Dynamic spending rules for retirement drawdown pros/cons and alternatives?

Pat38493

GazzaBloom said:

Thank you all for the comments and links to further reading, some good points to add to the musing.

The reason I am getting more serious about pinning down an early retirement date is that Timeline and FiCalc show 100% success rate with my current portfolio, remaining contributions and drawdown, suggesting I could hang up my boots at the end of 2024. However, that is with Guyton’s rules selected so I am wary.

Have you had a look through the cash flow chart for the worst case and pessimistc scenarios, and also downloaded the cash flow and balance data?  If you select rules like Guyton, you can see some of the big cuts you take in spending on some of the scenarios.

You can also see when using some of those approaches that if you have DB and SP or other income sources, slavishly following Guyton parameters sometimes leads to some strange results in the proposed cash flow where you sometimes ended up with  a huge fund at end of life, having cut your DC withdrawals (arguably unnecessarily).

There are also some pollution if you have DB and SP from periods in the first half of the 20th century where there was significant deflation which effectively increased the spending power of your DB assets a lot but are arguably very unlikely to happen in future.

Problem is that I think if you switch some of these type of rules on, then per definition you will end up with 100% success, but you then have to look at the impact on your spending.  I found that it's when you start putting some of those adjustment parameters on, that you then need to examine the data on the reports much more closely to see what is really going to happen.

Sea_Shell

So easy to get caught up in analysis paralysis.

If the numbers "feel" right and appear to make sense, go for it 😎

That's what we did.   Plan's holding up so far, after 4 years 🤞

Albermarle

Sea_Shell said:

So easy to get caught up in analysis paralysis.

If the numbers "feel" right and appear to make sense, go for it 😎

That's what we did.   Plan's holding up so far, after 4 years 🤞

I agree, most of us on these forums have a good feel for money/numbers, so I am never quite sure of the value of going into too much detail, especially when it is over decades. It's down to your personality to some extent I think. 

Pat38493

Just noticed today that Timeline have just rolled out a major UI upgrade.

Interestingly they have added clarifying text which kind of implies that going for 100% success is overkill and you should be aiming for 82-95%, even to the front results screens.

However if you have Guyton switched on, I would then question this - personally I would take this to mean without any of those rules about variable spending switched on. 

Also - have you only selected Guyton in the inflation rules or are you using guardrails under the withdrawal rules?

If you only select Guyton under inflation, your spend will never increase again once it trails inflation, no matter how good things get afterwards (which is obviously not what you would do in real life.

FIREDreamer

Sea_Shell said:

So easy to get caught up in analysis paralysis.

If the numbers "feel" right and appear to make sense, go for it 😎

That's what we did.   Plan's holding up so far, after 4 years 🤞

Just read your nuts thread. Not all of it obviously as it is quite a long thread.

I have a lot more than you (not boasting), probably double, I am older, can probably retire but too frightened or unsure / worried to do so.

If I bought an annuity it would be enough (and a bit more) but I just can’t give that much money to an insurer.

i will be one more year until I’m 80 at this rate, how do I get myself out of this.

I am sure my health would improve if I could get the courage to retire. Financial services, not customer facing, more like programming, compressed hours, not physically demanding, finding the job stressful and I find myself dreading every day.

Help!

Sea_Shell

It's not all about what you have (savings/income etc)...it's also about what you want (need) to spend.

If your numbers don't support each other, then you need a rethink, regardless of how many naughts your numbers have.

GazzaBloom

Pat38493 said:

Just noticed today that Timeline have just rolled out a major UI upgrade.

Interestingly they have added clarifying text which kind of implies that going for 100% success is overkill and you should be aiming for 82-95%, even to the front results screens.

However if you have Guyton switched on, I would then question this - personally I would take this to mean without any of those rules about variable spending switched on. 

Also - have you only selected Guyton in the inflation rules or are you using guardrails under the withdrawal rules?

If you only select Guyton under inflation, your spend will never increase again once it trails inflation, no matter how good things get afterwards (which is obviously not what you would do in real life.

I have Guyton's inflation and guardrails switched on but guardrails are set to 5% adjustments not 10%. I will download the data and have a look.

GazzaBloom

Sea_Shell said:

So easy to get caught up in analysis paralysis.

If the numbers "feel" right and appear to make sense, go for it 😎

That's what we did.   Plan's holding up so far, after 4 years 🤞

It may also be easier and of more comfort if you have used an IFA to review your plan and confirm your numbers, if I recall you sought advice?

To date, I haven't and am only using software and my own guidance.

Sea_Shell

GazzaBloom said:

Sea_Shell said:

So easy to get caught up in analysis paralysis.

If the numbers "feel" right and appear to make sense, go for it 😎

That's what we did.   Plan's holding up so far, after 4 years 🤞

It may also be easier and of more comfort if you have used an IFA to review your plan and confirm your numbers, if I recall you sought advice?

To date, I haven't and am only using software and my own guidance.

Well yes, just the once, in a non-formal way (old friend - but IFA).   He gave no other advice.

We just presented our figures, he gave them the once over and said, looks good to me 🤣

Sea_Shell

On that point.   I'm not sure an IFA would (can?) actually tell you, "Yes, you have enough to retire!!"

You're unlikely to get the "official" rubber-stamp you seek.

ATEOTD They can't know how much you'll choose (or have to) to spend in retirement.