Safe withdrawal rates query

lisyloo

Thanks everyone for the very helpful and useful information.
one thing I’ve realised we haven’t factored in with a straight SWR is state pension.

thread now “closed” due to being hijacked by someone with a “certificate”, another problem you avoid when you pay a professional :-) x

Kim1965

At 67 i will have sp and db index linked totalling 17.5 k, i need about 20k pa
I should have 200 to 250 dc and plan only to take the dividend income. 
 Is this a " safe *strategy?? 

BritishInvestor

michaels said:

0.5%,1%,,,even 2% doesn't sound very much:

£5,000 - £20,000 per year managing a £1m pot for 40 years is £200,000 - £800,000 or between 20% and 80% of the amount of retirement income the retiree will spend....

That's a fair observation, but the average DIY investor probably trails the market by a reasonable amount every year so I'm not convinced it's always as clear cut as that (purely in terms of returns).

westv

michaels said:

0.5%,1%,,,even 2% doesn't sound very much:

£5,000 - £20,000 per year managing a £1m pot for 40 years is £200,000 - £800,000 or between 20% and 80% of the amount of retirement income the retiree will spend....

I'm sure most people would be more than happy if their pension pot stayed the same despite 40 years of drawdown.
Although some might be unhappy that they didn't spend enough!

zagfles

lisyloo said:

zagfles said:

lisyloo said:

Just answering the questions wrt charges,

It’s really good if you and others on here have the skills confidence and desire to do DIY.
not everyone is as capable - for example the nurse in the headlines.
 who was scammed out of £45k recently.
I don’t think the regulars on here are the same as your average Person. I think they represent an certain intellectual percentile. Most people don’t want to engage at all.

personally I don’t have the desire to do it myself.
There are other areas I save money compared with others e.g. the £250 car I bought 9 years ago, but this is just something I want to outsource.

I don’t think discussing the pros and cons is pointless if someone can benefit but arguing what you wish to do with your life and what I wish to do with my life is a bit pointless as we’ve both made up our minds on the managing investment front.

you don’t know me so how can you know I’d make even a half decent job of it or not lose the lot in a scam? I do think it’s dangerous for some people TBH and there’s plenty of evidence to back up that statement.

My point wasn't that you (or the average person) should necessarily be doing it themselves. It was that the cost is (IMO) excessive for what isn't really a high skill service, as evidenced by an untrained amateur like me being able to easily pass the main pension and retirement planning exam. 

I don’t agree.
An average person can do ironing, service their car, put up solar panels, probably build an extension, some of us choose not to.
if I felt the cost was excessive for service I received I wouldn’t pay it.
if you think I’m clever enough to pass the exams then I’m clever enough to work out whether I want to pay this fee.
I think I can decide for myself.

here’s news of hundreds of people who’ve lost the lot

https://news.sky.com/video/it-will-affect-me-until-im-gone-nhs-nurse-loses-45-000-to-scammers-12596134

I think I’m making a better decision than them.

we’ll just have to disagree but it’s fact that some lose everything and I definitely won’t (I can’t access the money myself).

I accept the fees are excessive for YOU but everyone else can do what they want.

You're spending a lot of time arguing about something you say is pointless arguing about  And missing the point completely in the process. I'm not saying YOU shouldn't use an IFA. I'm saying IFA costs are excessive. That's all. You might have a different opinion, but that doesn't mean I'm not allowed to express mine. OK?

And just because you use an IFA doesn't mean you avoid scams. Someone I know was about to use an IFA recommended by their friend. They asked me about it, I did a quick check on them, including on the financial ombudsman site here https://www.financial-ombudsman.org.uk/decisions-case-studies/ombudsman-decisions and found they had 10 or so judgements against them for stuff like dodgy Cape Verde property investments!

It's probably easier to avoid getting scammed by sticking to mainstream pension providers than by using an IFA.

zagfles

BritishInvestor said:

michaels said:

0.5%,1%,,,even 2% doesn't sound very much:

£5,000 - £20,000 per year managing a £1m pot for 40 years is £200,000 - £800,000 or between 20% and 80% of the amount of retirement income the retiree will spend....

That's a fair observation, but the average DIY investor probably trails the market by a reasonable amount every year so I'm not convinced it's always as clear cut as that (purely in terms of returns).

The average investor using a IFA probably trails the market by even more as they pay more in charges. Investment performance isn't the job of an IFA, even if they call themselves a "financial planner". Which is why they're no questions on it in the R04 "pensions and retirement planning" exam.

If you're after good performance, you'd look for a star fund manager, not an IFA. And some even question whether star fund managers even exist, and you might as well go passive, but that's another argument.

dunstonh

thread now “closed” due to being hijacked by someone with a “certificate”, another problem you avoid when you pay a professional :-) x

You wouldn't get a certificate by passing a pensions module.  The qualification comes from passing all of the modules.  Pensions are covered across 4 modules.   Also, you have to be member of the CII and the modules are sat at exam locations.  The cost would run into hundreds of pounds per module.   So, it is unlikely any consumer would attempt to sit one and get a result.

The full and comprehensive pension exam from the CII for the last decade or so has been J05 and that is a full written exam (not multi-choice) and any internet warrior claiming to have passed that without study is talking BS.

dunstonh

At 67 i will have sp and db index linked totalling 17.5 k, i need about 20k pa
I should have 200 to 250 dc and plan only to take the dividend income. 
 Is this a " safe *strategy?? 

Are you single or married/partner?     £20k is almost hit by two state pensions potentially.

Taking only dividend income from a diverse portfolio is safe in respect of the income need.  Although if you invest it badly, it wouldn't be safe.    100% in a bank share for example would have given a plentiful yield in the 90s and early 2000s but come the credit crunch, you would have lost the lost.

Pre-credit crunch, this website was full of DIY investors who preached the HYP strategy.   They all came a cropper in the credit crunch.  And then you had BP's issues which was also a staple of the HYP strategy.

michaels

BritishInvestor said:

michaels said:

0.5%,1%,,,even 2% doesn't sound very much:

£5,000 - £20,000 per year managing a £1m pot for 40 years is £200,000 - £800,000 or between 20% and 80% of the amount of retirement income the retiree will spend....

That's a fair observation, but the average DIY investor probably trails the market by a reasonable amount every year so I'm not convinced it's always as clear cut as that (purely in terms of returns).

I would be surprised if my global tracker trailed the market by more than the total 0.15% fund plus platform charges.

Kim1965

dunstonh said:

At 67 i will have sp and db index linked totalling 17.5 k, i need about 20k pa
I should have 200 to 250 dc and plan only to take the dividend income. 
 Is this a " safe *strategy?? 

Are you single or married/partner?     £20k is almost hit by two state pensions potentially.

Taking only dividend income from a diverse portfolio is safe in respect of the income need.  Although if you invest it badly, it wouldn't be safe.    100% in a bank share for example would have given a plentiful yield in the 90s and early 2000s but come the credit crunch, you would have lost the lost.

Pre-credit crunch, this website was full of DIY investors who preached the HYP strategy.   They all came a cropper in the credit crunch.  And then you had BP's issues which was also a staple of the HYP strategy.

Will be single, should have closer to 25k. Would only take money out of dc if theyears gone well. Spread over 25 +etfs so hopefully diversified