Tbf he did say expensive lifestyle. Which is why I asked what that means because as we all know one person's expensive is another's spare change.And this is why people work until they drop, thinking they need that much
How much you need is completely dependent on lifestyle. I have nothing like that amount and stopped work two years ago, in my 50's. Saying that, £1.5-2m isn't going to go very far if he spends half a million a year so you can't give a figure unless he does.
Pension fund performance - do you monitor yours, how is it doing, do you actively change it?
- Thread starter danlightbulb
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Yep, he made a vague request and said his lifestyle is "expensive" so I gave a vague answer that would cater to an "expensive" lifestyle accordinglyAnd this is why people work until they drop, thinking they need that much
How much you need is completely dependent on lifestyle. I have nothing like that amount and stopped work two years ago, in my 50's. Saying that, £1.5-2m isn't going to go very far if he spends half a million a year so you can't give a figure unless he does.
Also, to be fair, just because you stopped working on your 50s with a lot less doesn't mean you have a good strategy to get you to your 80s with the lifestyle you are looking for (I mean you probably have one, but from what you said we don't know that).
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True but £1.5m invested across all vehicles is not an unreasonable target for someone wanting to drawdown an inflation adjusted 50-60k with a better than even chance of it lasting until they kark it. 50k is not a massive number if its supporting 2 people through retirement if you have been earning 6 figures previously (which I suspect would be the case here).And this is why people work until they drop, thinking they need that much
How much you need is completely dependent on lifestyle. I have nothing like that amount and stopped work two years ago, in my 50's. Saying that, £1.5-2m isn't going to go very far if he spends half a million a year so you can't give a figure unless he does.
That's my personal target for retirement at 57, 10 more years to go!
Soldato
I shall be dead before 80, literally nobody in my family has made it much past 70 so far (and I'm ill so...) and haven't actually touched my pensions yet, just happily living on savings.Yep, he made a vague request and said his lifestyle is "expensive" so I gave a vague answer that would cater to an "expensive" lifestyle accordingly
Also, to be fair, just because you stopped working on your 50s with a lot less doesn't mean you have a good strategy to get you to your 80s with the lifestyle you are looking for (I mean you probably have one, but from what you said we don't know that).
IIRC a million gives you an easy £40k a year but obviously, if he's spending much more than that yearly he'll need to keep saving and hope not to drop dead before the big day.
You could be the first to make it to 90.I shall be dead before 80, literally nobody in my family has made it much past 70 so far (and I'm ill so...) and haven't actually touched my pensions yet, just happily living on savings.
IIRC a million gives you an easy £40k a year but obviously, if he's spending much more than that yearly he'll need to keep saving and hope not to drop dead before the big day.
Soldato
Nope, I have no intention of doing that, and nor does my body. None of this 'plan to live to 100' retirement planning for me.
Everyone is different, and has different needs in retirement. I intend to carry on with exactly the same lifestyle I have now, but maybe with more sportscars, coke and hookers.
I have a decent amount but not the 1m+ some mention
If you want a better answer you'll have to give a rough idea of pot size + what 'expensive' means in terms of spending per year.
As one thing though i'd just say if you want to retire in the next few years and you haven't already done it, think about moving some cash over to less risky assets to minimise a sequence of returns risk right at the start when you want to retire.
Soldato
If I keep working at the same place and paying into the pension the same amount, I will have a pot £476,000. This doesn't include the four figures yearly bonuses that I get and put into the pot.
According to the planner I can draw down £35,900, with my DB pensions and state pension which is still more than I live on at the moment while paying a mortange and still have cash left over at the age of 100, as I plan to have the equivalent of £3000 of today's money value per month.
This doesn't include ISAs that I'm also putting into.
Honestly, I could live of 1500 per month as that's what I'm doing at the moment with cash spent on stuff that I don't need.
According to the planner I can draw down £35,900, with my DB pensions and state pension which is still more than I live on at the moment while paying a mortange and still have cash left over at the age of 100, as I plan to have the equivalent of £3000 of today's money value per month.
This doesn't include ISAs that I'm also putting into.
Honestly, I could live of 1500 per month as that's what I'm doing at the moment with cash spent on stuff that I don't need.
Drawing down £35,900 a year from a pot of £476,000 would be roughly 7.5% a year. Not sure what calculator you are using but that strategy would have a high chance of failure. Usual recommendation is to plan for 4%, although I do think that's a bit conservative if you're willing to flex your income depending on performance.
Soldato
He's including the state pension in that amount I think. Most people seem to forget about that in their calculations.
Soldato
The amount includes my state pension and my DB pensions... the 4% rule is a bit of a hack job but admittedly one that is still commonly used. I used the L&G retirement planner.
But working out the 4% rule isn't just a case of total amount / amount wanted, the remaining amount is still invested and growing.
Normally people tend to draw more between the ages of 60-65/66 from their pots, then reduce once state pension kicks in. Use the extra money to go part time etc between 60-65.
Real world 5-6% a year is fine, you'd have to have a fairly cataclysmic set of world events/market crashes to empty a drawdown fund in full taking 5/6% per year over the long term.
OK fair enough. The term drawdown is used to refer to an invested pot you are taking income from, rather than other types of pension income.
The 4% rule is a general rule that takes into expected inflation and pot growth. Certainly agree it's not hard and fast, though.
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Probably a pretty good strategy to forget about it, unless you are nearly retirement age already
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Soldato
Well you never know. I'm just over 7 years away so it's very much part of my retirement planning.Probably a pretty good strategy to forget about it, unless you are nearly retirement already
Not really, you could just enter a crash followed by a stagnant period in the early few years of retirement for that strategy to fail without significant adjustment. It's true people tend to take more early, but that also means the effects of unexpectedly low growth early on are amplified.
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I think you missed the bit about "over the long term" - reviewed annually, adjusted accordingly, 5/6% average withdrawals over 10/15/20 years, it's very easily doable. Some years less, some years more, but averaged, it's achievable.
I agree however 'over the long term' doesn't convey all that. I interpreted it as you are good to take 5-6% every year as growth will average out over the long term.
The issue is if you want to maintain the original 5-6% and we have a market downturn. Plenty of examples of prolonged market downturns and you dont have to go back far in history to see it. Suddenly your 5-6% a year is 10-12% a year and its not sustainable. So I think people need a proper plan rather than just aiming to withdraw a random starting percentage each year.