Annual growth projection %

Kim1965

Scb, I accept thst  I will work pt to mitigate risk if the a...e fell out the markets. It may be easier for me to go pt (im a tradesman) and i can choose to do less. After a lifetime of working 5 or six days a week and doing evening emergencies, part time is a real win for me. Plus it will provide structure and ease me into retirement. 
 On the face of it you seem to be really well placed financially, plus pt does not phase you. I can only think that you must enjoy your job? Or perhaps your hoping for redundancy? I dont see any financial reasons why you couldnt také a step towards retirement. 

SouthCoastBoy

Unfortunately i dont enjoy my job, but I will keep going for now just to add more resilience to my plan. We are also doing a few house renovations which will cost about 8k so staying at work will pay for that.

Peterrr

I have read that UK stocks average annualised returns over the last 119 years have been 4.9% above inflation. Of course, "past performance etc.", and to be honest, I'm using similar rates to yours OP

MK62

One issue with using averages, especially longer term averages, is that you can get radically different outcomes in drawdown, even if different sets of return and inflation data have the same overall averages....

SouthCoastBoy

Yes, hence that is why I'm still working, as no guarantees on future growth etc. 

The problem with my approach is I could work longer than I need to

OldScientist

MK62 said:

One issue with using averages, especially longer term averages, is that you can get radically different outcomes in drawdown, even if different sets of return and inflation data have the same overall averages....

Using the asset return data for the UK from https://www.macrohistory.net/ for rolling 30 year periods (from 1872 to 2016), the real annualised return rates for various asset classes at 1st percentile (i.e., close to worst case), 25th percentile, and median are

                     1    25    Median
Stocks        1.2   3.3      5.1
Bonds       -4.7  -1.2      1.1
Bills/Cash -2.4  -0.7      1.0
60/20/20    0.2    2.1      3.2

So choosing a worst case value close to 0% real is consistent with history and a good first start.

However, as MK62 says, the sequence of returns is important if a constant inflation adjusted drawdown is used which requires more sophisticated approaches. For example, the calculators at https://www.2020financial.co.uk/pension-drawdown-calculator/ or https://portfoliocharts.com/portfolio/retirement-spending/ (although the former appears to have stopped working, or is just me? edit: Seems to be working again now), while the latter will need setting to UK as a home country and only includes data from 1970-2022, which doesn't include the worst cases for the UK).

SouthCoastBoy

I'm confident my spreadsheet is complex enough to give accurate figures based on the inputs, the problem I have are the future input variables, above is a good guide and shows that maybe too pessimistic, for example I have inflation at 4% for around ten years but equities growth 3.5% and cash growth around 1.5%.

sgx2000

saucer said:

 My only query is why wait?

My Thoughts too....

OldScientist

SouthCoastBoy said:

I'm confident my spreadsheet is complex enough to give accurate figures based on the inputs, the problem I have are the future input variables, above is a good guide and shows that maybe too pessimistic, for example I have inflation at 4% for around ten years but equities growth 3.5% and cash growth around 1.5%.

Agree with you about the future - no-one has any certainty about what the returns or inflation over the next 30 or more years will be. Two possible ways of building more certainty into a plan (in the absence of an inflation protected DB pension) is to hold RPI annuities (although there is insurance company and government default risk and, without a guarantee period, a reduction in legacy in the early years) or build your own annuity out of inflation linked bonds (with longevity and government default risk). With the former, aged 65, a joint annuity with 50% survivor benefits is currently giving an annual payout of about 3.5% of premium, while a 30 year version of ladder gives somewhere between 3.3% and 3.8% depending on whether you assume 0% or 1% yields to maturity (these reduce to 2.9% and 3.4% for a 35 year ladder, which are not that far away from estimates of the SAFEMAX withdrawal rate for the UK).