Early-retirement wannabe

OldMusicGuy wrote: »

I personally wouldn't trust the 4% rule over a 30 year retirement based on what has happened in the past, because there are some pretty big societal and economic shifts looming. However, I think it's a really useful guide number to help get an idea of what size of DC pot you need to retire and I wish I'd known about it earlier.

I would recommend this tool to help get the odds of the 4% rule not working:
https://engaging-data.com/will-money-last-retire-early/
It really puts things into perspective much better than most tools as it includes life expectancy data so lets you visualise the overall probability of outliving your funds rather than just the probability of them lasting to age x.

I'm using a bucket strategy in retirement rather than any form of safe withdrawal rate but that suits my very risk-averse nature. One of the most important things I have learned is to find both investment and decumulation strategies that suit your psychological makeup.

Couldn't agree more on the psychological side. I'm 16 weeks away from retiring with an 11 year gap before any DB pensions come on stream. The rational side of my mind says I have so much safety margin built in I will be fine. The little homunculus lurking down in my hindbrain is an awful lot harder to convince!

k6chris wrote: »

What is a bucket strategy??

I would guess OMG is basically allocating chunks of his funds to different time periods and either expects to have enough in DB / SP to cover his needs long term, or else one of the buckets is earmarked to buy an annuity.
I have a few buckets myself to bridge the gaps until various DB / SPs come into play and am modelling them quite differently to the remaining drawdown pot.

Has anyone on here decide to take their DB pot out? Or are you all convinced that leaving it in situ is the way to go?

AlanP wrote: »

Loads of threads on this forum about transferring out from a DB scheme if you have a Search / Browse.

No consistent answer and very personal situation dependent.

If you are considering it I would suggest you start a new thread and see what opinions are based on your ( & spouse / partner) situation.

Thanks, I have done that, as I read this thread regularly I just wondered if any of the regular contributors have taken that path.

k6chris wrote: »

What is a bucket strategy??

In simple terms, it's segmenting your retirement assets into buckets with differing levels of risk rather than keeping it all invested and taking specific %age withdrawals. For example, I have 18 months of cash in immediate access accounts and another three years of cash in a fixed interest bond ladder, all outside my DC pot and tax free.

In my DC pot, I have 23% held as cash (earning no interest) and the rest invested in three multi-asset tracker funds for a 10 year plus timeframe.

That is a very low risk approach that will avoid pound cost ravaging in my early retirement years. It suits my goals, personality and financial situation but it wouldn't be appropriate for many people I am sure. Many commentators out there don't like it (because it could miss out on potential gains) but it suits me.

FWIW I have no DB, SP kicks in age 66 (I am just coming up to 61).

If you want a very detailed review of statistical analysis of different investment portfolios in retirement, I recommend this book by Michael McClung: "Living Off Your Money: The Modern Mechanics of Investing During Retirement with Stocks and Bonds". This gave me ideas about how to structure the money I have invested for the long term. It is very stats heavy though.