermarle said:

cfw1994 said:

The UK is around 4-6% of ‘the world’, the US around 50-60% (example source).
I’ve never understood the desire to be UK-focussed and ignore the broader market.

Many people are suspicious of anything foreign, and think British is best. 

Roughly 52%, on recent polls.

There is an argument that the FTSE100 is quite well globally diversified, as much/most of it is in companies with significant international trade. However the reality is that we are c6% of global GDP, and most of our purchasing is going to be driven by global trade factors so I expect that my future costs and inflation will be pegged to the growth in the international markets.

I expect that the market prices for forex and local GDP broadly price in all known factors and risks, far more efficiently and thoroughly than I can, and therefore I choose to have a globally diversified portfolio which broadly mirrors the global market. It's not perfect, but I can't see a better solution.

DT2001

There is a risk in whatever strategy you choose. IMO if you chose a Guyton Klinger approach with say a 4.6% withdrawal rate on day 1 this would give you 2 years in cash. Thereafter top up every 6 months to replenish the cash pot. The ongoing draws will be at 2.3% plus inflation p.a. (Using £8.8k of £387k) which would be well below the GK guardrails even if the market fell.
If you combined this approach with a willingness to take p/t work in say the 1st 5 years it would cover most bases. The odds are you’ll have a larger pot by 60/SPA when you could then utilise part for an annuity.
A flexible approach to your plan, work, spend will achieve your goal.