Stick or twist with contributions?

4500_Donavan

ColdIron said:

4500_Donavan said:

Albermarle said:

 am very, very Tech and US heavy but I believe any crash will be short lived

I think you need a Plan B in case you are wrong !

Thanks. Plan B would be the cash buffer. 

Your plan B needs to be an integral part of plan A

You need robustness and flexibility to provide a reliable income for the rest of your life in lieu of an earned income. Are you boxing yourself into a single course of action?

What is your actual plan B (let's call it plan C)?

4500_Donavan said:

ali_bear said:

It depends on what you intend to do on retirement. If the majority of your fund is going to stay invested then a short term downturn at that time doesn't hurt you much. Alternatively if you were going to convert, say, half of your DC fund into an annuity it would. 

Thanks. My plan is monthly drawdown by selling fund units and using cash buffer outside of guardrails.

Selling funds every month (if that is the plan) will get old very quickly

Hi. Could you give me some examples of what you mean? Will also have 2 full SP at 67.

El_Torro

4500_Donavan said:

I am very, very Tech and US heavy but I believe any crash will be short lived and the Al bubble will evolve into amazing industrial and consumer automation.

I work in IT for a manufacturing organisation and see the Al tools embedded by our software suppliers and the additional value they provide. I'm a believer!

I don't know what you were doing during the dot-com bubble and subsequent crash but knowing a bit about what happened and why might help temper your optimism. In summary:

The world (or at least the global stock market) was betting on the internet being the next big thing. As it turns out the internet was the next big thing, that didn't stop the bubble bursting and the subsequent crash though. It took the general stock market 6 or so years to recover from that crash. Looking at more tech heavy indices like the Nasdaq the recovery was far longer than 6 years. It's not clear exactly how many tech companies went bust during the dot-com crash but it's estimated that about 52% of them did. 

It's not a certainty that history is repeating itself. It's possible that the many billions of dollars that have been invested in AI will all make a return. I wouldn't bet my retirement on that though, especially if I was 10 years or less away from retirement. 

I agree with other posters in this thread that say that 62 is probably a more realistic retirement target for you than 60. 

leosayer

My main observation is that both your job and retirement plans are highly dependent on tech companies. This kind of correlation is risky and if a negative market event happened, it could severely impact your whole plan - known as "Sequence of Returns Risk".

I agree with you about the ability of AI tools to provide value but surely this will benefit diverse industries not just the tech ones you are concentrated in.

In any case, you have done so well getting to this stage why gamble on a certain stock market outcome when you are so close to your goal?

What is your plan for generating retirement income once you stop work?

4500_Donavan

@leosayer I'm thinking of using income generating funds. I seen a few that generate anything from 5 to 9% annually and have capital growth of 5% as well. My employment is in manufacturing. We are not a tech based industry but we try to use tech to generate competitive advantage. Thanks for your feedback. 

kempiejon

4500_Donavan said:

I think my priority has to be the cash buffer. Only needing annual growth of 3.3% to retire at 62. I think just writing it all down has helped me come to that conclusion. 

You've >5 years to go and you want 4 years for a cash buffer and plan to spend the next few years building the buffer in a money market fund. One could invest that in your preferred equity mix and you could have enough investment to sell and fill that cash pot sooner, cash like savings do not grow much. Of course equities can go down unlike cash.

LHW99

4500_Donavan said:

@leosayer I'm thinking of using income generating funds. I seen a few that generate anything from 5 to 9% annually and have capital growth of 5% as well. My employment is in manufacturing. We are not a tech based industry but we try to use tech to generate competitive advantage. Thanks for your feedback. 

Without adding a lot of risk, I'm not sure there are any income generating funds that can provide 9% income and 5% capital growth, certainly not over the 20+ years of a typical retirement.