Best way of tracking savings, pension planning

LHW99

kinger101 said:

LHW99 said:

Mutton_Geoff said:

LHW99 said:

Spreadsheet - well actually 3   - one for annual expenditure, one for savings / investments and one for annual total income. Began recording on paper well before Excel was a thing!

VisiCalc or Lotus 123?

Neither. Began on paper and now on Excel, although I did try Lotus briefly (couldn't get on with it) and also had a go on our first (BBC 64k memory) computer, but that trial didn't last long either, although we did have an MS DOS emulator which worked fine for word processing.

5" floppys - those were the days - great improvement over a cassette tape!

Not bragging or anything, but my floppies were always 5.25"

- well, they were 5" to the nearest inch.......

DT2001

I read threads like these and take my hat off to those that plan and record meticulously. I don’t. I use excel spreadsheets as I, my OH and son are all self employed to record income, expenditure and expected tax/NI. When it comes to household expenditure I concentrate on the bigger amounts and lump the rest together. I have in the past, at the end of a year, done a SAF (source and application of funds) to see how much we have earned and saved. Now I just record, on a piece of paper, every few months, savings, ISA’s and pensions.
As far as planning for retirement I know when pensions are due to be paid, deferring SP etc and I just work on 3% withdrawal rate from our total pot. It is a rough guide and the problem I have with so many planning tools is the assumptions (straight line return, inflation consistant and steady expenditure). The key IMO is to work out likely expenditure (basic level) and try and ensure that is covered by guaranteed income and then whatever excess is generated is available for ‘luxuries’. My method will not suit most however having been self employed with a quite variable income allows me to be comfortable with that approach. I have a plan B (sell a property) and C (use capital). 
 

coyrls

The main thing to watch for in spreadsheet projections is the illusion of accuracy.  Just because everything is calculated to the nearest penny doesn’t make a projection any more accurate.  I prefer a broad assumption top-down calculation rather than a detailed bottom-up calculation.  The minimum, moderate and comfortable retirement calculations based on detailed expenditure spreadsheets produced by the PLSA show the flaws of a bottom-up approach.

Suhusa

coyrls said:

The main thing to watch for in spreadsheet projections is the illusion of accuracy.  Just because everything is calculated to the nearest penny doesn’t make a projection any more accurate.  I prefer a broad assumption top-down calculation rather than a detailed bottom-up calculation.  The minimum, moderate and comfortable retirement calculations based on detailed expenditure spreadsheets produced by the PLSA show the flaws of a bottom-up approach.

Hence the R script I built, with 10000 runs and including volatility. The numbers are never the same between runs but they're not that important. The interesting information is in the parameters of the resulting distributions of what's left in the 10000 'pension pots' - after first saving for retirement and then withdrawing for a set number of years. It's also not something to read too much into, but it's a good sanity check for (presumably) safe withdrawal rates for example.

DealingWithEstate

Thanks, all! Lots of food for thought and ideas.   I think your point about the "illusion of accuracy" is a good one 

coyrls ... but also the point about the leaking bucket and the need to know the size of the holes @Mutton_Geoff
Some of you are obviously more tech'y than I will ever be (R scripts? VBA macros?)... but this nudges me towards keeping a better track of what goes out, as much as what comes in!

optoutDB

I built my own spreadsheet. Top tip is to keep everything in 2023 prices otherwise the numbers lose all meaning when you look ahead. I went for a 'safe' 0.5% return on all investments. 

I did have plans to do monte-carlo runs, have probabilities for events ( mainly inheritances, and when to take pensions) and adaptive spending.  In the end I just have a few different scenarios and my disposable spending adjusts to net worth and targets £30k balance at age 80.   The biggest uncertainty/worry is whether the State pension and my DB pension does keep track with real inflation.

My spreadsheet does things correctly based on current regime like paying tax on pension drawdowns, and also moves spare cash into my ISA when it can. 

As a result of this modelling, I have just allowed myself a discretionary spend of £500pcm for the time being, compared to the <£100 I had been spending due to matching my spending to my earnings still.