tag:blogger.com,1999:blog-2875915890415125655.post1187070720619222757..comments2023-05-18T10:37:34.608+01:00Comments on <a href="http://www.retirementinvestingtoday.com">Retirement Investing Today</a>: A Sobering Income Drawdown Demonstration – 8.5 Years InRetirementInvestingTodayhttp://www.blogger.com/profile/03088383743670046657noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-2875915890415125655.post-7287993238909336372015-07-08T21:33:06.656+01:002015-07-08T21:33:06.656+01:00This post is post budget and post 3.5 hour trading...This post is post budget and post 3.5 hour trading suspension on NYSE .<br />RIT - I think it is unlikely that your attitude to risk will soften post-retirement - in fact I predict it is likely to be heightened. It may well be that your area of work has attracted you partly due to your attitude to risk - and what you feel you can contribute to a career where risk assessment is so relevant.<br />stringvestnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-7715403751587889372015-07-07T16:30:51.379+01:002015-07-07T16:30:51.379+01:00Hi RIT,
Interesting reading :)
Definitely soberi...Hi RIT,<br /><br />Interesting reading :)<br /><br />Definitely sobering stuff, although like stringvest mentioned, some pretty unlucky timing starting to drawdown just before the crisis. I suppose the point being, that could be possible, even though more unlikely than not. Better to have prudence built into your savings and see your portfolio grow even as you drawdown on it, rather than being Anonymoushttps://www.blogger.com/profile/18300941962780673623noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-230932973688456582015-07-05T23:32:00.326+01:002015-07-05T23:32:00.326+01:00Apologies if this has been mentioned before in one...Apologies if this has been mentioned before in one of your earlier posts in the series, but why doesn't '100% Cash on Deposit' feature as one of the portfolio scenarios ? Since you're starting from 2006, for the first two years you could have easily beaten inflation simply using high street bank deposit accounts, and that's again the case now assuming you're using CPI asDMhttp://eaglesfeartoperch.blogspot.co.uk/noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-72880302347252818912015-07-05T20:12:54.700+01:002015-07-05T20:12:54.700+01:00So national Insurance will really be RIT insurance...So national Insurance will really be RIT insurance. Very wise.deariemenoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-88209799253256144992015-07-05T11:45:50.201+01:002015-07-05T11:45:50.201+01:00Hi stringvest and great to hear from you. It'...Hi stringvest and great to hear from you. It's been a little while.<br /><br />You are right that I'm quite conservative/gloomy with a lot of my studies and assumptions - definitely a glass half empty person. I think deep down this partly comes from my career which forces me to manage risk very carefully as an event has very serious consequences. It will be interesting to see whether RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-75867496051938360852015-07-05T10:27:41.783+01:002015-07-05T10:27:41.783+01:00Hi RIT and contributors.
RIT- you seem to like pa...Hi RIT and contributors.<br /><br />RIT- you seem to like painting yourself a scenario that is as gloomy as possible - eg you omit the State Pension in your calculation - as if you want to scare yourself into making very cautious plans for your long term finances.<br /><br />One point that you do not make is that you can always change your SWR - it is not fixed in stone forever at the initial SWRstringvestnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-7111688688150818792015-07-05T10:18:17.958+01:002015-07-05T10:18:17.958+01:00Hi John
I didn't take it as questioning but ju...Hi John<br />I didn't take it as questioning but just some healthy discussion which we've been having for a number of years now. Your thoughts have always taught me a lot, always make me think and reinforce why I have this blog - a forum for new information that can then encourage us all to do further research about what's right for each of us.<br />Cheers<br />RITRetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-79150369520085851752015-07-05T10:10:56.833+01:002015-07-05T10:10:56.833+01:00RIT,
I do not question your personal choice of SW...RIT,<br /><br />I do not question your personal choice of SWR - each person will make the most appropriate decision based on their circumstances - as you say, for you, length of retirement is a bigger factor than for most retirees.<br /><br />So in general, the assumptions we make for the SWR % is a big factor - set it too high and we risk running out of money too soon - set it too low and we endGetting to Net Zerohttps://www.blogger.com/profile/05649975918886866788noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-14211199254365448492015-07-05T09:35:49.755+01:002015-07-05T09:35:49.755+01:00"Say your target retirement figure was £25,00..."Say your target retirement figure was £25,000 p.a. you would need to save £1m to generate this at 2.5% but just under £600K at 4.25%. Generating that extra £400K must surely mean quite a few extra years at work?"<br /><br />Financially I think the drawdown % is and will be the biggest decision I (and any other early retiree) will ever make. Given I have 81% of the wealth I need RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-81023831745782491752015-07-05T09:20:21.202+01:002015-07-05T09:20:21.202+01:00I agree the 8% figure is high based on 4 relativel...I agree the 8% figure is high based on 4 relatively good years. Maybe 6% longer term would be nearer the mark, then factor in a figure for platform costs and fund fees - maybe 0.4% and also inflation so getting down to ~4% - 4.5% depending on the level of equities exposure.<br /><br />Say your target retirement figure was £25,000 p.a. you would need to save £1m to generate this at 2.5% but just Getting to Net Zerohttps://www.blogger.com/profile/05649975918886866788noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-2105960460272647442015-07-05T08:40:53.862+01:002015-07-05T08:40:53.862+01:00Hi RC
In all my planning I do not consider the Sta...Hi RC<br />In all my planning I do not consider the State Pension. Given governments desire to continually tinker and the state of the public finances I think the date will be continually pushed out and/or it will eventually be means tested making me ineligible. Any State Pension will therefore be a bonus on top of an already 'hopefully safe' strategy. That said I am planning to RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-56381808731205373032015-07-05T08:34:36.102+01:002015-07-05T08:34:36.102+01:00At a 5% withdrawal rate the 6 portfolios would hav...At a 5% withdrawal rate the 6 portfolios would have lost real wealth of between 21% and 38% by now. I'd be panicking if I was down 38% while knowing I have 20 odd years of potential life left in me.RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-62757358365104406182015-07-04T14:16:21.886+01:002015-07-04T14:16:21.886+01:00I have never read a single post to that effect on ...I have never read a single post to that effect on MSE, you must read more widely than I do!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-19892482841894032822015-07-04T11:34:55.154+01:002015-07-04T11:34:55.154+01:00Hi RIT,
Did you take state pension into account at...Hi RIT,<br />Did you take state pension into account at all?<br />If you add this to your income from 68 does it influence your ultrasafe withdrawal rate, or do you like to assume that there will be no state pension for those that work hard to save enough?RevalidationCramhttps://www.blogger.com/profile/16763173292591052631noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-3987256431958422892015-07-04T07:09:20.545+01:002015-07-04T07:09:20.545+01:00My target for retirement is 1 million investment i...My target for retirement is 1 million investment in property and 1 million in stocks, nothing in fix income for the initial decades.<br /><br />Plus own property to live on it.<br /><br />The average return on the long term looks to me like 5% + inflation, without costs and taxes will be around 3% that is enough for a family of four to live comfortably in a cheap country.Dalamarhttps://www.blogger.com/profile/14262037701162440486noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-54687915837886261322015-07-04T05:52:05.119+01:002015-07-04T05:52:05.119+01:00Hey RIT,
Thx for this in spiring and educational ...Hey RIT,<br /><br />Thx for this in spiring and educational exercise. I believe more peopel should do the same, just to geta feel of the work, impact, risks of living of a portfolio. On the other hand, reading it from others is a good proxy.<br /><br />The fact that you take a simulation starting near a top, is a good idea. It raises the question: how to mitigate the sequence of returns risk. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-16462811639880533162015-07-04T00:28:51.263+01:002015-07-04T00:28:51.263+01:00I often read the MSE forums. People there routine...I often read the MSE forums. People there routinely chatter about investing capital that "should" return 5% p.a. or that "should" let them withdraw 5% p.a. What they mean by "should" God alone knows. One of the regular commenters there has asked for a definition, to no effect. When the next market crash hits, there are going to be even more moaning minnies there deariemenoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-2448334781170325392015-07-03T23:32:50.302+01:002015-07-03T23:32:50.302+01:00Hi John
You've understood correctly and I agr...Hi John<br /><br />You've understood correctly and I agree it is a simplistic example but I'm going to stick with it as it's certainly providing me with benefit given I'm not yet drawing from my own portfolio. I do agree with you on the diversification though and my own portfolio is as you know far more diversified.<br /><br />I'm a bit wary of your 8% pa comparison since midRetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-45903212021126791982015-07-03T21:48:43.346+01:002015-07-03T21:48:43.346+01:00Interesting as ever RIT.
I guess it might be not ...Interesting as ever RIT.<br /><br />I guess it might be not such a good plan to base a 30 yr drawdown strategy on just the UK market (unless I have misunderstood).<br /><br />As an example, the widely diversified Vanguard Lifestrategy 60 fund has provided an annual return of just over 8% p.a since inception (June 2011) so using such a fund, you could comfortable take your 4% and build a nice Getting to Net Zerohttps://www.blogger.com/profile/05649975918886866788noreply@blogger.com