Like many people in the UK I've been gradually stacking wealth for several years now, in the form of diversified investments including the good old pension.
For pretty much all of my life, i've used my income to increase my wealth, I haven't used my wealth as an income source, but at some point soon that could change, because my wealth is now getting towards being sufficient to be used for such purposes.
NB it' makes absolute sense for me to do this... I know my pensions kick in at 60 and then 67, with a certain amount of liquid funds that come available in both instances, by the time I reach 67 my income from both pensions will be pretty decent, so I may as well draw down on some of the wealth as I approach pension age to work less.
But TBH I'm struggling to get myself into the mindset of drawing down on some of that wealth for income purposes.
The closer I get to retirement age the more I want more of a wealth stack.
I think it's good to be realistic leaning towards pessimistic...
For example my current pension age is 67, but I calculate for 68. I think there's a 95% chance that the pension age is going to be pushed back, just a little. It could go back to 69 or even 70 for people in my age category of course, but I think 68 is a reasonable compromise.
Certainly for anyone in their 50s, I wouldn't bank on being able to claim your SP when you're 67, it'll probably later, obviously for anyone below 50 it's anyone's guess how long you'll have to wait - 72, 75 maybe? But there ain't the money for ya, not with the amount of debt the UK has, sorry but that's just obvious!
(Anyways, that's another story!!!)
I'm also thinking more about big ticket items and future capacity to meet them..
- Cars
- House repairs
- Health
- Big ticket one of luxuries such as holidays.
All of that could be pricey...
And you have so much more if you just wait another year or so to draw down...
Wealth targets for 60 = £120K (draw down £10K a year) Alt = £60K draw down £5K a year and do SOME work!!!
If I were to draw down from age 57 = £180K (draw down £20K a year)
56 would be £200K, 58 would be £160K - THAT'S A REMARKABLE DIFFERENCE the younger I get.
Looked at another way, I'd have £20K year more in the bank PERPETUALLY if I could fully retire on my wealth at 56 but chose to delay just one year until 57
Final thoughts...
I guess if work isn't so bad, which it isn't ATM, one just carries on working for a year or so more, even one year can make a massive difference!