Sources of advice / software tools re: when to retire (and on how much)

Pat38493

Notepad_Phil said:

Kodadda said:

...
If I understand correctly, the 4% rule suggests that this could generate an income of up to £26.6k – i.e. 4% * (£115k + £250k + £300k) were I to maximise my equity release and retire immediately. But obviously that ignores state and DB pensions.
...

A 4% withdrawal rate comes from US data and was meant in the worst of times to leave just enough money so that the pot hadn't run out over the typical length of retirement.

Consequently I'd reduce the 4% to 3.5% as you're in the UK and then I'd definitely consider reducing it even further as retiring immediately would mean your retiring at least 12 years before your state pension kicks in. So depending on how risk averse you are, maybe down towards 3%.

Partially I agree but the 4% rule was originally developed assuming no state pension and no other DB type assets, but on the flip side OP wants to retire earlier than the normal age, so if OP for example only needed to draw out 2% after having state pension, it might be possible to target 4% or greater during that bridge period.  Further modelling needed.

Kodadda said:

Simon11 said:
Why do you have so much stored up in ISA, bonds and saving, compared to your pension? Maybe inheritance?

Reason for asking is that going forward I would suggest putting in as much as possible into your DC through work to take advantage of tax savings and if you can, for now borrow money in ISA, bonds to make up the difference.

Poor planning, to be honest. When I started working for myself, I kept making my ISA contributions, but didn't sort out my pension. (The bond was a gift. And the savings are mostly a payout after my pension provider messed up.) But, yes, assuming I keep working (for a little while, at least) I was planning to move some of this into my pension.

Would advise you look to maximise your state pension one way or another either by working extra years or topping it up in future periods as you go - it's a good bargain compared to other pension assets.

Also yes would advise paying maximum you can into your pension as you will get tax relief on the contributions (especially if any of your income is on higher rate but either way).

You can also try a site called Cfiresim - it's based on US data but it allows you to plug in some fund values and future income streams and give you a rough idea.

Another thing is to analyze and categorize you spending and figure out what will change after you stop working - and also not forgetting you won't have to pay NI or pension contributions after stopping so those "costs" will go away as well.

Mick70

I am hoping to retire possibly 55 (and at most 57) , and unlikely to get my state pension until 67/68. However I have a DB and a DC mix.  On the DC even though retiring early I plan to use the 4% rule , then reduce this when state pension kicks in . 3% seems to conservative , IMO anyway 

dawsonrm

Pat38493 said:

Timeline.io which is normally a paid tool used by advisers but you can get a demo version to play with.

Anyone know how you can actually get a demo version of timeline? From what I can see you have to be an advisor to get hold of one.

Pat38493

dawsonrm said:

Pat38493 said:

Timeline.io which is normally a paid tool used by advisers but you can get a demo version to play with.

Anyone know how you can actually get a demo version of timeline? From what I can see you have to be an advisor to get hold of one.

Last time I checked, you would go to the login on the financial planning software and "sign up" - if you sign up, I think you are allowed to access the software but only with one or two clients available.  As far as I know it's not time limited - you are just limited to having a couple of clients available.

(if you use Timeline, last time I was playing with it there were a few quirks like I found that if you changed your longevity or retirement date or some other dates of income streams or suchlike, it sometimes got confused and wrongly changed other dates of pension contributions so you have to double check that everything is still correct each time you make significant alterations to the model - however it's a good tool in my opinion).

There is also another even more advanced tool called "Voyant Go".  This one you can sign up for  30 day trial.  There are also some financial podcasters who offer a paid "training class" that includes a year membership of Voyant Go which you can renew for about a hundred quid a year I think.  However this software is quite complicated to use and since OP said that Timeline was already too complicated for them I didn't mention it up to now.   Voyant Go main model works just on programmed return and inflation rates that you put in, but you can run historical and monte carlo stress tests on the model in a separate screen.  Timeline is focussed mainly on historical stress testing.

michaels

There is also the ERN spreadsheet (google docs)
https://docs.google.com/spreadsheets/d/1QGrMm6XSGWBVLI8I_DOAeJV5whoCnSdmaR8toQB2Jz8/copy?

Rule of thumb is to work out how much money you would need to 'replace' state and DB pensions until they become payable and deduct that from your DC pension/other savings and then add on 3.5% (for example) of the remaining pot

EG State pension 10k, DB 2k from age 67
Retire at 57 need 12k x 10 years = 120k to 'cover' SP and DB to age 67
Isa+DC (+downsize) pot 665k less 120k = 545k
545k at 3.5% SWR = £19k

So prior to SP age drawdown 19k + 12k pa from DC/ISA pot = 31k pa
Post SP age age drawdown 19k pa from pot and get 12k pa SP+DB = 31k pa

Pat38493

michaels said:

There is also the ERN spreadsheet (google docs)
https://docs.google.com/spreadsheets/d/1QGrMm6XSGWBVLI8I_DOAeJV5whoCnSdmaR8toQB2Jz8/copy?

Rule of thumb is to work out how much money you would need to 'replace' state and DB pensions until they become payable and deduct that from your DC pension/other savings and then add on 3.5% (for example) of the remaining pot

EG State pension 10k, DB 2k from age 67
Retire at 57 need 12k x 10 years = 120k to 'cover' SP and DB to age 67
Isa+DC (+downsize) pot 665k less 120k = 545k
545k at 3.5% SWR = £19k

So prior to SP age drawdown 19k + 12k pa from DC/ISA pot = 31k pa
Post SP age age drawdown 19k pa from pot and get 12k pa SP+DB = 31k pa

Yes this is also a good tool that I have looked at.  Need to be aware though that the ERN spreadsheet, because of the way he has modelled all the data to get it all into a single spreadsheet, relies on whether your end portfolio balance will be above zero at the end of your retirement period.  If you are relying on a bridge approach where you are using a fund to bridge the gap between early retirement and start of DB and SP pensions, the ERN spreadsheet will not warn you if you are running and significant risk of running out of money before the additional pensions kick in.  However that doesn’t make it a bad tool - you just have to keep in mind the limitations of each tool.

bluenose1

My favourite one is guiide.co.uk and I regularly check the different permutations of working extra couple of months etc. It asks how much you want to live on and whether you want it inflation linked etc, though think they only assume 2.5% annual inflation. 
Good if you aren’t great at spreadsheets and also good to check it agrees with any spreadsheet calculations.