Financial planner to test my retirement planning?

UrbanAchiever

Hi everyone,

I've been planning for my retirement for a long time, but especially in the last 4 years. I'll be 52 in May and always had an ealiest retirement date of 53 years old based on my numbers. So I'm getting very close to pulling the trigger.

In the back of my mind age 53 was always the earliest I'd finish but I was open to staying longer if it suited me.

A change is coming down the track at work which I'm not going to like. My job is safe, but there's a good chance I'll get a new manager in the next few months, who I don't want to work for.

So it feels like 53 may well be the age I finish now. I have a detailed spreadsheet with all my pensions/savings/properties etc. And it forecasts out until I'm 85. With the ability to tweak things like inflation, investment returns etc. It is telling me I can easily retire at 53.

However, now that things are becoming more real, I have a sense of nervousness and feel like I want someone to sanity check it. I've watched loads of James Shacks videos where he does modelling and feel that a service like this could be useful to put my mind at rest.

Any views if this would be useful, or are there online tools I can use that would do similar? Or if using a financial planner, any recommendations for someone to use for this one off exercise? I have no interest in having someone manage my investments for me.

Thanks.

QrizB

A couple of the places that get mentioned are guiide (yes, with two i's) and cFIREsim. I think guiide is more UK-focused while cFIREsim uses US data.

I've used cFIREsim myself and it's fairly straightforward.

Storcko14

If your numbers are telling you that you can easily quit at 53 but you're still a bit nervous then it sounds more like it's the psychological aspects of quitting that are the concern. The 'so, now what?' question. So, if you haven't done so already, I would invest some time working out what you want retirement to look like. What interests do you have? What will you do for social? Will you miss career status? Are there volunteer opportunities you could investigate?

I probably spent a lot more time and effort on this than the numbers in my last 2-3 years of working and I'm really glad I did.

Linton

If you want to get the views of an IFA I dont think your suggested approach would work.

The problem I see is IFA's are liable for the advice given. If it proves to be inappropriate they can be required to pay compensation. So they cannot have a quick scan through your proposals and then say something like "It looks OK to me". They would have to fully understand them and examine them in detail, perhaps asking you for more data. Which is rather a waste when they could be using their experience, skills, and the methods with which they are familiar to come up with a more comprehensive plan themselves in perhaps a shorter time frame.

Perhaps a better approach would be for you to ask the IFA to come up with their proposals using their own tools and methods and for you to question the results in the light of your ideas. Discussion could well come up with issues you had not considered.

Year by year modelling is easy if you are numerate - you can do it on a spreadsheet. The difficulty is in the assumptions on which the model is based and how you interpret the results. There is also the problem of one-off events which could occur at any time such as the almost inevitable major market crash or the death of either yourself or your spouse (if any).

I am sure that you will find that after retirement reality will be very different to what your plans indicated. Events can easily make the plans totally irrelevent. When I retired drawdown was so restricted that it was not a viable option for most people. So there was no need to think about market crashes or long term investment policies since the only real question was when to buy an annuity.

To suggest a specific tool, have you looked at Firecalc or cFIRESim? They are much the same and model how different types of portfolio would have worked out in providing a steady income during the past 100 years or more, taking into account the booms and busts in the US that actually happened. Both are free.

Bostonerimus1

I'll endorse using Firecalc etc on line retirement calculators to stress test a plan. I did that when I was approaching early retirement and my numbers also looked good. But I was also still nervous as it was going to be a big change in my life. Somethings that helped me were double checking my budget and making a couple of economies and also making sure I had secured a baseline income separated from my investments.

I'd paid off my mortgage to reduce the amount of income I needed in retirement, but just before retirement I stopped my streaming services which saved a bit more money. You mention some "properties" and rental income is a nice complement to investment returns, but you might also consider an annuity if income generation from stocks and bonds makes you a bit nervous. I think you'll find that if you have planned well, then after a few months you will feel better as your former wage cheques are replaced by a flow of rent/annuity/dividends/capital gains payments on a regular basis.

seacaitch

A few planning/modelling tools have been mentioned, and if you like this sort of thing then here are a few more:

- MyFinanceFuture (UK)
- EvolveMyRetirement (UK)
- TPAW Planner (US)

I think the latter's approach is one of the more interesting options available, and I use my own very simple version of the method used by TPAW.

Albermarle

 I have a detailed spreadsheet with all my pensions/savings/properties etc. And it forecasts out until I'm 85. 

You have a 50% chance of living beyond 85.

I think if you asked an IFA for a plan, they usually work on a time scale more into your 90's. If you are part of a couple, there is a 50% chance one of you will live until your early 90's and a 20% chance one of you will still be alive when you are 98.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/81929927#Comment_81929927

Yes, Part of stress testing a plan is to understand how it changes with longevity. This also influences asset allocation choices as things like annuities become more attractive the longer you live.

Smudgeismydog

I found it helpful to break down my retirement into distinct phases and the pots available to fund these. This is particularly relevant for someone like yourself taking early retirement.For example, my first phase was 50 - 57, so the period before I can access my pension.

I receive a dependents pension, which provides me with peace of mind, as @Bostonerimus1 noted, an annuity might be something to consider later on, even if it’s just to cover your core expenditure.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81929927#Comment_81929927

The FCA has made it clear that cashflow modelling should not stop at “average” life expectancy, because by definition, around half of people will live longer than that. In practice, many planners either use a high percentile age (for example, the age at which only c.10–20% of people in that cohort are still expected to be alive) or a fixed age well into the higher 90s to reflect longevity risk.

kempiejon

@UrbanAchiever that chimes with me

I started accumulating cash in the run towards my work change. I wasn't going to like it and I'd been planning ER since my 30s and decided I could probably just afford it. I had a plan, if I left early, around your age I'd use some cash to live on leaving the investment alone and take a part time job - I already had a very occasional zero hours contract and I could easily increase hours.

It is better to retire to something you want, when you chose to than away from something you don't like when pressured to.

If the spreadsheet looks good for 53 if you can elect not draw on the plan for a few years, or not be totally dependant upon it it'll look better at 54. And it might help ease into the new way. Of course you could sit out the new manager for a few more months knowing you're set financially and can leave on a whim, that might give you some peace of mind and negotiating position at work. That what I kinda did in the end.