UFPLS approach to retirement

Skinnydad

pensionpawn said:

dunstonh said:

As mentioned, your draw rate is unsustainable.  For example, here is what happened if you started with £250k on the 1st Jan 2000:

You have run out by 2016.

You don't know if you are going to have a good period or a weak one but as we have just had a really good period for over decade and with all the things going on that are going on, you should be planning for a much weaker rate of return.   

3.5% is around the mark. About £8750 a year.  If you are in your 50s then less than that.

Just some observations. Why does the pot have to last instead of reducing to zero at average life expectancy? For those who have qualified for a full state pension that will cover 2/3's of the annual drawdown after 10-12 years and there's the impact of paying in £3600 gross, £2880 net until 75. Horses for courses....

Thanks Pensionpawn.  Exactly my thoughts. myself and my wife will have full state pensions in just over 2 years. I certainly don't expect to get into my 90's so my plan is to exhaust this fund over a desired timeframe.  If I get to 85. I'm not really bothering how much is left.  I'll have an income from 2 other pensions plus the Full state pension and could always downsize if needed.  Though I wanted to leave this to my sons.

Skinnydad

older_and_no_wiser said:

I think one should always factor in that your annual withdrawal will naturally decrease as you get into your 80s (for those luckily enough to have a long life span). As you get older, there is more likelihood of ill health. Do you want to use your remaining money to fund care home fees (if required) or simply use the equity from selling up your home? Personally, I'd love to have completely used up my retirement pot by this time if it came to that.

Hopefully you have a full state pension coming in to fund the later years. 

Is leaving an inheritance for family etc important? If so, could you do this during your life so that you get the benefit of seeing your loved ones enjoy the money?

Travel and holidays will probably decrease as you enter the latter years too.

I'm at an age now (50s) where I can see the above actually happening to the generation above me. My own father's financial behaviour now he's in his late 80s is teaching me so much about what potentially my attitude to money and lifestyle could be in 30+ years time 

Quite a lot to take into account and sometimes spreadsheets and calculators won't take these things into account.

The accumulation phase is certainly a lot easier than the withdrawal phase!

Thanks Older_and_no_wiser my sentiments exactly.  My wife and I intend to travel whilst we still can baring no ill health.  Probably as you stated tapering off after our 80's.  I want to use up the retirement pot by the time I go gaga or need care home fees... 

Skinnydad

SouthCoastBoy said:

I have witnessed relatives getting old (78, 82, and 90) and in my experience as they reach their 80s spending has definitely diminished, for example my 90 year old father in law no longer drives, has downsized from a 3 bed detached house into a 1 bedroom flat, very rarely travels outside a 3 or 4 mile radius of his home and his income (final db pension + state pension) outstrips his spending by a large amount.

Personally, if I'm still around I am expecting spending to start to tail off from around 75 to 80.

Thanks SouthcoastBoy.  This is what I've seen also.  I've elderly relatives and they hardly spend a penny.  Yes someone does the garden etc.  They don't drive and basically it comes down to food and energy for them.  All horses for courses..

Skinnydad

MK62 said:

One issue here is looking at the people we know and assuming their experience will apply to us.....it might, but then again.....

It's a tough one though.......do you hold back spending in your 60s just in case, but run the risk of then having too much in later life.......or do you open that spending tap in your 60s, and run the risk of not having enough......it's hard to square that circle.

As I read once, "Only in retirement planning is an early death the winning ticket".........

Totally agree with you MK62...My OH and I both retired at 60 and if it wasn't for the pandemic then we'd have done more holidays.  Hopefully that's opening up again..on their deathbed, how many folk wish they'd have spent more time in the office..

Skinnydad

Sorry for the late responses folks.  My brother in law was up from London, he's just finishing a clinical trial for Stage 3 oesophageal cancer.  Was a shock when it was announced.  He's only 61.. so it's news like this that makes you think about old father time and how best to utilise what you've spent your life saving for.  No pockets in shrouds etc..  

Kim1965

So with 2 x sp in 2yrs, 2 x other pensions,  and 250 k in a sipp and no desires to pass on as inheritance. I'd say start spending your 15 k per year sipp and enjoy. 

Skinnydad

Thanks very much Kim. I intend doing to it just the mechanism of getting it out and how best to extract it...I had a thought last night. I know most folks talk about performance and ensuring your investments keep performing. Then others rightly so, tell you that the market could crash and you could see a sharp drop in your fund etc. All true. However as I have 250k just now. Can't I just convert all this to cash and then I'd have the 250k regardless of market conditions. I know the value of money erodes if it's not making anything. Regardless I'd still be able to take 15k for around 17 years...any thoughts 

Albermarle

Although the 'can't take it with you ' 'no pockets in a shroud' philosophy may suit some , it does not suit everybody I would guess and not just due to wanting to leave an inheritance.
After a lifetime of accumulating and being financially comfortable /sitting on large savings, pensions etc , I think many would feel uncomfortable having 'spent up', even if they had regular pension income etc .
I imagine even at say 90 , it would be quite a comforting feeling to still have a good wedge in the bank . Especially if it meant not having to downsize etc.
I am not advocating that one should not enjoy retirement whilst one can , only not sure of the wiseness of aiming to have nothing left when you are a lot older. 

MallyGirl

Skinnydad said:

Thanks very much Kim. I intend doing to it just the mechanism of getting it out and how best to extract it...I had a thought last night. I know most folks talk about performance and ensuring your investments keep performing. Then others rightly so, tell you that the market could crash and you could see a sharp drop in your fund etc. All true. However as I have 250k just now. Can't I just convert all this to cash and then I'd have the 250k regardless of market conditions. I know the value of money erodes if it's not making anything. Regardless I'd still be able to take 15k for around 17 years...any thoughts 

The question is - what would £15k be worth in 17 years compared to what it buys you today? Would it be enough?
Inflation is significant.

MK62

Skinnydad said:

Thanks very much Kim. I intend doing to it just the mechanism of getting it out and how best to extract it...I had a thought last night. I know most folks talk about performance and ensuring your investments keep performing. Then others rightly so, tell you that the market could crash and you could see a sharp drop in your fund etc. All true. However as I have 250k just now. Can't I just convert all this to cash and then I'd have the 250k regardless of market conditions. I know the value of money erodes if it's not making anything. Regardless I'd still be able to take 15k for around 17 years...any thoughts 

You could do that, but make sure that you are fully aware of just how much inflation will and might erode it's value........in 17 years that 15k could be worth less than half it's current value.....if that's something you could live with, then doing this could be a viable option for you.........tbh though, it's not something I'd do personally - but then everyone's view and tolerance of risk is different.