Recommendations for learning around withdrawal strategies

nicknameless

Hi Folk,

Apologies if this has been covered in detail before.  Approx. 2 years or so from considering partial or full retirement and wanting to increase knowledge base re potential withdrawal strategies.  We have mix of DB, SIPP, and small amount of ISA savings.

Can you good folk recommended any resources (books, articles (don't mind academic) etc.) that might help me increase knowledge in this area.

Also wondering eventually if this is an area to take paid advice in?  We are fully DIY at present and I have spreadsheets and also using software to gauge affordability of retirement, but of course I don't know what I don't know.

Any recommendations and thoughts welcome.

Many thanks,

N

NoMore

The Safe Withdrawal Rate Series - Early Retirement Now Most comprehensive investigation into SWR, I've ever seen, however USA based.

Beyond The 4% Rule: The science of retirement portfolios that last a lifetime eBook : Okusanya, Abraham: Amazon.co.uk: Books - Good book and is UK based.

Living Off Your Money: The Modern Mechanics of Investing During Retirement with Stocks and Bonds: Amazon.co.uk: McClung, Michael H: 9780997403404: Books - Haven't actually read this but seen it recommended.

Three for starters, others will be along to recommend more and point out the shortcoming in these.

Also there's probably two parts to what your asking:

1) How much to withdraw from your portfolio - this is essentially what SWR is about and is the thing most discussed online and in research.

2) How to withdraw tax efficiently - this is the area which has less academic research and is pretty unique to an individual, however this is usually easier to figure out, once you know how much you wish to withdraw.

dunstonh

Just remember that there is no 4% SWR rule and the research behind it is not suitable for UK investors.  

Bostonerimus1

dunstonh said:

Just remember that there is no 4% SWR rule and the research behind it is not suitable for UK investors.  

The difficulty with many articles on retirement withdrawals that you'll find on the web is that they are American and emphasize US tax management strategies that are not applicable to a UK retiree. So you need to filter out that stuff and get down to the basic asset allocation and investment withdrawal strategies. You also need to be aware of any emphasis on US equity and bond markets. However, the basic principles can be applied. I would start with the "Bogleheads" webpage on withdrawal strategies and then look at the links and references at the bottom of the page for more information.

https://www.bogleheads.org/wiki/Withdrawal_methods

Albermarle

This is a slightly easier/simplistic read maybe from Vanguard.
Setting a strategy for retirement withdrawals (vanguard.com)

Somebody

Go on Youtube and have a look at videos by Meaningfulmoney (Pete Matthew).  Other planners are available e.g. James Shack but I would start with Pete first.

gm0

McClung uses more than US data for his method testing so the "not read it" but recommend ignore us centric stuff arguments do not really apply to that one. 

Clearly few UK investors are interested in Roth conversions and other US tax arcana.  And he doesn't really touch that either bar some more generic role of guaranteed income sources analysis which do use TIPS ladders. For that chapter you have to read across to UK relevant index linked and other forms of guaranteed income bond ladders (without the $ involved).  Conceptually largely the same and not the focus of the book.

But it doesn't do UK tax planning.  You have to learn that elsewhere.  I haven't found a good and maintained as up to date book which takes the whole thing on inclusive of tax planning. I don't think that really works for the author or publisher.

What McClung does do is deaccumulation method testing with US, international and simulated "stress markets" to test approaches against one another across a range of conditions.  Portfolio shape, method of access and rebalancing - does any of it matter and if so how much and which one is best.  You don't have to agree with his combination of final choices to get value on what the "good enough ones" are and which few to probably avoid becuase they seem to lag a bit across a wide range of scenarios of back testing and MC simulation.

It doesn't have to be accurately predictive nor does it claim that - to tell us if approach A is (mostly) better than B in a range of conditions simulated.  And also about the magnitude of these differences

A lot of web simplified retirement magic is shilling for somebody driving recognition / clicks or advice services.  An early lesson is that there isn't much magic to be had.

I also like Bernstein "Rational Expectations" which is intermediate in difficulty between Okusanya (basic) and McClung (exhaustive and exhausting in the field it covers).

And of course there is always the ERN drawdown web series which has some US centricity and its occasional over simplifications of others' work when conducting comparisons. - but is a free resource where someone with modelling skills has examined this area of statistics and documented and shared findings at considerable effort.  So to be celebrated for what it is and not what it isn't. 

There is some good explanatory stuff on monevator - unclear what is and isn't on google or behind the subscription wall now.

nicknameless

NoMore said:

The Safe Withdrawal Rate Series - Early Retirement Now Most comprehensive investigation into SWR, I've ever seen, however USA based.

Beyond The 4% Rule: The science of retirement portfolios that last a lifetime eBook : Okusanya, Abraham: Amazon.co.uk: Books - Good book and is UK based.

Living Off Your Money: The Modern Mechanics of Investing During Retirement with Stocks and Bonds: Amazon.co.uk: McClung, Michael H: 9780997403404: Books - Haven't actually read this but seen it recommended.

Three for starters, others will be along to recommend more and point out the shortcoming in these.

Also there's probably two parts to what your asking:

1) How much to withdraw from your portfolio - this is essentially what SWR is about and is the thing most discussed online and in research.

2) How to withdraw tax efficiently - this is the area which has less academic research and is pretty unique to an individual, however this is usually easier to figure out, once you know how much you wish to withdraw.

Sorry for the slow response to this thread - been very busy.

The other thing for me is how best to assess safe withdrawal from the 'portfolio' part of our retirement resources i.e. mainly SIPPs and a little bit of ISAs, alongside fixed income and adjust this according to market performance.  We both have DB pensions coming online at different points and with state pension at approx. 68 if both still alive we'd have nearly £50k in fixed income pre-tax (we need more than this at this point and so will still need to draw from our 'portfolio' slightly).

We are looking at retiring at approx. 55 (couple of years or so) and so obviously the portfolio does more of the work earlier on.

I have everything in timeline planning (managed to sign up a while ago and still have access) and this is giving a clear indication as we move towards retirement but I am not wholly confident in trusting a piece of software (although I assume most financial planners would be doing that?!).

Have ordered some reading from recommendations.

Thanks everyone.