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10 years retired - how come finances are so good?
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green_man said:Linton said:ISTM the core reason people are finding themselves unexpectedly rich after say 10 years retirement is that, reasonably enough, they plan pessimistically on all fronts. In reality life rarely turns out completely badly.0
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Secret2ndAccount said:Here are 125 simulations of a retirement like yours:
You are in the middle of the mass of lines. So just average. Incidentally, 5.6% of these simulations ran out of money! If stocks are at an unexpected high, and annuities are at an unexpected high, have you considered buying an annuity. Put 300k into an annuity, then go on with the million you started with.
Too me this feels like a situation where the "risk" level of the investments could (should?) be increased in order to reduce the bigger risk - inflation.
I am pretty sure that if you run that simulation with less cash and more equities the 5.6% of failures will disappear i.e. the level of risk aversion is actually causing the risk of long term failure.
Unfortunately in the finance investment world "risk" is seen mainly in the context of the risk for short or medium term nominal losses. Carrying 100% cash would come up as zero risk on your investment platform, but actually it's a big risk.0 -
Pat38493 said:Secret2ndAccount said:Here are 125 simulations of a retirement like yours:
You are in the middle of the mass of lines. So just average. Incidentally, 5.6% of these simulations ran out of money! If stocks are at an unexpected high, and annuities are at an unexpected high, have you considered buying an annuity. Put 300k into an annuity, then go on with the million you started with.
Too me this feels like a situation where the "risk" level of the investments could (should?) be increased in order to reduce the bigger risk - inflation.
I am pretty sure that if you run that simulation with less cash and more equities the 5.6% of failures will disappear i.e. the level of risk aversion is actually causing the risk of long term failure.
Unfortunately in the finance investment world "risk" is seen mainly in the context of the risk for short or medium term nominal losses. Carrying 100% cash would come up as zero risk on your investment platform, but actually it's a big risk.I will consider your response though, thanks.0 -
green_man said:Linton said:ISTM the core reason people are finding themselves unexpectedly rich after say 10 years retirement is that, reasonably enough, they plan pessimistically on all fronts. In reality life rarely turns out completely badly.
So based on that it’s probably no surprise that things seem ok. However in my mind it seems to have been a pretty rocky 10 years: stagnant growth in the UK; spiralling energy costs; war in Europe; inflation in double figures; high interest rates (compared with recent past); COVID; Trump lunacy. I know there’s nearly always something happening but other than actual world wars this seems like pretty big head winds to me.
Dot com crash of 2000- due to massive overexuberance/bubble in dot. com stocks.
GFC of 2008 - Reckless lending, subprime mortgages, exacerbated by debt derivatives etc0
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