Early-retirement wannabe

jamesd wrote: »

I'm grateful that I was a respondent to the survey that preceded them. I was able to explain how the GAD limit was low early on when it needed to be high and say that if they wanted me to increase pension contributions they should stop forcing me to use non-pension money to get a level income throughout retirement. They delivered, though I'll never know how much of a role that feedback played.

Big thanks in case your feedback played a role! It's refreshing that people are given personal responsibility instead of being treated like naughty children.

Marine_life wrote: »

Back to blogging - hopefully now more regularly:

http://earlyretirefree.com/how-much-do-i-need-for-retirement-and-will-it-last/

If the 4% rule doesn't factor in SP then it's clearly a flawed number. My retirement plan is based on reducing drawdown on savings and DC pensions by the same amount as SP once I reach 67 and get paid SP.

JoeEngland wrote: »

once I reach 67 and get paid SP.

Assuming Brexit doesn't bankrupt HMG such that they means test state pension. "Saved some money up? Great, spend that first, and then try your luck again as there is no more money."

I have £0 in my plan for state pension as anything else is blind optimism.

bluenose1 wrote: »

My husband gets £20k Pension now and I will get £10k Pension at 60.
We have about £10k income from properties
We will have about £70k in a DC scheme in 3 years when I am 55.
Assume the 4% rule doesn't apply to us. Not sure if there is a formula to use in my circumstances to decide when to retire.

The 4% "rule" applies to any money you intend to draw down from an amount that you want to last indefinitely. In your case you likely would plan to run it down to "fill the gap between age 55 and your £10k DB pension aged 60 so you wont be using the 4% rule.



The "formula" is not exactly brain surgery, just add your DB + SP plus whatever you think you need to burn down from your "pension pot" (which may include personal pension, ISAs and other savings) .



A few lines in a spreadsheet or if thats too difficult, on a bit of paper. One line per year, showing the different amounts coming in
eg

aged 55 £20k DB + £10k rent + say £10k from DC = £40k.
aged 56 £20k DB + £10k rent + say £10k from DC = £40k.
aged 57 £20k DB + £10k rent + say £10k from DC = £40k.
aged 58 £20k DB + £10k rent + say £10k from DC = £40k.
aged 59 £20k DB + £10k rent + say £10k from DC* = £40k.
aged 60 £20k DB + £10k rent + £10k DB =£40k
etc
and at age 67
aged 67 £20k DB + £10k rent + £10k DB + SP1 ?£8k + SP2 ?£8k = £56k

Is £40k enough to live on aged 55? If so you can retire. If not, you cant. Or you can "semi retire" and take part time jobs. Add those into the numbers.

*That leaves you £20k in DC as a fall back, eg 5 years at £10k out.

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'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.