We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
How long pension pot might last - sense check of calculations
Options
Comments
-
Or Equity Release your house to the max, and leave a note with your will saying "sorry, there's no money left!" 😉How's it going, AKA, Nutwatch? - 12 month spends to date = 2.60% of current retirement "pot" (as at end May 2025)0
-
getting_better_2 said:Hi All,
Following some really helpful advice over the last couple of weeks, I've started pulling together a spreadsheet plan of how far my pension pot will take me...
Based on some fairly simple numbers of:
4% growth
3% inflation
3.5% drawdown
My calculations show pot running out after approx 33-34 years does that sound about right? ( current calc based on starting to draw at 58 so would be good until 91/92 which feels suitably ambitious)
Also does growth of 1% above inflation sound realistic, especially as by the time of drawing down I'll presumably have a very low risk investment
Thanks in advance for any thoughts
0 -
To my currently fairly lucid mind, it makes a lot of sense to consider that when you approach 70-75: annuity rates will naturally be more attractive as you are closer to shuffling off your mortal coil….you might also be less inclined (or capable) to want to manage finances so much at that stageI get the second reason, but serious question: how much benefit is there from higher annuity rates at an older age after you factor in the foregone annuity payments between older age and whenever preceded that?0
-
JohnWinder said:To my currently fairly lucid mind, it makes a lot of sense to consider that when you approach 70-75: annuity rates will naturally be more attractive as you are closer to shuffling off your mortal coil….you might also be less inclined (or capable) to want to manage finances so much at that stageI get the second reason, but serious question: how much benefit is there from higher annuity rates at an older age after you factor in the foregone annuity payments between older age and whenever preceded that?
From HL's figures
A single fixed annuity at 65 returns 5.6%. In the short term it is not too bad but is likely to be of little value should you live to 90+. But you are probably safe in that sort of time period anyway assuming you have made sensible provision.
At 75 the return goes up to 7.6%. That is beginning to look like a reasonable return for guaranteed income for the rest of your life. Probably better than you will make from your investments without any risk. Sure, you might die early and not get the benefit but you will be dead so wont care. On the other hand you still have some risk from inflation.
Figures for age 85 are not available but from life expectancy data the figure could be say 12%. By which time buying an annuity looks very sensible to me.
1 -
JohnWinder said:To my currently fairly lucid mind, it makes a lot of sense to consider that when you approach 70-75: annuity rates will naturally be more attractive as you are closer to shuffling off your mortal coil….you might also be less inclined (or capable) to want to manage finances so much at that stageI get the second reason, but serious question: how much benefit is there from higher annuity rates at an older age after you factor in the foregone annuity payments between older age and whenever preceded that?
0 -
I guess the benefit of purchasing an annuity at 70-75 comes for the folks who live to be 100 plus.1
-
NedS said:JohnWinder said:To my currently fairly lucid mind, it makes a lot of sense to consider that when you approac h 70-75: annuity rates will naturally be more attractive as you are closer to shuffling off your mortal coil….you might also be less inclined (or capable) to want to manage finances so much at that stageI get the second reason, but serious question: how much benefit is there from higher annuity rates at an older age after you factor in the foregone annuity payments between older age and whenever preceded that?0
-
Linton said:NedS said:JohnWinder said:To my currently fairly lucid mind, it makes a lot of sense to consider that when you approac h 70-75: annuity rates will naturally be more attractive as you are closer to shuffling off your mortal coil….you might also be less inclined (or capable) to want to manage finances so much at that stageI get the second reason, but serious question: how much benefit is there from higher annuity rates at an older age after you factor in the foregone annuity payments between older age and whenever preceded that?Surely the point of insurance isn't winning. It is about making sure that you don't lose far more than you could possibly afford to. Using part of your pension pot to buy an index linked annuity is insurance against the risk of spending your later years living in abject poverty.If people have "more than enough money to self insure" then they would be daft to buy an annnuity, or to worry about safe withdrawal rates etc. The reality is that most people aren't in that position."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson1
-
MacMickster said:Linton said:NedS said:JohnWinder said:To my currently fairly lucid mind, it makes a lot of sense to consider that when you approac h 70-75: annuity rates will naturally be more attractive as you are closer to shuffling off your mortal coil….you might also be less inclined (or capable) to want to manage finances so much at that stageI get the second reason, but serious question: how much benefit is there from higher annuity rates at an older age after you factor in the foregone annuity payments between older age and whenever preceded that?Surely the point of insurance isn't winning. It is about making sure that you don't lose far more than you could possibly afford to. Using part of your pension pot to buy an index linked annuity is insurance against the risk of spending your later years living in abject poverty.If people have "more than enough money to self insure" then they would be daft to buy an annnuity, or to worry about safe withdrawal rates etc. The reality is that most people aren't in that position.
However you would be foolish to pay too much for your insurance. Below the age of say 80 I would say that at present annuity rates the cost would be too much in that the amount you would get as income would not make sufficient difference to your situation given the cost.1 -
I can understand the benefit of deferring purchasing an annuity to later life but obviously we won't know if rates by that then will be similar or not to now or whether our pension pots will be better or worse than now.0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 350.9K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.5K Spending & Discounts
- 243.9K Work, Benefits & Business
- 598.7K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards