Outliving your pension
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I’ve two levels, what I want, and what I need, and if market conditions move me from the former to the latter I will move into cash.0
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Kentish_Dave wrote: »I’ve two levels, what I want, and what I need, and if market conditions move me from the former to the latter I will move into cash.0
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I plan to convert part but not all of the funds into an inflation adjusted annuity at age 80, if I am still alive. This is to provide protection against living beyond 100 (and making poor investment decisions as I go passed 80).0
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Just wondering for people who are planning on leaving your DC pension pot invested after retiring, how are you planning to make it last so you don't run out of money?is your choice to stay invested rather than buying an annuity predominantly driven by a desire to take a higher level of income than an annuity would offer, or the possibility of leaving some of it to children / grandchildren / others?c) just limit the amount you are withdrawing to a safe withdrawal rate. ... I suppose the question I have with 'c' is a safe withdrawal rate of 4%
4% without inflation increases would be a percent or two below what'd work.
Alternatively the more modern variable Guyton-Klinger rules start at 5% for the UK for a 40 year plan with 65%:35%. These rules start out by skipping inflation increases if necessary. If appropriate they'd add in a 20% cut to the inflation-adjusted number or add extra increases.lower than the % you could get if you bought an annuity at 65 (5-6%is there anything available which could allow you to take investment risk (so your average level of income is higher, albeit there's no guarantee), but which could allow you to offload the risk of significantly outliving your life expectancy at retirement?
You can try matching spending drops by gradually buying level annuities and letting inflation deliver drops over time. Gradual buying in part so if there's high inflation early on there can be buying after it. Also because age tends to deliver higher annuity rates and the possibility of less good health and further increases.0 -
Is there an industry standard minimum amount to use to buy an annuity??? Say £50k ?How's it going, AKA, Nutwatch? - 12 month spends to date = 2.31% of current retirement "pot" (as at end March 2024)0
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DigForVictory wrote: »I do not live a healthy life, I do not expect to make old bones, so I plan to have fun.
Which will largely consist of pumping money towards grandchildren and then living on tuppences for the last of the 7th year.0 -
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The "4% rule" is more formally called "constant inflation-adjusted income". For the UK assuming costs of 1.5% the 100% 30 year success rate level is about 3.2% assuming around 50:50 or 60:40 equities:bonds.
Yes that looks to be right, which just floors me. People seem sanguine about 1.5% fees when at that level they are almost 50% of the spendable income you end up with. That will decrease as spending increases with inflation, but still it's an enormous amount of money to waste. And I think it is a waste for most people.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »Yes that looks to be right, which just floors me. People seem sanguine about 1.5% fees when at that level they are almost 50% of the spendable income you end up with. That will decrease as spending increases with inflation, but still it's an enormous amount of money to waste. And I think it is a waste for most people.
But rate before costs is "only" something like 0.5% more.0
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