Retirement Decision

ali_bear

One man's luxury is another man's bum-basic. 

(edit: I was replying to a much earlier post)

911abz

DT2001 said:

Your withdrawal rate is about 3% of the whole for the top end of your requirement which to my way of thinking is cautious bearing in mind in 15 years you will get your state pension. You also want to maximise investment growth which I think runs contrary to your apprehension. Linton’s 3 pot approach - cash/nr cash for immediate needs, large income producing pot to ‘feed’ 1st pot and growth pot (pension as untouchable for a few years) would work for you to achieve the income. Personally I intend to withdraw a fixed percentage of the whole high percentage equity pot (about 3.5%)  and supplement from cash pot to achieve the total but adding a caveat that I’ll reduce my income if I have a poor early sequence of returns. I have guaranteed income so a reduction in the ‘top up’ is less consequential. My plan will probably achieve the investment growth but at the potential expense of income certainty. How do you intend to use your cash reserve?

Initially plan to use cash & then GIA to bridge gap until 55 when I can access SIPP. Plan is to leave a 2-3 year 'cash buffer' to avoid withdrawing from SIPP, ISA or GIA during significant markets downturns etc. thus managing market volatility.  

Chewbecca

Cobbler_tone said:

My house and groceries cost about £17,500, so that’s a lot of etc for me. That’s with two of us on £180 a week on groceries including a regular supply of Waitrose Cava. Might bump it up if we switched to Champers. £45k for nice cars, gifts, clothes and holidays maybe.
I guess it’s all relative and some people spend £150 a month on the telly, £300 on council tax and the same again on energy bills.

That’s the point I guess isn’t it, there are wildly different ‘etcs’. Our outgoings are certainly higher than average but I really don’t think we are that extravagant in aread other than our travel spends.  Nothing on telly other than TV license (on holiday too much to make worthwhile!) and we drive basic, paid off 10 year old cars. Our house is expensive to run, CT is over £350pm and energy the same. It’s only a 3bed,1 bath though, just an expensive location. A luxury is another £350 monthly on private health insurance (covering pre existing conditions) and we have typically done a job a year on the house. So, when adding on eating out, social and groceries, it’s pretty easy to get to £40k. 

Cobbler_tone

Chewbecca said:

Cobbler_tone said:

My house and groceries cost about £17,500, so that’s a lot of etc for me. That’s with two of us on £180 a week on groceries including a regular supply of Waitrose Cava. Might bump it up if we switched to Champers. £45k for nice cars, gifts, clothes and holidays maybe.
I guess it’s all relative and some people spend £150 a month on the telly, £300 on council tax and the same again on energy bills.

That’s the point I guess isn’t it, there are wildly different ‘etcs’. Our outgoings are certainly higher than average but I really don’t think we are that extravagant in aread other than our travel spends.  Nothing on telly other than TV license (on holiday too much to make worthwhile!) and we drive basic, paid off 10 year old cars. Our house is expensive to run, CT is over £350pm and energy the same. It’s only a 3bed,1 bath though, just an expensive location. A luxury is another £350 monthly on private health insurance (covering pre existing conditions) and we have typically done a job a year on the house. So, when adding on eating out, social and groceries, it’s pretty easy to get to £40k. 

My taxable benefit of BUPA has increased 47% in two years. No idea how the transition to self paying after a company scheme works out financially. We have talked about self funding if it is silly and might do the online GP service for under £150 a year. That’s a great service for anyone who waits a month or more to see their regular GP. 

Pipthecat

911abz said:

I’m still feeling a bit nervous and uncertain about taking the next step.

I’m planning to draw down between £50k–60k per year in the most tax-efficient way possible 

Is £50-60k a year going to be enough to meet your lifestyle needs? It's unclear if you have been living modestly and saving hard, or have enjoyed what you made along with the lifestyle.  Unless you want to leave a big legacy or have picked out a fancy care home, my gut tells me that you could and probably should spend more in your 50's.

DT2001

911abz said:

DT2001 said:

Your withdrawal rate is about 3% of the whole for the top end of your requirement which to my way of thinking is cautious bearing in mind in 15 years you will get your state pension. You also want to maximise investment growth which I think runs contrary to your apprehension. Linton’s 3 pot approach - cash/nr cash for immediate needs, large income producing pot to ‘feed’ 1st pot and growth pot (pension as untouchable for a few years) would work for you to achieve the income. Personally I intend to withdraw a fixed percentage of the whole high percentage equity pot (about 3.5%)  and supplement from cash pot to achieve the total but adding a caveat that I’ll reduce my income if I have a poor early sequence of returns. I have guaranteed income so a reduction in the ‘top up’ is less consequential. My plan will probably achieve the investment growth but at the potential expense of income certainty. How do you intend to use your cash reserve?

Initially plan to use cash & then GIA to bridge gap until 55 when I can access SIPP. Plan is to leave a 2-3 year 'cash buffer' to avoid withdrawing from SIPP, ISA or GIA during significant markets downturns etc. thus managing market volatility.  

Seems sensible to me.

Remember no plan is set in stone so if ‘retirement’ doesn’t work out in its first configuration (?) you can change it.

Good luck 

Triumph13

The key thing I would add is that you are so well placed you don't need to find the perfect decumulation strategy, and shouldn't waste too much mental energy trying to find it.

Just make sure you use your PA when you can.

Albermarle

Triumph13 said:

The key thing I would add is that you are so well placed you don't need to find the perfect decumulation strategy, and shouldn't waste too much mental energy trying to find it.

Just make sure you use your PA when you can.

It is a good point.
Although I retired 10 years later than the OP plans to, I had probably done two or three years more than necessary.
One advantage of this, is that I effectively have more money than I need, and therefore do not spend too much time on worrying about decumulation strategies ( or worrying about money at all). Although I do read about them on here and take a kind of academic interest.

Triumph13

Albermarle said:

Triumph13 said:

The key thing I would add is that you are so well placed you don't need to find the perfect decumulation strategy, and shouldn't waste too much mental energy trying to find it.

Just make sure you use your PA when you can.

It is a good point.
Although I retired 10 years later than the OP plans to, I had probably done two or three years more than necessary.
One advantage of this, is that I effectively have more money than I need, and therefore do not spend too much time on worrying about decumulation strategies ( or worrying about money at all). Although I do read about them on here and take a kind of academic interest.

It was definitely a 'do what I say, not what I did' comment   Before the LTA was abolished I spent endless hours trying to find the optimum way to minimise my tax bill.

SouthCoastBoy

Albermarle said:

Triumph13 said:

The key thing I would add is that you are so well placed you don't need to find the perfect decumulation strategy, and shouldn't waste too much mental energy trying to find it.

Just make sure you use your PA when you can.

It is a good point.
Although I retired 10 years later than the OP plans to, I had probably done two or three years more than necessary.
One advantage of this, is that I effectively have more money than I need, and therefore do not spend too much time on worrying about decumulation strategies ( or worrying about money at all). Although I do read about them on here and take a kind of academic interest.

I'm pleased you're coming around to my way of thinking, in that it makes senses to do a few more years so the concern of running out of money doesn't become such an issue. 😀