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Post by bracknellboy on Jul 12, 2016 16:27:50 GMT
Licking a finger and sticking it in a vertical position ?
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agent69
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Post by agent69 on Jul 12, 2016 16:48:57 GMT
I've been thinking about it for a while. Was going to go in October but I got seduced by lay flat seats in business class cabins on long haul holiday flights, so will probably keep going for a bit longer. There are 2 issues to consider if you are thinking of early retirement: 1) do I have enough money 2) do I know what I am going to do for the rest of my life. If the answer to either is no, keep working a bit longer. or try looking here forums.moneysavingexpert.com/showthread.php?t=2840632 |
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adrianc
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Post by adrianc on Jul 12, 2016 17:17:05 GMT
There are 2 issues to consider if you are thinking of early retirement: 1) do I have enough money 2) do I know what I am going to do for the rest of my life. If the answer to either is no, keep working a bit longer. or try looking here forums.moneysavingexpert.com/showthread.php?t=2840632If the answer to 2 is no, then... I despair, frankly. That's the EASY bit.
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registerme
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Post by registerme on Jul 12, 2016 18:41:24 GMT
I had a play with the Flexible Retirement Planner (the only pain was having to install Java). I didn't do a huge number of runs but one thing I found interesting was that in every case assuming a lower risk lower return model meant I never ran out of money, but a higher risk higher return approach saw me run out. Every time.
(Albeit not taking into account any non-financial assets....).
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stevio
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Post by stevio on Jul 12, 2016 21:47:06 GMT
I had a play with the Flexible Retirement Planner (the only pain was having to install Java). I didn't do a huge number of runs but one thing I found interesting was that in every case assuming a lower risk lower return model meant I never ran out of money, but a higher risk higher return approach saw me run out. Every time. (Albeit not taking into account any non-financial assets....). That's the volatility cone for you. If inflation was 2%, your returns a guaranteed 5% and your withdrawal 3%, you would never run out of money (assuming zero taxes). But if inflation was 2%, your returns 5% and return volatility was 10%, you run out in many scenarios. Volatility means that return sequencing risk is a major issue in working out whether you capital pool will survive the necessary number of years. One thing I like about the Flexible Retirement Planner is that you can customize returns, return volatility, inflation and inflation volatility. I don't use the Investing Styles like "Moderate Risk" etc since they are based on historic returns which are very hard to replicate in a world of zero policy rates and ultra-low government bond yields. [ So basically a calculation that gives you a warm fuzzy feeling you think you know what is going to happen in the future, despite still not actually knowing what is going to happen in the future
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duck
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Post by duck on Jul 13, 2016 5:58:48 GMT
I retired early 14 months ago so I went through this exact process and you are correct samford71 you can end up with a massive number of assumptions/items on a spreadsheet (and this comes from a man who loves a good spreadsheet!) I started the process some years before retirement so I would have a good idea of what was actually spent and where 'inflation' really hit me where I couldn't avoid it (utilities and council tax in the main). I still log expenditure and will continue to do so. I ended up with a reasonably sized spreadsheet that is divided into a few major sections .... Unavoidable bills including an amount for 'healthcare' and unexpected property maintenance. Bills that I have some control over (e.g food). Discretionary spending. Including replacement of vehicles and holidays. All income is fed into the spreadsheet (income for me is totally investment, the wife has pensions that will come into play in some years time) My feed in spreadsheet calculates an weighted return rate for all my investments (it automatically adjusts as I change investments) so this is fed into my 'master spreadsheet' where cost minus income is calculated and this is fed into next year ...... when the spreadsheet turns red (conditional formatting) I've run out of cash! Whilst this spreadsheet is fully automated I have added in 'manual inputs' where I can adjust tax rates, investment return, projected inflation of unavoidable bills (just adding 1% extra to the council tax and then compounded gives a frightening cost in 20 years!) etc. this allows me to set up various 'what if' scenario's. So 14 months in my approach is working for me, expenditure overall is lower than allowed for so the red is well into the age range that I will never reach ...... time to plan another motorcycle tour and some more kit in my garage  |
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Post by tybalt on Jul 13, 2016 6:13:33 GMT
"Discretionary spending. Including replacement of vehicles and holidays"
At some stage your discretionary spending on vehicles is likely to become non avoidable.
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duck
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Post by duck on Jul 13, 2016 6:31:54 GMT
"Discretionary spending. Including replacement of vehicles and holidays"
At some stage your discretionary spending on vehicles is likely to become non avoidable. absolutely, they are planned in for regular changing (one off costs) but my aim in cutting down the sections on my spreadsheet was to be able to monitor spending more easily. For instance I bought a powder coating oven last month, didn't expect to but it is just deducted from the 'discretionary spending' budget ..... but that will be balanced out since I cannot currently ride my motorcycles (hip injury) so I won't be spending on petrol.
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SteveT
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Post by SteveT on Jul 13, 2016 6:35:44 GMT
Licking a finger and sticking it in a vertical position ? I can see what you're doing here: trying to appeal to my laziness factor again. It's an easy win ... My approach was even simpler: I married an actuary. Slightly concerned I may be informed at some stage that, statistically speaking, I've outlived my usefulness ... 
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adrianc
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Post by adrianc on Jul 13, 2016 8:49:08 GMT
"Discretionary spending. Including replacement of vehicles and holidays"
At some stage your discretionary spending on vehicles is likely to become non avoidable. Spending on vehicles is not "discretionary"... Well, I'm told that it is, and I've been very good lately - strictly one-in-one-out policy - but the fleet is currently down to the STRICTLY essential... ummm... seven or so. Of which two are currently legal. Seriously, purchasing our current sensible daily (19yo) cost us £250 earlier this year, plus a swap for our previous sensible daily (26yo), which cost us £100 seven years ago. duck - about your powder oven...? Can I borrow it...?
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JamesFrance
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Post by JamesFrance on Jul 13, 2016 9:14:15 GMT
Money is only a part of retirement planning. I retired over 20 rears ago at the age of 56 having given a lot of thought to how we would occupy ourselves, having seen my own father steadily decline through boredom and inactivity.
We decided we needed three different types of accommodation to move between to keep the interest going year round and decided on a small house in a yacht marina as a base, a narrowboat and a motorhome. Much of the summer we spent exploring England and Wales by canal and the motorhome was mainly used for touring Spain and Portugal in the winter.
We eventually changed the narrowboat for a sailing boat in the med and having tired of the long and frequent drives back to the UK we changed the house 10 years ago for one in France where we are now. I had to stop driving last year through poor eyesight so the last motorhome has gone, but we still go south for the winter, renting somewhere instead. We rarely become bored which is the most important thing.
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archie
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Post by archie on Jul 13, 2016 9:19:57 GMT
I retired early and now spend all my time on these forums, beware |
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duck
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Post by duck on Jul 13, 2016 9:46:38 GMT
duck - about your powder oven...? Can I borrow it...? I would love to say 'yes' but if you saw the trouble getting it into and out of my van and installed in my garage you will understand why it is staying exactly where it is. When the Mrs heard I was picking up an oven she thought I had finally lost it, little did she know of my 'cunning plan' to keep myself occupied!
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adrianc
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Post by adrianc on Jul 13, 2016 9:58:40 GMT
s'ok, I can bring bits to you...
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Post by mrclondon on Jul 13, 2016 11:34:29 GMT
I retired 15 months ago, last month passed the 50 milestone, and based on family longevity could live for another 35-40 years.
As others have said only a small variation in assumptions on yield and inflation can have a huge knock on effect on disposable cash. My view (and with hindsight that of my father who retired at 56) attempting anything other than a very basic cashflow model is not going to be a particularly useful use of time.
Some key thoughts:
a) many people overlook potential inheritances when considering retirement cashflows
b) almost everyone on this forum is capable of earning additional income if they really felt the need - as just one example the private tutoring of kids - we are all highly intelligent people who could put that to use if there really was a need.
c) Most people in the UK waste a daft amount of money each year. Lots of research shows a single retired person can have a good standard of living including holidays for £20k pa and a couple for £30k pa. Cars need replacing periodically, yes, but there is no need to buy new. My large Citroen cost £6000 with 12k miles at 15 months old and is still going strong ten years later (and still looks like a "posh executive" car, not that I particularly care about image). Indeed most things can be bought nearly new for a substantial cost saving - I've just bought a MacBook that is just over a year old for less than 25% of the price of a new one.
d) many people overlook cost savings that will come about post retirement e.g. commuting, lunches/coffee etc
e) The tax allowances are currently very generous for non-earners - this year the first £17,000 of savings income is tax free (£11k personal allowance + £1k savings allowance + £5k 0% savings rate) plus £5,000 of dividend income tax free. So prior to drawing from pensions (at some point aged 55 onwards) savings+dividend income of £22k pa can be achieved tax free even before considering the income from ISA's.
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