Do you carry on using retirement planning tools after retirement?

GazzaBloom

I'm sure there are few members on here that use some form of retirement planning tools, or their advisor does, such as Timeline, FiCalc, Voyant, or your own spreadsheet.

For those that do and either have retired or are nearing retirement, do you expect to carry on with using the planning tool after retirement? or has it served it's purpose and you no longer need it?

For those using an advisor, do you plan to carry on using your advisor in the same way?

kinger101

If I'm using drawdown, I'll still need to use.  I guess it could get to a stage where I'm well out of the woods in regards to SOR risk and comfortable with a fixed modest withdrawal, but until then, I'd want to keep a close eye on things.

Linton

From my nearly 20 years experience if you remain significantly dependent on investments during retirement you must use a year by year spreadsheet or equivalent model to monitor and predict your ongoing wealth, spending and income. How else are you going know you are going off course or assess the effect of say a sudden 10% rise in prices or a world cruise.

On the other hand I believe that any usefulness of an SWR type model ceases as soon as you have retired. You need to be looking at things at a much greater level of detail. My spreadsheet model for example includes the separate accurate calculations of income tax for myself and Mrs L, one off expenditures for specific years, inflation rates for specific years, different returns for different investment tranches etc. 

The safety of the plan is assessed by the predicted total wealth remaining at death.  Whilst this value is substantial I am happy to spend pretty freely. Annual monitoring of wealth at death provides a very early warning of problems to come and enables one to identify relatively small changes that over the long term would have major effects. There should therefore be no need for major short term changes in lifestyle driven by panic.

Doctor_Who

Having recently retired early and using UFPLS withdrawals from my SIPP, I'm using my own spreadsheet to monitor and predict wealth over the next 10-12 years. At this point my DB pension and SP will kick in and I can probably stop the monitoring and predicting (although I expect I'll carry on out of interest!). If all I had was a DC pot and SP until the 'end' then things would be different, and I'd definitely want to keep monitoring and predicting wealth each year.

GazzaBloom

Linton said:

From my nearly 20 years experience if you remain significantly dependent on investments during retirement you must use a year by year spreadsheet or equivalent model to monitor and predict your ongoing wealth, spending and income. How else are you going know you are going off course or assess the effect of say a sudden 10% rise in prices or a world cruise.

On the other hand I believe that any usefulness of an SWR type model ceases as soon as you have retired. You need to be looking at things at a much greater level of detail. My spreadsheet model for example includes the separate accurate calculations of income tax for myself and Mrs L, one off expenditures for specific years, inflation rates for specific years, different returns for different investment tranches etc. 

The safety of the plan is assessed by the predicted total wealth remaining at death.  Whilst this value is substantial I am happy to spend pretty freely. Annual monitoring of wealth at death provides a very early warning of problems to come and enables one to identify relatively small changes that over the long term would have major effects. There should therefore be no need for major short term changes in lifestyle driven by panic.

That makes sense, I run a very detailed zero based budget for day to day, month to month income/expenditure which runs out 12 months ahead but my current retirement planning is simple year on year projections.

I guess I just carry on into retirement the same, updating the year on year future plan after that years consumption, and update planned future annual spend based on what the current budget no.s look like and see what the projections look like to see if any adjustments required.

Pat38493

I am not sure about Voyant but Timeline is mainly best as a long term stress testing tool.  I think you could still use Timeline in retirement maybe every year or so, but you would have to be very careful about how you interpret the results.

Firstly, Timeline is not very good on the short term because if you look at the fund balance downloads which gives you information by quarter, you can see that although Timeline calculates the growth and inflation scenarios by calendar month, it puts all of your annual spending and contributions on January 1st, when in reality you are probably spreading it over the year.  This most likely makes virtually no difference on a 40 year long term plan, but certainly it means the quarterly predicted balances in the first year will be totally "wrong".

For this reason, I decided that in my Timeline model I only put in my investment balances as of January 1st in the current year, and would only then update them a year later, and I didn't put in any balance changes during the year.

The other issue is around SORR - if you look at the balances chart and switch everything on - all calendar years, best, worst, etc - you will often see that there are some nasty situations where your fund went down by nearly half in the first few years, but the scenario then recovered.  Imagine if you ran Timeline a few years into your retirement you will get a shock and it might tell you that you shouldn't have retired.  However this is not correct if you are in a 40% market crash - Timeline makes no allowance for the point that the markets are currently in 40% drawdown and therefore you are much more likely to be in one of the more optimistic scenarios going forwards.

Therefore arguably the best might be to download all the data spreadsheets and graphs from Timeline when you retire as a baseline, and use that as one of the data points in an annual review and for creation of your own spreadsheets.  If you insist on using Timeline years after retirement, you should probably be using an much lower expected success rate if you are in a large market drawdown at that moment.

Sea_Shell

I don't use any tools but my own spreadsheets.   I have one for spends (categorised), one for totals of what's where, one historic and one projection.   Lots of odd sheets included here and there too, for logging interest, ISA prices, 1 yr fixes etc etc.

We keep a beady eye on everything. 😉

Will we carry on once full DB/SP in play?   Don't know.  It's sort of become a hobby...or is that obsession 😇😲😉

Linton

GazzaBloom said:

Linton said:

From my nearly 20 years experience if you remain significantly dependent on investments during retirement you must use a year by year spreadsheet or equivalent model to monitor and predict your ongoing wealth, spending and income. How else are you going know you are going off course or assess the effect of say a sudden 10% rise in prices or a world cruise.

On the other hand I believe that any usefulness of an SWR type model ceases as soon as you have retired. You need to be looking at things at a much greater level of detail. My spreadsheet model for example includes the separate accurate calculations of income tax for myself and Mrs L, one off expenditures for specific years, inflation rates for specific years, different returns for different investment tranches etc. 

The safety of the plan is assessed by the predicted total wealth remaining at death.  Whilst this value is substantial I am happy to spend pretty freely. Annual monitoring of wealth at death provides a very early warning of problems to come and enables one to identify relatively small changes that over the long term would have major effects. There should therefore be no need for major short term changes in lifestyle driven by panic.

That makes sense, I run a very detailed zero based budget for day to day, month to month income/expenditure which runs out 12 months ahead but my current retirement planning is simple year on year projections.

I guess I just carry on into retirement the same, updating the year on year future plan after that years consumption, and update planned future annual spend based on what the current budget no.s look like and see what the projections look like to see if any adjustments required.

We do not budget at all within the year.  I see no point unless one's total expenses are worringly close to being unsustainable.    At the start of each year money is reallocated to balance the various asset classes with day to day expenditure taken as needed from the cash tranch. The plans show a level of expenditure for the next year but if it is exceeded by a fairly small amount it usually leads to no more than a shrug of my shoulders.  To make a broader point, in my view planning should be for years not days.

Most of our expenditure is fixed either by its nature or by our chosen standard of living. Any spur of the moment expenses are likely to be small compared with the overall annual expenditure - for example is it really worth fretting about buying a £300 new phone if you are spending £35K/year anyway?  If you have used your annual alcohol budget for the year by October are you going to stop drinking until the New Year?

One off expenditure of £1000s that could make a real difference to ones finances eg expensive holidays, new cars etc are explicitly planned and finance allocated separately from day to day expenditure.

GazzaBloom

Some great thoughts there - thanks

Bostonerimus1

If you are in drawdown it's necessary to still use the various planning tools to see if you are on track. With them you can make sure your spending, investment gains (or losses) and withdrawals and all still adding up to a success full retirement. 

sgx2000

My concern at 63, and fast approaching retirement is ....
Will your mental acuity match your desire to manage your own funds into your 80's or 90's???

Surely non of us can predict this....