Annihilation or Abundance ?

optoutDB

What odds are you putting on each of these in your retirement models? 

You are wrong by a factor of 10 at least.

cfw1994

Was that a late night random idea?
Feel free to explain your last line - please show your workings 😉

Cobbler_tone

optoutDB said:

You are wrong by a factor of 10 at least.

I'm more concerned they have access to our data. Do you work for M&S?

HedgehogRulez

Total annihilation was a great game back in the day

Qyburn

Looking like abundance at the moment.

vacheron

optoutDB said:

What odds are you putting on each of these in your retirement models? 

You are wrong by a factor of 10 at least.

6 to1 , 14 to 1  and 25 to 1, dropping to 25:2 if you can find a broker that will do it with zero comission!  

german_keeper

cfw1994 said:

Was that a late night random idea?
Feel free to explain your last line - please show your workings 😉

I don't even understand the first line. Even google didn't help me. Seems to be something to do with physics.

Secret2ndAccount

From his other posts, optout appears to be a genuine human who is trying to educate himself about pensions, so I will offer a response. Perhaps the question is deliberately vague in order to be open to a range of answers. Perhaps he was having a conversation with himself and posted a thought from the middle of it, not twigging that the rest of us hadn't been in on the discussion up to that point. Anyhoo...

The way I read it was this: "If you look backwards after drawing your pension for a number of years, what is the probability that, in hindsight, you should have drawn 10 x more, or 90% less than the actual amounts taken?"

For me, the factor 10 is too large, so the likelihood is extrremely small. I can see one scenario: if you plan for a 30+ year drawdown, but unfortunately only last a few years, then you might realise you could have spent 10x as much each year. However, this is unlikely and unforseeable, so it doesn't help much with pension planning. For any average kind of retirement, with any average kind of portfolio, the chance of being off by a factor of 10 is vanishingly small.
2x could easily happen, but if you plan and execute halfway decently, the likelihood of needing to halve your income is small.

QrizB

Secret2ndAccount said:

The way I read it was this: "If you look backwards after drawing your pension for a number of years, what is the probability that, in hindsight, you should have drawn 10 x more, or 90% less than the actual amounts taken?"

I read it slightly differently. More along the lines of:

"If you've modelled your retirement as a 1% chance of annihilation (ie. running out of money), you're wrong and it's 0.1% (or 10%; OP was non-specific). And if you've modelled your chance of dying as rich as Croseus as 10%, you're wrong and it's 1% (or 100%)."

I guess it's possible that an overly-pessimiatic model could mean the 1%/10% is really 0.1%/100% while an overly-optimistic model makes it 10%/1%, but as the OP hasn't indicated which of these two extremes they were thinking of it's hard to comment further.

And if, for example, your model puts your chances of unheard-of wealth at 20%, it can't possibly "really be" 200%.

DoublePolaroid

0% and 100% respectively.

I’m not wrong by a factor of 10, 100 or any other number. 

Because I didn’t opt-out of my DB 😉 

dunstonh

optoutDB said:

What odds are you putting on each of these in your retirement models? 

You are wrong by a factor of 10 at least.

Without knowing what the modelling data assumptions are, you cannot say what the margin of error is.