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Now I enjoy working, have a rewarding moderately paid job and am only in my mid thirties. However I have little desire to still be working at aged 68.
If we set an arbitrary date for retirement @ age 55 / 20 years from now, what are the financial steps we could take to best achieve the aim of drifting around the West Coast on wur yacht for the long hot summers of 2038 onward?
Clearly the obvious one is to pay off all debt - worked hard at this the last few years and now all gone bar mortgage and student loan and now have a moderate amount of savings.
Where next?
Depends on how much your debt is costing you. I still have a mortgage but invest each month in pensions and an ISA. I also have a couple of debts at interest free. I work my investments harder so its not worth paying them off at the moment.
Where next?
Pension. There are loads of online calculators that will give you a rough idea of how much you need to save to acheiev an income of £x at age nn.
Someone will be along in a minute to say something like "pensions are a con". Ignore them.
Are you serious?
Let's say you want an income in perpetuity of £30k a year from the age of 55.
You will need a pension savings pot of about £1m!
https://www.telegraph.co.uk/pensions-retirement/annuities/best-annuity-rates-available-today/
Am I serious about what?
Not necessarily. Using drawdown and leaving your money invested could easily provide around £30k pa on about 1/3rd of that.
Yes, I am serious and hopefully achievable.
I (currently) have a defined benefits pension scheme which should return enough to live on from the age of 68, not counting the state pension. Now assuming this rug is not pulled from under me at some point then I should only have to self fund for 13 years. On that basis, things start to feel a bit more plausible...
You have hit the nail on the head Scruff. Think from when you want to retire until when you receive your state pension (or soon after)
"Not necessarily. Using drawdown and leaving your money invested could easily provide around £30k pa on about 1/3rd of that."
30k PA yield from a pot of ~£330k?
I take it this involves drawing down capital & income? Cos I don't know how you yield 10% without a) a lot of risk or b) withdrawing capital.
Don't have children and never move house (or re-mortgage).
Don't split up with the wife (if you have one).
All perfectly achievable then 🙂
Bear in mind that you are unlikely to be able to call on pensions savings at 55. It's not legislation yet, but there's a lot of talk about it and it will likely happen.
In a consultation document from 2014, the government proposed that the normal minimum pension age (the earliest age you may be able to take your pension benefits) should increase from age 55 to age 57 in 2028. It would increase at the same rate as the increase in the State Pension age from then on. This means that the minimum pension age would remain ten years below State Pension age.
However, there is currently nothing in the legislation to state that the normal minimum pension age will increase in 2028.
From https://www.pensionsadvisoryservice.org.uk/about-pensions/pension-reform/freedom-and-choice
So, you'll probably need other forms of savings (probably ISAs) to use for the period between when you retire and when you can start to draw on your pension.
Using drawdown and leaving your money invested could easily provide around £30k pa on about 1/3rd of that.
Really? If you are in your 30s now you can expect to live to 90. So that 30k would require a 10% return for 35 years? That seems optimistic, particularly if you take inflation into account, which if it is the same as the last 35 years would require your income to be £96k by the time you are 90.
Also, the lifetime allowance is £1,030,000, so if you are looking that £1m pot you will have to think about that.
That's useful IHN - When you say ISA's I presume you mean more stocks and shares investment ISA's as against cash ISA's? Interest rates on cash savings accounts are pitiful at the moment.
I take it this involves drawing down capital & income? Cos I don’t know how you yield 10% without a) a lot of risk or b) withdrawing capital.
The way you do it is by gaining >10% pa on your investments. Over the last 6 years I have annualised gains of >19% invested in "lowish" risk funds.
if you take inflation into account, which if it is the same as the last 35 years would require your income to be £96k by the time you are 90.
Read the above. I am sure I would be happy on the state pension at 96. Also what makes up inflation. Depending on your circumstances inflation may not be that important to you later in life so that is meaningless.
Yep, investment ISAs, not cash ISAs.
Over the last 6 years I have annualised gains of >19% invested in “lowish” risk funds.
Were they trackers? 😉
1. Don't have kids.
2. See above.
3. Don't put all your hopes on a time you may never reach or have the health to enjoy. Sorry to be pessimistic, I have seen too many friends drop dead or have serious health problems. Enjoy today and now.
Easier to win the lottery than achieve reliable gains of >10%.
Easier to win the lottery than achieve reliable gains of >10%.
Define "reliable"
Were they trackers?
You tell me
Not necessarily. Using drawdown and leaving your money invested could easily provide around £30k pa on about 1/3rd of that.
Current guidance is that 4% is the max you can take indefinitely using drawdown without eroding the capital. Even that is pushing it, most dividend centric funds max out at 3-3.5% pa.
Unless you are real savvy on financial matters then I would recommend you get a financial advisor and he can 'steer' you to your objective. Yes they cost, but if he's making good returns for you, then I have no objection to him making money from it.
In my 20's I set myself a desire to be retired by 60, I am now on target to achieve my retirement at 58 in 2020.
I set up investments and recently ISA's every year and put regular savings away every month, the big one though was cashing in an old works pension for the lump sum value and re-investing in a private pension which you can draw down from the age of 55, whereas keeping in a works scheme will usually be penalised for early drawdown. You are then in total control of that lump of money and can draw down a monthly salary to your requirements. The money is then 100% within your estate too, so any surplus after you die all goes to beneficiaries.
After you retire you will probably require a larger salary for the first 20 years to pay for all your adventures, the last 20 years is just to pay someone to feed you and wipe your ass! 😉
The lottery doesnt work the way you think it does. I have roughly a 1 in 14,000,000 chance of winning the lottery in the UK.
There are a large number of funds that have provided >12% pa for over a qtr of a century.
Maybe your maths is affecting your investment strategy?
"reliable" meaning a viable retirement strategy. If it was easy and safe then annuity rates would be higher.
Current guidance is that 4% is the max you can take indefinitely using drawdown without eroding the capital. Even that is pushing it, most dividend centric funds max out at 3-3.5% pa.
Great. Follow that advice then. I am confident (as are many others) that growth of circa 10% is possible, particularly when you use a low cost platform and reinvest dividends. Compound interest is a wonderful thing.
As above, considering that we are supposed to be up shit creek atm, we have been seeing 20%+ return in the past 3 years!!
I played safe with my big pension pot, and put it in a scheme that smooths and guarantees 8%/yr whatever the market.
If it was easy and safe then annuity rates would be higher.
Well you are comparing very different things. An annuity is not the same as drawdown and remaining invested is the key to larger annual amounts.
I played safe with my big pension pot, and put it in a scheme that smooths and guarantees 8%/yr whatever the market.
"guarantees" .... Really?
Easier to win the lottery than achieve reliable gains of >10%.
I doubt it is reliable, but this smug git made 27% on a pension the year before last....
I doubt it is reliable, but this smug git made 27% on a pension the year before last….
But its in the bank and compound interest will help. 2% for the next 2 years will see annualised >10%
One way would have to be born in the 50s not the 80s but there you go.
Retiring at 55 for a non-boomer is going to be hard work, in short you've got 20 years to earn and save enough to live off for 13 years without any other income and another 17 topped up with a state pension (give or take) - providing you've already done a 10 stretch as you need 30 years NI contributions to qualify for one (with the obvious caveat around the moving goal posts of state pension).
It's by no means impossible though, it depends on how much lifestyle you're prepared to give up now to have later. Not having kids would certainly help. Cost us £10k a year in childcare for our Daughter until she started school-full time, save £10k a year for 20 years should get you £250k with compounded interest.
but this smug git made 27% on a pension the year before last….
Not really that difficult in a single year*, but if you're retiring at 55 and possibly living to 100, you have to consider what you expect to average over nearly 45 years. At some point, there will be a correction and some funds will take a bit hit (40% +), you'd expect to see a few of these over 45 years....
* if you look at the returns for most funds over the last 10 years, they have great years and then fallow years, so 20% in a single year isn't that remarkable. Maddoff's great appeal was he delivered 10% pa every year on year no matter what the markets did....
I played safe with my big pension pot, and put it in a scheme that smooths and guarantees 8%/yr whatever the market.
“guarantees” …. Really?
One of my father's work pensions (which he set up decades ago) guaranteed 8% pa growth. He didn't expect them to honour it and pay out (see Equitable Life), but they did. Won't be seeing those types of pensions again in our lifetimes....
save £10k a year for 20 years should get you £250k with compounded interest.
Your not even beating inflation...
The lottery doesnt work the way you think it does. I have roughly a 1 in 14,000,000 chance of winning the lottery in the UK.
There are a large number of funds that have provided >12% pa for over a qtr of a century.
Used to be 14 million - it's even less now with more numbers.
Maybe your maths is affecting your investment strategy?
It's not just their maths that's off! 😉
Simple answer is to pump as much as possible into your pension. Basically it's 40% free money so is a no brainer. Get a decent IFA you can trust (not easy I admit but they are out there).
Cash might be a bit tight for a wee while but you'll soon get used to things. We came up with more or less the same ideas you did and at the same age. Planned to retire at 55 but was actually able to go at 52. It is totally the best thing I've ever done. You may read stories about people being bored in retirement. Anyone who is must have absolutely no imagination.
Okay we don't drive around in Ferraris or eat out at five star restaurants every night but we manage a pretty comfortable life. Well worth making a few sacrifices early on to reap the rewards later. Go for it.
30k PA yield from a pot of ~£330k?
I take it this involves drawing down capital & income? Cos I don’t know how you yield 10% without a) a lot of risk or b) withdrawing capital.
Quick Excel work suggests that at 4% interest you have spent up your pot after about 15 years,
OP - read this https://simplelivingsomerset.wordpress.com/2018/09/27/fire-in-the-news-liar-liar-pants-on-fire/ for a dose of reality on achieving what you want (earn at least double the average, don't have kids, save and invest a big chunk of income 25-50%? or inherit)
Then have a read around http://monevator.com/ for the nuts and bolts of how to invest
OP – read this
Good luck, it's near unreadable. I'm sure he's making a reasonable point, but I'm not sure what it is.
Good luck, it’s near unreadable.
Does read like a drunk rambling on way past last orders.....
There is a simple draw down calculator on HL website you can have a play with, you have to give your DOB as at least 1963 (as otherwise you can't access your pension yet).
https://www.hl.co.uk/retirement/drawdown/calculator
I would have said property but that ship has sailed. I preinvested in a pension via btl, I think I got 8% when I first bought. The govt really does not like private landlords though.
Anyway, it's a done deal for me but I wouldn't put my new money in.
So now its equities and divis, 5% on average. Yes they will correct but the reinvested divi just buys more units.
Good luck
Its nigh impossible unless you are either rich or able to put a load of money away early.
I'm doing three things - managing my pension growth - currently on average 12% per year, paying down my mortgage and saving a regular amount into premium bonds in the hope that one day I'll get lucky enough to win an amount that make later life slightly more comfortable.
The reality is that I'll like have finished my mortgage by the age of 58, but won't have enough to stop working. I've got well over six figures in my pension yet a calculated annuity returns at best a regular £5k per year. On top of the state pension thats £17k per year with Mrs K's as well. That won't go far in London. I can see us downsizing outside of town and investing the equity in the current property somehow to provide for the future.
The way you do it is by gaining >10% pa on your investments. Over the last 6 years I have annualised gains of >19% invested in “lowish” risk funds.
No you really haven't. That is an impossible statement.
You may well have realisde 19% annualised gains but they have not been 'low' risk. You, like almost every other schmuck out there, don't understand the risk/return principle. You cannot have both. That is the sort of financial alchemy that got into trouble in 2007.
So now its equities and divis, 5% on average.
5% dividend yield average sounds very high. Yields have been falling as asset prices have inflated over the last few years with everyone chasing high returns.....
It is completely doable! If you are willing to put in the effort and make some adjustments. I am 36 now and am planning to retire at 45. I did not come from money, have no inheritance, no lottery wins, and earn what I think is a pretty moderate salary (31k). I also didn’t start earning that until later in life as I was mid 20’s before I left uni. But I don’t have kids. You don’t mention if you do or not.
our game plan included avoiding debt and lifestyle creep (buying better/more just because you can), paying the mortgage down as quickly as we could, though knowing what I do now this may have no been the best move vs investing sooner. You need to know how much you need each year so get obsessive about tracking spend...and I mean every penny....will 30k really work for you? You may need much more, or much less. Only once you know that can you calculate how much you need. Then get those savings working for you in a s&s ISA suggest an index fund with a low fee, for a invest and forget approach. If your DB pension provides enough money from 68 then you just need 13 yrs x your annul £. If you have no kids or anyone else to leave it to you don’t need to worry about maintaining the sum in the long term and so drawdown rates are not so important. Good luck!
If your DB pension provides enough money from 68 then you just need 13 yrs x your annul £.
Just about no one under 50 is eligible for a DB pension any more, nearly all schemes have closed to new members over the last 20 years.
My DB scheme fell into the pension protection fund and exited with much reduced benefits (basically no index linking).
I am 42 and have a 55 plan broadly as follows:
-DB pension from previous job (20 years accrued)
-Release equity by downsizing house and living off some of the proceeds
-Maxed out the risk on my DC pension, (aware that I could lose it all) currently at 7%
-Will do some form of work post 55 to supplement income and keep active
-Wife will probably be motivated to work beyond 55
I see so many people working themselves into health problems trying to put away enough to fund their retirement never mind an early retirement. Trouble with this is the lifestyle they think they need to be happy. This includes big house, nice car, multiple holidays abroad and in some cases even 2nd homes, spoiling their kids and grandkids etc etc. Yes, you could invest smart, work longer and harder chasing higher salary, hope a loved one leaves you something in their will when they die, whatever else you need to do to chase that retirement.
Or my approach is to live a simpler life and take my happiness from things that don't require much of an income. Downsize to as small a place you can be comfortable in, strip away all expenses that are not a basic need and see how much you free up. Then reintroduce one or two expenses to cover some of your luxury wants. If you rotate these every 6-12 months that gives you a chance to sample something else without additional expense. Take up hobbies with low entry requirements - hill walking, cycling, fishing, woodworking, photography, painting or whatever, there must be thousands of things.
That £30k a year retirement dream just became a £12k a year one. Much easier to finance that.
Just about no one has DB pensions anymore” true but the OP has said they do so that makes it much easier. What rene59 said! If you want luxury then it’s not likely to happen but if you can adjust to a modest living then it’s completely achievable. And by modest I don’t mean skint!
A dumb question but ...
presumably if you save money in addition to your pension contributions, you can take it as and when you feel like and pay only capital gains tax on it (if applicable),
Can't remember where I found this the other week, FT I think...
Current yields are very modest, which makes even the whole 3-4% a year draw down rule look optimistic...
[url= https://farm2.staticflickr.com/1906/44121723185_c74f46a256.jp g" target="_blank">https://farm2.staticflickr.com/1906/44121723185_c74f46a256.jp g"/> [/img][/url][url= https://flic.kr/p/2adTn8g ]Top 15 Dividend Funds[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
presumably if you save money in addition to your pension contributions, you can take it as and when you feel like and pay only capital gains tax on it (if applicable),
If in an ISA, tax free and take it when you like (£20k pa limit for investing).
If in a SIPP, limited to 25% tax free at 55, then the rest taxed at 65 (although 55 / 65 rise, can't recall when).
I use both, SIPP for tax benefit and ISA for flexibility.
@ff - and for common or garden investments, outside of tax-free or pension options, take it as you wish, I suppose!
@ff – and for common or garden investments, outside of tax-free or pension options, take it as you wish, I suppose!
Yes, but given you can put just about anything in a tax wrapper these days, no real reason to have anything outside one.
IIRC Peer to Peer lending can't currently go in an ISA, but I think that's about to change.
You need to factor in 20 years inflation of into your calculations. £30,000pa sounds a reasonable income today but by the time you retire you'll probably need twice that - £60,000pa to achieve the same standard of living.
No you really haven’t. That is an impossible statement.
You may well have realisde 19% annualised gains but they have not been ‘low’ risk. You, like almost every other schmuck out there, don’t understand the risk/return principle. You cannot have both. That is the sort of financial alchemy that got into trouble in 2007.
I dont think you understand the word "impossible" What is it about my statement that is "impossible"
I do understand the "risk" principle and that is why the word "low" was in quotes. Any investment involves risk (and you are hardly adding much to the conversation pointing this out) but my stocks and funds (other than some very small holdings) all fall within the Morning star "average" category. I suspect they know more than you.
I suspect when you use the term "schmuck" you are inferring I am a fool, maybe, but at least I am not drawing assumptions without any evidence. There is probably a nice "Americanism" you can call on for that?
That is the sort of financial alchemy that got into trouble in 2007.
And actually, it really isnt
Save, save, save. Save half your age as a percentage of your salary as a minimum. Multiply your defined benefit by 20 for annual contribution, then top up as much as you can.
So if you have a salary of 50k and accrue 1/60th per year, that’s equal to 16.7K per year in the pot. You can add another 23K of savings to that. Saving 40K per year for 20 years will give you 800k pot equivalent.
Then move somewhere cheaper and not worry about paying down your entire mortgage. That’s my plan. I can take my DB pension from 55 and think earlier is better. I also plan to work doing consultancy, or return to academia.
Expect the chancellor to raid the pensions contributions of people saving heavily. 40k and 1M lifetime will probably be lowered in time further.
IIRC Peer to Peer lending can’t currently go in an ISA, but I think that’s about to change.
Funding Circle are introducing one (if not already) My returns using that platform over a few year are less than advertised when you factor in bad debts. I think I had returns of around 6-7% and being outside an ISA eats into that.
1M lifetime will probably be lowered in time further
If you expect to breach this then you can make the same investments using your ISA allowance (you really can put quite a lot of money away with either tax free contributions or at least tax free draw down at the other end)
Schmuck
<span style="font-size: 0.8rem;">There is probably a nice “Americanism” you can call on for that?</span>
Yiddish, innit.
Multiply your defined benefit by 20 for annual contribution, then top up as much as you can.
They pretty much no longer exist! Nearly all DB schemes closed to new members over the last 20 years.
1M lifetime will probably be lowered in time further
Supposedly it's to track RPI moving forward e.g. went up 3% last year. Although I agree it's an easy tax grab to lower it. Having said that, you could freeze your fund and escape the reduction in each of the previous lowering events.
Pensions aren't quite what they were, but still useful. The benefit of putting money in a personal pension is that you pay tax when you take the money out, not when you earn it, plus you get 25% tax free. So a pension is more useful the more tax you pay. In return your money is locked up until 55 or whatever age that increases to. A company pension usually has the added benefit that they put money in as well, but carries the risk that the company funds the pot and may not play fair.
I will be retiring at 60 - 2.5 years away) or maybe sooner. We will be poor until we get our state pension at 67. I don't care. I am happy to live simply and to do a bit of part time work. e have bits and pieces of pension. We also have a small flat we let out that I have invested a fair amount of money into
My advice - live a frugal lifestyle and put everyting you possibly can into property.
Check this out op:
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement
That Mr Money Mustache article is interesting - although reading a few articles on his site, it must be somewhat more straightforward saving a cool Mil when earning 6 figures!
Cheers
From the FT..
What lies ahead? Predicting the returns on stocks and bonds is hugely difficult; that is why so many people are paid so much money to try to do it. Nobody can know exactly how markets will perform over the next 10 years. But historical patterns do make it possible to ascribe a probability to future returns, and to give a central likelihood. The key insight is this: the biggest factor determining a return on your asset in the future is the price you pay for it now. If it is expensive when you buy it, your likely return is lower than if you buy it cheap. The best way to value an asset is in terms of the cash flow it will produce. Buy a bond with a low yield, or a stock at a high multiple of its earnings, and you are less likely to make a profit. That is a shame because bonds look historically expensive (yields hit a record low two years ago but they have not risen much since), while US stocks have only been more expensive at the height of the dotcom bubble in 1999 and 2000. Assets from outside the US look better value, but do not offer exciting returns. There are many ways to calculate predicted returns. Here is a summary of the forecasts used by some of world’s most respected investors to drive their asset allocations:
[url= https://farm2.staticflickr.com/1938/45000757642_4cb24b5fa5.jp g" target="_blank">https://farm2.staticflickr.com/1938/45000757642_4cb24b5fa5.jp g"/> [/img][/url][url= https://flic.kr/p/2byyDrL ]FT Future of returns looks glum[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
Really interesting read, to read for free google "Legacy of Lehman Brothers is a global pensions mess" and then click on the link, their paywall allows access via Google search redirects...
The benefit of putting money in a personal pension is that you pay tax when you take the money out
Not necessarily. You still have your tax allowance so you will pay at your marginal rate. If you have income from ISA's then they are tax free (although you paid tax on the money going in at the other end!) If you now pay tax at 40% and you post retirement income is likely to be less than the higher rate (we can only take an educated guess at this) then it probably makes mores sense to move your ISA into a SIPP (keep your eye on annual limits) then risk paying tax (at the lower level) when you retire.
Agreed, highly unlikely most people will be paying 40% tax on pension income as you would need a few £m saved to achieve that...
Although ISAs offer flexibility so if you are made redundant before 55, you can at least use those whereas you can't touch your pension even if destitute.
Probably a stupid question but how would you tackle the pension contributions for the period of time between when you retire and when you claim your pension?
I get the save up, invest, downsize etc so you have enough money to survive from 50 odd when you retire until when you can start claiming your pension but surely the pension would take a fairly big hit if not contributed to for the last 15 odd years? All my statements give me a figure of XX per year provided I keep contributing at the same of greater amount until retirement age.
If you retire at 50, then you need to live of savings till 55 and won't pay anything into your pension as you have no income to afford to do so. However, your pension pot can still grow, assuming invested in stocks and shares (although you run the risk of a crash wiping out a fair chunk of value*).
At 55 you can take 25% tax free, so live off that till 65/67 when you can start claiming state pension or access the rest of your private pension.
* it's a tricky subject. Conventional (annuity) wisdom has been to move your pension fund into bonds over the 10 years prior to retirement to de-risk it (at the expense of growth) and then buy an annuity on your 65th birthday and live of that.
With drawdown, you have more options and will potentially be living of an invested fund for decades, so will expect to suffer a few crashes (and recoveries). So a mix of growth and dividend funds would be chosen and you'd accept that your % take each year might have to vary with the ups and downs of the stock market.
Given no one knows what the markets will do tomorrow let alone in 40 years time, there is no right answer, just lots of options.....
@Footflaps... Whatever.
The average annualised returns for this decade from the US have been 13.2%. The long term average is 9.6% and the Dow Jones is up 130% over this period. This is not the highest returning decade (so far) and the 50's averaged almost 19% and the 90's almost the same. I dont think anyone is assuming these high rates will continue forever but without any evidence, simply saying "we are all going to hell in a handcart" tells us very little, particularly as few accurately predicted the crash 10 years ago.
The fact of the matter is that with a fair wind a return of circa 10% over a long period is achievable (timing is everything of course) and all this does is match the long term performance of the US (last 90 yrs)
If you retire at 50, then you need to live of savings till 55 and won’t pay anything into your pension as you have no income to afford to do so
I may be wrong but I think the question refers to state pension contributions?? If so and you havent built up to the amount required to get the full state pension then you can continue to make contributions to "buy" it, I think. You need to get advice on this as one thing I am sure of is its "cheap" to buy.
With regard to the years contributions for state pensions - you only need 30 years worth of contributions at a surprisingly low level to earn one at present - The years I worked part time at uni for instance was enough for them to count as "qualifying" years.
You can check via the HMRC website quite easily how many years you have in the bag.
I was advised that on top of my 15% pension contributions I should buy the most expensive house I can afford... really max it out. Then live a simple life.
i was advised against property investment how we normally understand it; don’t buy rental properties as the pitfalls are many and expensive to manage, but buy sensibly and max out on my own house.
The plan would then be to sell up and downsize, with the proceeds forming part of my pension. In other words, don’t commute part of my pension into a lump sum, take the maximum monthly pension I could and if I needed a lump sum use the equity from selling the big family house. If I don’t need it, then reinvest at this point.
I've no idea if it was good advice, but it made sense to me.
The fact of the matter is that with a fair wind a return of circa 10% over a long period is achievable (timing is everything of course) and all this does is match the long term performance of the US (last 90 yrs)
How can the future be a fact?
The last 10 years have been an unprecedented bull run, which is very unusual. All the current trends suggest reduced growth / yields moving forward, so it would be prudent to plan accordingly.
NB As a 'stake in the ground' to test your hypothesis, if making 10% per annum was so easy, how do you explain that annuity rates are significantly below this? The fact they offer near to 5% in a competitive market, would suggest that the long term expectation is closer to 5% (and that's with half the annuity owners dieing early and subsidising those who live longer).
To be fair annuities are (forced to be?) very risk averse. I certainly anticipate getting a lot more from my own personal investments than an annuity would yield. However, I wouldn't retire early on the hope of an indefinite 10% index-linked income.
To be fair annuities are (forced to be?) very risk averse.
It's a contractual agreement, you give them a lump sum and then guarantee a payout till you die. But in a competitive market they're not making huge profit margins, so it does give you an idea of what you can expect. My point being that If it was so easy to do better, they would offer better rates.
How can the future be a fact?
Well you seem to be predicting its so I thought I would have a go.
The last 10 years have been an unprecedented bull run, which is very unusual. All the current trends suggest reduced growth / yields moving forward, so it would be prudent to plan accordingly.
Not unprecedented, not even the highest if you read what I wrote. The 9.6% is the average over the last 90 yrs.
in a competitive market
Hehe... Very good
My point being that If it was so easy to do better, they would offer better rates.
Are you here all week 🙂
I certainly anticipate getting a lot more from my own personal investments than an annuity would yield. However, I wouldn’t retire early on the hope of an indefinite 10% index-linked income.
If 5% is not enough and 10% is too much to expect. What do you plan on?