Retire@56?

mspensionmonkey

See the comments above. Very different points of view as to the 'safe' withdrawal rate. I tend to favour a rate lower than 4%.

sandsy

SouthCoastBoy said:

dunstonh said:

Retiring at 56 and using a 4% draw rate would be quite risky.  Probably more suitable to use 2.5% until well into 60s.

- why are you using an IFA? What value are you getting from them?

Good question as this is exactly the sort of thing that you expect the IFA to be modelling.

This is interesting, is the SWR in the UK considered to be 2.5%?

A SWR should be lower when someone retires earlier as their money needs to last for longer.  But using SWRs is more complicated when there are other sources of retirement income kicking in, like state pension.

dunstonh

This is interesting, is the SWR in the UK considered to be 2.5%?

There is no such thing as an SWR.  Despite many people discussing hypothetical figures as what it may be.

Whilst a lot of the data is US based, it usually contains periods that include a period when the US was an emerging market rather than a developed market and that can potentially lead to overstating the assumptions used for the future.

Longevity is an issue that needs to be considered.  Along with what gaps you need extra funding for.  Age 67 when an indexed state pension kicks in.   Another age when the spouse/partner one kicks in.  Any potential DB pensions kicking in etc. 

i.e. a draw rate of x% may be needed until age xx and then a draw rate of y% until age yy and then a draw rate of z% until age z.

If all your money is investment-backed then you generally see 2.5% for 50s, moving up to 3.5% in your mid to late 60s.  

Another risk is taking it in a cycle where investment returns fail to grow at all or do very poorly.    Whilst there is no rule of thumb, you do often find that 10-15 year periods alternative between good and bad.   We have just come off one of the better periods.  What next?

If you take too much early on and get a bad cycle then you may start a cycle of erosion that could be very uncomfortable.  If your life expectancy is 35 years then you need to make your money last longer than if it was 25 years.

Alice_Holt

The OP may find these articles of interest:

https://monevator.com/tag/swr/

mspensionmonkey

Alice_Holt said:

The OP may find these articles of interest:

Thanks. I've written pieces about sequence of returns and pound cost ravaging for my job. Slightly concerned with the current inflation figures and stock markets, hence my post. 

k_man

mspensionmonkey said:

Alice_Holt said:

The OP may find these articles of interest:

Thanks. I've written pieces about sequence of returns and pound cost ravaging for my job. Slightly concerned with the current inflation figures and stock markets, hence my post. 

that's a new one on me
😁

QrizB

mspensionmonkey said:

Give me the benefit of your wisdom. Am I good to go?

FWIW, yes I think you are.

dunstonh

mspensionmonkey said:

Alice_Holt said:

The OP may find these articles of interest:

Thanks. I've written pieces about sequence of returns and pound cost ravaging for my job. Slightly concerned with the current inflation figures and stock markets, hence my post. 

The current events are actually close to the average.    

Thrugelmir

mspensionmonkey said:

Alice_Holt said:

The OP may find these articles of interest:

Thanks. I've written pieces about sequence of returns and pound cost ravaging for my job. Slightly concerned with the current inflation figures and stock markets, hence my post. 

There's no clear cut answers. Just opinion. When in doubt err on the side of caution. 

Kim1965

Im amazed to see that someone sitting on 3/4 of a million and wanting 23 k a year is being put off retiring.
 Retire and enjoy. If indeed 2.5% withdrawal is banded as being safe withdrawal at56 then dc pensions are about as much use a a chocolate teapot. Some of the opinions on this forum are ultra cautious. Cannot take your money into the afterlife folks.