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Once you've "won the game"

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  • uk1
    uk1 Posts: 1,862 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 11 October 2021 at 3:01PM
    zagfles said:
    uk1 said:
    zagfles said:
    uk1 said:
    Much of the comment on this and all threads is predicated on the notion that the key thing (and some seem to feel the only thing)  is to ensure that your capital and pot grows in sync or ahead of your spending once you have retired.  In other words your total value is always protected and must never drop.  That's why there is such a high-level focus by many on annuities.  This basic idea is true if you wish it to be that way.  But too many fall into the trap of not considering what many will say is a terribly risky option. 
    I happen not to see it that way.  There is another option to consider and that is to treat all of your combined pots when you reach retirement as a sinking fund and that given all the clever caveats and doom assertions, your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of at some point you decide will be zero observing of course a reasonable safety margin.  I know many will disagree but it is an option that when thought through might not be that daft.  The idea of ensuring that given reasonable presumptions that when you and your spouse pop your cloggs that there is enough to take care of who you want to with whatever you decide and ensure that little is left to tax is an approach that requires you to exert some clarity over what you actually want to be the outcome.  Some may actually shokingly find that they are not spending as quickly as they need in retirement to achieve the closing balance they plan if you get my drift.
    When taking this approach a very few number of fortunate people may find that their challenge isn't as large as they think it is when taken from the sucked-in viewpoint that you must always have a growing fund.  And for the sake of clarity to repeat myself.  Very fall fall into this group, my point being that some are in this fortuante position without knowing so and it just makes sense to consider all strategy and tactical options.
    What?? An annuity is a "sinking fund" by definition. Once in payment its current "value" is the annual payout * the number of years you have to live. Obviously you don't know the latter, but you do know it will shrink by one year every year. So its value is "sinking". When you die, and your spouse if it's a joint annuity, the value is zero. The zero balance you talk about above.
    So what you're talking about is similar to an annuity ie a "sinking fund", but an annuity guarantees it, whereas drawing down from a pot however invested in cash/bonds/equities/property etc doesn't guarantee it - ie you still have to "play the game", invest and hope your investments achieve your objectives.
    Do you get it now?

    With an annuity, once purchased, you no longer make deposits.  It neither sinks nor increases in value each year.  With a sinking fund, you make both further deposits and further withdrawals and it can either gain or sink in value.
    "Annuity and sinking fund are two types of investment options exercised by investors. Annuity is an investment that offers payments for a certain period of time as a result of a substantial sum paid up front. Investing in a sinking fund is similar to keeping aside a sum of money over a period of time to fund a capital expense in the future.  The key difference between annuity and sinking fund is that while an annuity is an account where funds are withdrawn from, a sinking fund is an account where funds are deposited."
    I hope this explains more clearly for you - better than I have been able to - the significant differences between a sinking fund and an annuity.
    Of course an annuity sinks in value, an annuity paying £10k a year for life is obviously worth more for someone with more expected years of life, so its capital value reduces as you age, until you die when it's value is zero. Just like your aim with the a "sinking fund", like you said: "...your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of..."
    So the aim is the same, but with a "sinking fund" you're "playing the game", ie taking a risk, with an annuity you're not.
    A traditional annuity never sinks in value to the purchaser because it only has a single value throughout the whole of it's investment life and that is the amount you contract to receive each year as defined in the original annuity document with any formula for increases or other benefits clearly defined and frozen.  It never sinks or gains in value unexpectedly.  That is the sole purpose of it.  It is to remove the risk of sinking whilst losing the oppurtunity of gaining.  The value an individual may or may not have lossed or gained cease when the decision is made to purchase and whether it gained or lost as an investment can only be ascertained once the person is dead. However, thoughout the whole of their life the value never sank or gained in value. It was what it always was - no more no less, and it never sank nor gained.  Whether it was a wise decision or not tthe investor never got to know. 
    It never, ever has less value.  It might at any given moment be a better or worst decision but that only affects it's value as an investment after the person has died and retrospectively consider the decion which I fear is not an opportunity open to the majority of investors.This thread and most other threads are about investment desion options for living people to consider rather than deceased people.
    A sinking fund is a different idea.  It is a fund where you decide to add and invest so much each year and spend an amount each year.  The value sinks or gains each year.
    I'm not certain what your motive is with me for persisting that an annuity is a sinking fund and cannot see how it is adding useful clarity for those who are asufficiently alive at this momenty to post.
    I'm happy to leave things there and let you have your final word.

  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    uk1 said:
    zagfles said:
    uk1 said:
    zagfles said:
    uk1 said:
    Much of the comment on this and all threads is predicated on the notion that the key thing (and some seem to feel the only thing)  is to ensure that your capital and pot grows in sync or ahead of your spending once you have retired.  In other words your total value is always protected and must never drop.  That's why there is such a high-level focus by many on annuities.  This basic idea is true if you wish it to be that way.  But too many fall into the trap of not considering what many will say is a terribly risky option. 
    I happen not to see it that way.  There is another option to consider and that is to treat all of your combined pots when you reach retirement as a sinking fund and that given all the clever caveats and doom assertions, your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of at some point you decide will be zero observing of course a reasonable safety margin.  I know many will disagree but it is an option that when thought through might not be that daft.  The idea of ensuring that given reasonable presumptions that when you and your spouse pop your cloggs that there is enough to take care of who you want to with whatever you decide and ensure that little is left to tax is an approach that requires you to exert some clarity over what you actually want to be the outcome.  Some may actually shokingly find that they are not spending as quickly as they need in retirement to achieve the closing balance they plan if you get my drift.
    When taking this approach a very few number of fortunate people may find that their challenge isn't as large as they think it is when taken from the sucked-in viewpoint that you must always have a growing fund.  And for the sake of clarity to repeat myself.  Very fall fall into this group, my point being that some are in this fortuante position without knowing so and it just makes sense to consider all strategy and tactical options.
    What?? An annuity is a "sinking fund" by definition. Once in payment its current "value" is the annual payout * the number of years you have to live. Obviously you don't know the latter, but you do know it will shrink by one year every year. So its value is "sinking". When you die, and your spouse if it's a joint annuity, the value is zero. The zero balance you talk about above.
    So what you're talking about is similar to an annuity ie a "sinking fund", but an annuity guarantees it, whereas drawing down from a pot however invested in cash/bonds/equities/property etc doesn't guarantee it - ie you still have to "play the game", invest and hope your investments achieve your objectives.
    Do you get it now?

    With an annuity, once purchased, you no longer make deposits.  It neither sinks nor increases in value each year.  With a sinking fund, you make both further deposits and further withdrawals and it can either gain or sink in value.
    "Annuity and sinking fund are two types of investment options exercised by investors. Annuity is an investment that offers payments for a certain period of time as a result of a substantial sum paid up front. Investing in a sinking fund is similar to keeping aside a sum of money over a period of time to fund a capital expense in the future.  The key difference between annuity and sinking fund is that while an annuity is an account where funds are withdrawn from, a sinking fund is an account where funds are deposited."
    I hope this explains more clearly for you - better than I have been able to - the significant differences between a sinking fund and an annuity.
    Of course an annuity sinks in value, an annuity paying £10k a year for life is obviously worth more for someone with more expected years of life, so its capital value reduces as you age, until you die when it's value is zero. Just like your aim with the a "sinking fund", like you said: "...your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of..."
    So the aim is the same, but with a "sinking fund" you're "playing the game", ie taking a risk, with an annuity you're not.

    A traditional annuity never sinks in value to the purchaser because it only has a single value throughout the whole of it's investment life and that is the amount you contract to receive each year as defined in the original annuity document with any formula for increases or other benefits clearly defined and frozen.  It never sinks or gains in value unexpectedly.  That is the sole purpose of it.  It is to remove the risk of sinking whilst losing the oppurtunity of gaining.  The value an individual may or may not have lossed or gained cease when the decision is made to purchase and whether it gained or lost as an investment can only be ascertained once the person is dead. However, thoughout the whole of their life the value never sank or gained in value. It was what it always was - no more no less, and it never sank nor gained.  Whether it was a wise decision or not tthe investor never got to know. 
    A sinking fund is a different idea.  It is a fund where you decide to add and invest so much each year and spend an amount each year.  The value sinks or gains each year.
    I'm not certain what your motive is with me for persisitng that an annuity is a sinking fund and cannot see how it is adding useful clarity.
    I'm happy to leave things there and let you have your final word.
    Knowledgeable posters are often too pedantic and we all like to defend a position we believe in which can cause friction. Sometimes it seems that the argument becomes more important that the facts of the discussion and the contrarian position is taken and reinforced just to get a rise out of someone. In that case I just ignore them as no online forum is worth the aggravation.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • uk1
    uk1 Posts: 1,862 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    bostonerimus said:
    uk1 said:
    zagfles said:
    uk1 said:
    zagfles said:
    uk1 said:
    Much of the comment on this and all threads is predicated on the notion that the key thing (and some seem to feel the only thing)  is to ensure that your capital and pot grows in sync or ahead of your spending once you have retired.  In other words your total value is always protected and must never drop.  That's why there is such a high-level focus by many on annuities.  This basic idea is true if you wish it to be that way.  But too many fall into the trap of not considering what many will say is a terribly risky option. 
    I happen not to see it that way.  There is another option to consider and that is to treat all of your combined pots when you reach retirement as a sinking fund and that given all the clever caveats and doom assertions, your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of at some point you decide will be zero observing of course a reasonable safety margin.  I know many will disagree but it is an option that when thought through might not be that daft.  The idea of ensuring that given reasonable presumptions that when you and your spouse pop your cloggs that there is enough to take care of who you want to with whatever you decide and ensure that little is left to tax is an approach that requires you to exert some clarity over what you actually want to be the outcome.  Some may actually shokingly find that they are not spending as quickly as they need in retirement to achieve the closing balance they plan if you get my drift.
    When taking this approach a very few number of fortunate people may find that their challenge isn't as large as they think it is when taken from the sucked-in viewpoint that you must always have a growing fund.  And for the sake of clarity to repeat myself.  Very fall fall into this group, my point being that some are in this fortuante position without knowing so and it just makes sense to consider all strategy and tactical options.
    What?? An annuity is a "sinking fund" by definition. Once in payment its current "value" is the annual payout * the number of years you have to live. Obviously you don't know the latter, but you do know it will shrink by one year every year. So its value is "sinking". When you die, and your spouse if it's a joint annuity, the value is zero. The zero balance you talk about above.
    So what you're talking about is similar to an annuity ie a "sinking fund", but an annuity guarantees it, whereas drawing down from a pot however invested in cash/bonds/equities/property etc doesn't guarantee it - ie you still have to "play the game", invest and hope your investments achieve your objectives.
    Do you get it now?

    With an annuity, once purchased, you no longer make deposits.  It neither sinks nor increases in value each year.  With a sinking fund, you make both further deposits and further withdrawals and it can either gain or sink in value.
    "Annuity and sinking fund are two types of investment options exercised by investors. Annuity is an investment that offers payments for a certain period of time as a result of a substantial sum paid up front. Investing in a sinking fund is similar to keeping aside a sum of money over a period of time to fund a capital expense in the future.  The key difference between annuity and sinking fund is that while an annuity is an account where funds are withdrawn from, a sinking fund is an account where funds are deposited."
    I hope this explains more clearly for you - better than I have been able to - the significant differences between a sinking fund and an annuity.
    Of course an annuity sinks in value, an annuity paying £10k a year for life is obviously worth more for someone with more expected years of life, so its capital value reduces as you age, until you die when it's value is zero. Just like your aim with the a "sinking fund", like you said: "...your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of..."
    So the aim is the same, but with a "sinking fund" you're "playing the game", ie taking a risk, with an annuity you're not.

    A traditional annuity never sinks in value to the purchaser because it only has a single value throughout the whole of it's investment life and that is the amount you contract to receive each year as defined in the original annuity document with any formula for increases or other benefits clearly defined and frozen.  It never sinks or gains in value unexpectedly.  That is the sole purpose of it.  It is to remove the risk of sinking whilst losing the oppurtunity of gaining.  The value an individual may or may not have lossed or gained cease when the decision is made to purchase and whether it gained or lost as an investment can only be ascertained once the person is dead. However, thoughout the whole of their life the value never sank or gained in value. It was what it always was - no more no less, and it never sank nor gained.  Whether it was a wise decision or not tthe investor never got to know. 
    A sinking fund is a different idea.  It is a fund where you decide to add and invest so much each year and spend an amount each year.  The value sinks or gains each year.
    I'm not certain what your motive is with me for persisitng that an annuity is a sinking fund and cannot see how it is adding useful clarity.
    I'm happy to leave things there and let you have your final word.
    Knowledgeable posters are often too pedantic and we all like to defend a position we believe in which can cause friction. Sometimes it seems that the argument becomes more important that the facts of the discussion and the contrarian position is taken and reinforced just to get a rise out of someone. In that case I just ignore them as no online forum is worth the aggravation.

    You are perfectly right to remind me.
  • zagfles
    zagfles Posts: 21,427 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Chutzpah Haggler
    uk1 said:
    zagfles said:
    uk1 said:
    zagfles said:
    uk1 said:
    Much of the comment on this and all threads is predicated on the notion that the key thing (and some seem to feel the only thing)  is to ensure that your capital and pot grows in sync or ahead of your spending once you have retired.  In other words your total value is always protected and must never drop.  That's why there is such a high-level focus by many on annuities.  This basic idea is true if you wish it to be that way.  But too many fall into the trap of not considering what many will say is a terribly risky option. 
    I happen not to see it that way.  There is another option to consider and that is to treat all of your combined pots when you reach retirement as a sinking fund and that given all the clever caveats and doom assertions, your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of at some point you decide will be zero observing of course a reasonable safety margin.  I know many will disagree but it is an option that when thought through might not be that daft.  The idea of ensuring that given reasonable presumptions that when you and your spouse pop your cloggs that there is enough to take care of who you want to with whatever you decide and ensure that little is left to tax is an approach that requires you to exert some clarity over what you actually want to be the outcome.  Some may actually shokingly find that they are not spending as quickly as they need in retirement to achieve the closing balance they plan if you get my drift.
    When taking this approach a very few number of fortunate people may find that their challenge isn't as large as they think it is when taken from the sucked-in viewpoint that you must always have a growing fund.  And for the sake of clarity to repeat myself.  Very fall fall into this group, my point being that some are in this fortuante position without knowing so and it just makes sense to consider all strategy and tactical options.
    What?? An annuity is a "sinking fund" by definition. Once in payment its current "value" is the annual payout * the number of years you have to live. Obviously you don't know the latter, but you do know it will shrink by one year every year. So its value is "sinking". When you die, and your spouse if it's a joint annuity, the value is zero. The zero balance you talk about above.
    So what you're talking about is similar to an annuity ie a "sinking fund", but an annuity guarantees it, whereas drawing down from a pot however invested in cash/bonds/equities/property etc doesn't guarantee it - ie you still have to "play the game", invest and hope your investments achieve your objectives.
    Do you get it now?

    With an annuity, once purchased, you no longer make deposits.  It neither sinks nor increases in value each year.  With a sinking fund, you make both further deposits and further withdrawals and it can either gain or sink in value.
    "Annuity and sinking fund are two types of investment options exercised by investors. Annuity is an investment that offers payments for a certain period of time as a result of a substantial sum paid up front. Investing in a sinking fund is similar to keeping aside a sum of money over a period of time to fund a capital expense in the future.  The key difference between annuity and sinking fund is that while an annuity is an account where funds are withdrawn from, a sinking fund is an account where funds are deposited."
    I hope this explains more clearly for you - better than I have been able to - the significant differences between a sinking fund and an annuity.
    Of course an annuity sinks in value, an annuity paying £10k a year for life is obviously worth more for someone with more expected years of life, so its capital value reduces as you age, until you die when it's value is zero. Just like your aim with the a "sinking fund", like you said: "...your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of..."
    So the aim is the same, but with a "sinking fund" you're "playing the game", ie taking a risk, with an annuity you're not.
    A traditional annuity never sinks in value to the purchaser because it only has a single value throughout the whole of it's investment life and that is the amount you contract to receive each year as defined in the original annuity document with any formula for increases or other benefits clearly defined and frozen.  It never sinks or gains in value unexpectedly.  That is the sole purpose of it.  It is to remove the risk of sinking whilst losing the oppurtunity of gaining.  The value an individual may or may not have lossed or gained cease when the decision is made to purchase and whether it gained or lost as an investment can only be ascertained once the person is dead. However, thoughout the whole of their life the value never sank or gained in value. It was what it always was - no more no less, and it never sank nor gained.  Whether it was a wise decision or not tthe investor never got to know. 
    It never, ever has less value.  It might at any given moment be a better or worst decision but that only affects it's value as an investment after the person has died and retrospectively consider the decion which I fear is not an opportunity open to the majority of investors.This thread and most other threads are about investment desion options for living people to consider rather than deceased people.
    A sinking fund is a different idea.  It is a fund where you decide to add and invest so much each year and spend an amount each year.  The value sinks or gains each year.
    I'm not certain what your motive is with me for persisting that an annuity is a sinking fund and cannot see how it is adding useful clarity for those who are asufficiently alive at this momenty to post.
    I'm happy to leave things there and let you have your final word.

    OK, final word, I give up, if you're happy to believe an annual income for life has the same value to a 50 year old as a 80 year old, believe it. I'm off to do something more productive like explaining general relativity to my cat. Ta ta.

  • uk1
    uk1 Posts: 1,862 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 11 October 2021 at 4:01PM
    zagfles said:
    uk1 said:
    zagfles said:
    uk1 said:
    zagfles said:
    uk1 said:
    Much of the comment on this and all threads is predicated on the notion that the key thing (and some seem to feel the only thing)  is to ensure that your capital and pot grows in sync or ahead of your spending once you have retired.  In other words your total value is always protected and must never drop.  That's why there is such a high-level focus by many on annuities.  This basic idea is true if you wish it to be that way.  But too many fall into the trap of not considering what many will say is a terribly risky option. 
    I happen not to see it that way.  There is another option to consider and that is to treat all of your combined pots when you reach retirement as a sinking fund and that given all the clever caveats and doom assertions, your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of at some point you decide will be zero observing of course a reasonable safety margin.  I know many will disagree but it is an option that when thought through might not be that daft.  The idea of ensuring that given reasonable presumptions that when you and your spouse pop your cloggs that there is enough to take care of who you want to with whatever you decide and ensure that little is left to tax is an approach that requires you to exert some clarity over what you actually want to be the outcome.  Some may actually shokingly find that they are not spending as quickly as they need in retirement to achieve the closing balance they plan if you get my drift.
    When taking this approach a very few number of fortunate people may find that their challenge isn't as large as they think it is when taken from the sucked-in viewpoint that you must always have a growing fund.  And for the sake of clarity to repeat myself.  Very fall fall into this group, my point being that some are in this fortuante position without knowing so and it just makes sense to consider all strategy and tactical options.
    What?? An annuity is a "sinking fund" by definition. Once in payment its current "value" is the annual payout * the number of years you have to live. Obviously you don't know the latter, but you do know it will shrink by one year every year. So its value is "sinking". When you die, and your spouse if it's a joint annuity, the value is zero. The zero balance you talk about above.
    So what you're talking about is similar to an annuity ie a "sinking fund", but an annuity guarantees it, whereas drawing down from a pot however invested in cash/bonds/equities/property etc doesn't guarantee it - ie you still have to "play the game", invest and hope your investments achieve your objectives.
    Do you get it now?

    With an annuity, once purchased, you no longer make deposits.  It neither sinks nor increases in value each year.  With a sinking fund, you make both further deposits and further withdrawals and it can either gain or sink in value.
    "Annuity and sinking fund are two types of investment options exercised by investors. Annuity is an investment that offers payments for a certain period of time as a result of a substantial sum paid up front. Investing in a sinking fund is similar to keeping aside a sum of money over a period of time to fund a capital expense in the future.  The key difference between annuity and sinking fund is that while an annuity is an account where funds are withdrawn from, a sinking fund is an account where funds are deposited."
    I hope this explains more clearly for you - better than I have been able to - the significant differences between a sinking fund and an annuity.
    Of course an annuity sinks in value, an annuity paying £10k a year for life is obviously worth more for someone with more expected years of life, so its capital value reduces as you age, until you die when it's value is zero. Just like your aim with the a "sinking fund", like you said: "...your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of..."
    So the aim is the same, but with a "sinking fund" you're "playing the game", ie taking a risk, with an annuity you're not.
    A traditional annuity never sinks in value to the purchaser because it only has a single value throughout the whole of it's investment life and that is the amount you contract to receive each year as defined in the original annuity document with any formula for increases or other benefits clearly defined and frozen.  It never sinks or gains in value unexpectedly.  That is the sole purpose of it.  It is to remove the risk of sinking whilst losing the oppurtunity of gaining.  The value an individual may or may not have lossed or gained cease when the decision is made to purchase and whether it gained or lost as an investment can only be ascertained once the person is dead. However, thoughout the whole of their life the value never sank or gained in value. It was what it always was - no more no less, and it never sank nor gained.  Whether it was a wise decision or not tthe investor never got to know. 
    It never, ever has less value.  It might at any given moment be a better or worst decision but that only affects it's value as an investment after the person has died and retrospectively consider the decion which I fear is not an opportunity open to the majority of investors.This thread and most other threads are about investment desion options for living people to consider rather than deceased people.
    A sinking fund is a different idea.  It is a fund where you decide to add and invest so much each year and spend an amount each year.  The value sinks or gains each year.
    I'm not certain what your motive is with me for persisting that an annuity is a sinking fund and cannot see how it is adding useful clarity for those who are asufficiently alive at this momenty to post.
    I'm happy to leave things there and let you have your final word.

    OK, final word, I give up, if you're happy to believe an annual income for life has the same value to a 50 year old as a 80 year old, believe it. I'm off to do something more productive like explaining general relativity to my cat. Ta ta.


    I have never expressed or implied a view that is in any way sense or form remotely like the view you have falsely ascribed to me. 
    Good luck with your conversations with your cat.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    uk1 said:
    bostonerimus said:
    uk1 said:
    zagfles said:
    uk1 said:
    zagfles said:
    uk1 said:
    Much of the comment on this and all threads is predicated on the notion that the key thing (and some seem to feel the only thing)  is to ensure that your capital and pot grows in sync or ahead of your spending once you have retired.  In other words your total value is always protected and must never drop.  That's why there is such a high-level focus by many on annuities.  This basic idea is true if you wish it to be that way.  But too many fall into the trap of not considering what many will say is a terribly risky option. 
    I happen not to see it that way.  There is another option to consider and that is to treat all of your combined pots when you reach retirement as a sinking fund and that given all the clever caveats and doom assertions, your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of at some point you decide will be zero observing of course a reasonable safety margin.  I know many will disagree but it is an option that when thought through might not be that daft.  The idea of ensuring that given reasonable presumptions that when you and your spouse pop your cloggs that there is enough to take care of who you want to with whatever you decide and ensure that little is left to tax is an approach that requires you to exert some clarity over what you actually want to be the outcome.  Some may actually shokingly find that they are not spending as quickly as they need in retirement to achieve the closing balance they plan if you get my drift.
    When taking this approach a very few number of fortunate people may find that their challenge isn't as large as they think it is when taken from the sucked-in viewpoint that you must always have a growing fund.  And for the sake of clarity to repeat myself.  Very fall fall into this group, my point being that some are in this fortuante position without knowing so and it just makes sense to consider all strategy and tactical options.
    What?? An annuity is a "sinking fund" by definition. Once in payment its current "value" is the annual payout * the number of years you have to live. Obviously you don't know the latter, but you do know it will shrink by one year every year. So its value is "sinking". When you die, and your spouse if it's a joint annuity, the value is zero. The zero balance you talk about above.
    So what you're talking about is similar to an annuity ie a "sinking fund", but an annuity guarantees it, whereas drawing down from a pot however invested in cash/bonds/equities/property etc doesn't guarantee it - ie you still have to "play the game", invest and hope your investments achieve your objectives.
    Do you get it now?

    With an annuity, once purchased, you no longer make deposits.  It neither sinks nor increases in value each year.  With a sinking fund, you make both further deposits and further withdrawals and it can either gain or sink in value.
    "Annuity and sinking fund are two types of investment options exercised by investors. Annuity is an investment that offers payments for a certain period of time as a result of a substantial sum paid up front. Investing in a sinking fund is similar to keeping aside a sum of money over a period of time to fund a capital expense in the future.  The key difference between annuity and sinking fund is that while an annuity is an account where funds are withdrawn from, a sinking fund is an account where funds are deposited."
    I hope this explains more clearly for you - better than I have been able to - the significant differences between a sinking fund and an annuity.
    Of course an annuity sinks in value, an annuity paying £10k a year for life is obviously worth more for someone with more expected years of life, so its capital value reduces as you age, until you die when it's value is zero. Just like your aim with the a "sinking fund", like you said: "...your aim with your sinking fund spreadsheet is to have a zero balance when you and all those you care for given reasonable and sensible assumptions are taken care of..."
    So the aim is the same, but with a "sinking fund" you're "playing the game", ie taking a risk, with an annuity you're not.

    A traditional annuity never sinks in value to the purchaser because it only has a single value throughout the whole of it's investment life and that is the amount you contract to receive each year as defined in the original annuity document with any formula for increases or other benefits clearly defined and frozen.  It never sinks or gains in value unexpectedly.  That is the sole purpose of it.  It is to remove the risk of sinking whilst losing the oppurtunity of gaining.  The value an individual may or may not have lossed or gained cease when the decision is made to purchase and whether it gained or lost as an investment can only be ascertained once the person is dead. However, thoughout the whole of their life the value never sank or gained in value. It was what it always was - no more no less, and it never sank nor gained.  Whether it was a wise decision or not tthe investor never got to know. 
    A sinking fund is a different idea.  It is a fund where you decide to add and invest so much each year and spend an amount each year.  The value sinks or gains each year.
    I'm not certain what your motive is with me for persisitng that an annuity is a sinking fund and cannot see how it is adding useful clarity.
    I'm happy to leave things there and let you have your final word.
    Knowledgeable posters are often too pedantic and we all like to defend a position we believe in which can cause friction. Sometimes it seems that the argument becomes more important that the facts of the discussion and the contrarian position is taken and reinforced just to get a rise out of someone. In that case I just ignore them as no online forum is worth the aggravation.

    You are perfectly right to remind me.
    No I'm not, I don't agree at all....;-)
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Dead_keen
    Dead_keen Posts: 257 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    zagfles said:

    I'm off to do something more productive like explaining general relativity to my cat.

    This is what I used with my dog if that's any help: https://www.amazon.co.uk/How-Teach-Relativity-Your-Dog/dp/0465023312 although she preferred quantum mechanics version (but that will be too scary for a cat).  
  • zagfles
    zagfles Posts: 21,427 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Chutzpah Haggler
    Dead_keen said:
    zagfles said:

    I'm off to do something more productive like explaining general relativity to my cat.

    This is what I used with my dog if that's any help: https://www.amazon.co.uk/How-Teach-Relativity-Your-Dog/dp/0465023312 although she preferred quantum mechanics version (but that will be too scary for a cat).  
    Our cat already understands quantum mechanics, he can act dead and alive at the same time. String theory's next, though not sure whether the 10 or 11 dimension version...

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