Is it all too good to be true?

SouthCoastBoy

In the last 7 years my investments when excluding new subscriptions have approximately doubled, on 60:40 equity:cash portfolio. Has this put me in a false position and the reality is there will be some poor years on the horizon?

I know nobody knows the answer but sometimes I feel the last few years of growth is not representative of the long term average and some difficult years may be just around the corner, therefore maybe I shouldn't count on the current balance being so high when I retire?

Maybe I should strip 30% of the balance and plan based on that?

Hoenir

Markets ultimately have to realign with the real world economy. Seems as if investing on the basis of fundamentals is a dying art. A byproduct of the plentifull cheap money era. 

af1963

There are no crystal balls here. There almost certainly will be poor years ahead, but they may be outweighed by further good years before or after.

But you can look at the investments you have, compared to what you expect to need, and make a decision about how riskily/aggressively you need to be investing the balance to be able to afford what you need to spend.  If any growth is just going to build up a pot that you won't fully spend, why take the risks ?

Bobziz

Without wishing to offend, from what I recall about your financial situation you could probably have retired a while ago. Is this about finding more reasons why now isn't the right time or do your numbers really suggest you should hang on ?

Bostonerimus1

You might consider some rebalancing of your assets. 

Sunnylifeover50plan

SouthCoastBoy said:

In the last 7 years my investments when excluding new subscriptions have approximately doubled, on 60:40 equity:cash portfolio. Has this put me in a false position and the reality is there will be some poor years on the horizon?

I know nobody knows the answer but sometimes I feel the last few years of growth is not representative of the long term average and some difficult years may be just around the corner, therefore maybe I shouldn't count on the current balance being so high when I retire?

Maybe I should strip 30% of the balance and plan based on that?

If you were to profit take, where would you invest the profit you'd taken? I do understand your sentiment but we all know it's time in the market rather than timing the market

Sarahspangles

Aren’t these risks already factored into the models and simulations you’ve run? If so you’re just adding a further safety margin. You’re already more likely to run out of time than money.

If in fact you just love working, then accept that.

NoMore

Can I afford to retire — MoneySavingExpert Forum

his first thread in pensions, 4 years ago. Told he could already retire then. His assets have increased significantly since than and at some point I'm sure he reduced his expected spending.

He has enough, but keeps finding excuses not to. Which is fine, if you like working keep working, but stop kidding yourself about it.

Albermarle

NoMore said:

Can I afford to retire — MoneySavingExpert Forum

his first thread in pensions, 4 years ago. Told he could already retire then. His assets have increased significantly since than and at some point I'm sure he reduced his expected spending.

He has a lot more than enough, but keeps finding excuses not to. Which is fine, if you like working keep working, but stop kidding yourself about it.

Small amendment. 

Notepad_Phil

SouthCoastBoy said:

Maybe I should strip 30% of the balance and plan based on that?

Before deciding to retire I looked at what would happen to our income if there was an immediate 50% crash that was followed by an inflation only recovery. Such a scenario would have meant few luxuries for us, but we would still have been comfortable enough so we went for it - note we continued to withdraw at our chosen income level, but were happy to know that we could cut back that income and live on it should we need to.

This was nearly 8 years ago and although Covid gave a few worries at first we've got more in our pots than when we started to draw down from them - in Inflationary terms we're a couple of percent up. In a few years we'll get to state pension age and we could really let our spending rip, but we know that we won't.

So I wouldn't say that you should plan on a 30% drop and only take that amount of income, but that it might make you happier if you knew that you would be comfortable enough if that did happen.

FIREDreamer

NoMore said:

Can I afford to retire — MoneySavingExpert Forum

his first thread in pensions, 4 years ago. Told he could already retire then. His assets have increased significantly since than and at some point I'm sure he reduced his expected spending.

He has enough, but keeps finding excuses not to. Which is fine, if you like working keep working, but stop kidding yourself about it.

To be fair, I had this problem for years. I annuitised 2/3 of my drawdown pot for a joint life uncapped RPI annuity just over a year ago. I remained at work until June this year when I retired at 60. My pot still keeps going up as I am only spending my early DB and annuity payments and still accumulating into ISA and the £2,880 into a SIPP.

No regrets.

Apart from the fact I could have retired at 55 based on my assets now.