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  • FIRST POST
    • ams25
    • By ams25 6th Jan 18, 9:48 AM
    • 177Posts
    • 210Thanks
    ams25
    How much can you take from your pot..,another perspective
    • #1
    • 6th Jan 18, 9:48 AM
    How much can you take from your pot..,another perspective 6th Jan 18 at 9:48 AM
    https://www.americanfunds.com/ria/insights/can-i-retire-at-40.html?cid=sm_tw_5030


    This article gives another view on the much discussed safe withdrawal rate topic, looking at it from an very early retirement stance (from 40s) but also covering later ages.

    I said here a while ago I was looking at a 3% rate for a planning guide (believing it to be conservative but prudent) and (at 52) everything I have read (a fair bit) in the past few months seems to support it being about the right level if you want to feel pretty secure you have enough. As often stated the withdrawal rate should only be a guide and a flexible approach needs to be taken - so you can raise spending if returns are better long term and cut spending if there is a prolonged period of low returns.

    But my take out from This article and my other reading is if you can make 3% work you should be fine. 4% might just be ok too, but there's is also a good chance it will not be and thus more aggressive spending cuts will be needed. Appreciate individual circumstances and bottom up spreadsheets need to be done of course.

    Given the 4% mantra so often used, especially on US sites, the article seems a valuable contribution to the debate.
    Last edited by ams25; 06-01-2018 at 10:02 AM.
Page 1
    • k6chris
    • By k6chris 6th Jan 18, 12:30 PM
    • 222 Posts
    • 384 Thanks
    k6chris
    • #2
    • 6th Jan 18, 12:30 PM
    • #2
    • 6th Jan 18, 12:30 PM
    Yes a useful addition to the debate. 3% SWR rather than 4%. Not optimal (and not meant to be). Could the ultimate 'lazy' retirement plan be "Put it all in a multi-asset fund (VLS60 etc) and drawdown 3% a year"?
    EatingSoup
    • ams25
    • By ams25 6th Jan 18, 12:54 PM
    • 177 Posts
    • 210 Thanks
    ams25
    • #3
    • 6th Jan 18, 12:54 PM
    • #3
    • 6th Jan 18, 12:54 PM
    Yes a useful addition to the debate. 3% SWR rather than 4%. Not optimal (and not meant to be). Could the ultimate 'lazy' retirement plan be "Put it all in a multi-asset fund (VLS60 etc) and drawdown 3% a year"?
    Originally posted by k6chris

    yes not going to be optimal...just a planning guideline.

    the downside of a multi asset portfolio like vls60 is you can't sell just bonds when equities go down..you only sell the totality...albeit rebalanced to some extent. Better to have a a bond and stock market fund.
    • dunstonh
    • By dunstonh 6th Jan 18, 1:42 PM
    • 93,034 Posts
    • 60,425 Thanks
    dunstonh
    • #4
    • 6th Jan 18, 1:42 PM
    • #4
    • 6th Jan 18, 1:42 PM
    But my take out from This article and my other reading is if you can make 3% work you should be fine. 4% might just be ok too, but there's is also a good chance it will not be and thus more aggressive spending cuts will be needed. Appreciate individual circumstances and bottom up spreadsheets need to be done of course.

    Given the 4% mantra so often used, especially on US sites, the article seems a valuable contribution to the debate.
    I gave it a speed read as I am about to go out. I didnt spot any mention of the asset spread. ie. how much is in equity, property and fixed interest. So, without knowledge of where it is invested, any talk about hypothetical draw rates seems a bit pointless. Someone with 100% fixed interest is going to have a different sensible draw rate than someone with 50% fixed interest/equity or 100% equity. 100% equity may require more flexibility on draw rate. However, these can often be negated by cash accounts but that is going on to a different discussion.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ams25
    • By ams25 6th Jan 18, 7:29 PM
    • 177 Posts
    • 210 Thanks
    ams25
    • #5
    • 6th Jan 18, 7:29 PM
    • #5
    • 6th Jan 18, 7:29 PM
    It's based on a 60:40 portfolio....
    60% large U.S. equities and 40% intermediate blended bonds over retirements of various lengths

    Personally would not have this.. ie instead a globally diversified fund with some small and medium cap exposure.
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