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Your simulator told me to retire ;-).
I made a quick and dirty monte carlo simulator for pension modelling. Let's you put in an age range you fancy retiring in, pension contributions, kids uni fees / gifts, etc. Then it runs a monte carlo simulation (I think the defaults are relatively plausible in terms of volatility and long term growth for a global tracker) and tells you what percentage of runs result in you being screwed or not.
Money lasts to 90: 97.3%
Ruin: 82 / 3,000 runs
Median retirement age: 55
Median pot at retirement: £1.05M (median of each run’s pot at the end of the year they retired)
Median estate at 90: £1.70M
Weirdly it asked for my wife's OAP but not her pension pot or how much she needs pcm. Is that because those are supposed to be joint figures?
Guess so.
The honest answer is because my wife has a defined benefit pension - so that's what it does. Having two pension pots with different contribution rates / available dates is a fairly obvious enhancement now you've mentioned it! I've anchored it all off one person's age, so that'll stay. I'll add additional pots tomorrow.
How did you code it @ewan ?
I’ve viewed a few MC sims in recent months. What I haven’t had time to consider is whether a Markov chain is a better approach. Folks seem to settle on MC for its simulation value which seems neat. I’m interested in given this prior state what is the distribution. As I’m not a statistician I wonder which approach might be most realistic.
Initally, I just got claude opus to do it in a chat window when I was watching a video on stats which got me thinking. That was in python which I can do. I then chucked the python in cursor and told it to make me a JS version that would work on github pages - bit of back and forth to add new features and make it nicer on mobile. Claude code would have done a better job probably, but I had cursor open! I can't program JS at all!
From my limited understanding of markov chains, I assume the median would come out the same, but it'd better model the runs that go tits up as it'd have bad years clustering which is more realistic?
How did you code it @ewan ?
I’ve viewed a few MC sims in recent months. What I haven’t had time to consider is whether a Markov chain is a better approach. Folks seem to settle on MC for its simulation value which seems neat. I’m interested in given this prior state what is the distribution. As I’m not a statistician I wonder which approach might be most realistic.
Initally, I just got claude opus to do it in a chat window when I was watching a video on stats which got me thinking. That was in python which I can do. I then chucked the python in cursor and told it to make me a JS version that would work on github pages - bit of back and forth to add new features and make it nicer on mobile. Claude code would have done a better job probably, but I had cursor open! I can't program JS at all!
From my limited understanding of markov chains, I assume the median would come out the same, but it'd better model the runs that go tits up as it'd have bad years clustering which is more realistic?
cool. Thanks.
I’m aware there are some MC-based libraries for this kind of thing in R but due to ‘stuff’ I’ve not had the time to explore.
it’s that successive random ‘oh dear’ and ‘whoah’ events that I thought a Markov chain might simulate well. But, hey, no one knows the future. I suppose we just try and figure out what the acceptable risks are.
There are various good free online pension tools. Someone linked to this one a year or so back and I have found it helpful
I always fine the free online ones quite simplistic - i.e. don't do statistical modelling of a range of returns and don't allow you to factor in life events like wanting to pay for the kids uni.
^^^ there was a lengthy discussion around that a few pages back. Currently, no, they are at early stages in their careers and we are trying to help them for now. They both need to drive to work, and both have cars which they fully finance and insure themselves. If they are still living at home by this time next years they will be contributing to the household costs.
Thanks, apologies, must have missed the earlier entry about it.
Re 'I'm not paying your mortgage for you' and suchlike, an old mate had a son who initially paid what was asked, £25 a week I believe (Bed, breakfast, packed lunch, evening meal,clothes washed and ironed etc)...and after a few weeks questioned why the amount was so high. His dad said "There are two ways we can do this. One is you pay board, the other is that you become a partner in everything to do with the house...so there'll be 3 of us putting in and we'll work out what profit you'll get when we sell up"
'Ooh, that sounds good, what'll I have to pay ?'
By the time they'd put 1/3 of a £500 mortgage, £120 electric bill, £80 gas bill, £350 food bill...etc etc...he was happy to revert to £25 a week rather than c £200...to have a share of the house and the hassle.
The honest answer is because my wife has a defined benefit pension - so that's what it does. Having two pension pots with different contribution rates / available dates is a fairly obvious enhancement now you've mentioned it! I've anchored it all off one person's age, so that'll stay. I'll add additional pots tomorrow.
It now does partner DC pots as well with separate contributions. You can now tell it to either stop the contributions at the same age that you retire (wherever that is in the window) or you can tell it a different age (still your age, as everything else is anchored off that).
I’m aware there are some MC-based libraries for this kind of thing in R but due to ‘stuff’ I’ve not had the time to explore.
it’s that successive random ‘oh dear’ and ‘whoah’ events that I thought a Markov chain might simulate well. But, hey, no one knows the future. I suppose we just try and figure out what the acceptable risks are.
Well it does Markov Chains now - my sum knowledge about them is from discussing it with a LLM tho! It does seem to work and passes the tests. I told it to only do a two regime set up - the defaults are apparently reasonably representative. Can you display both on the graph if you want - it seems to cause ruin more often and also makes the 95th (significantly!) more successful!
https://mrhoney81.github.io/pension_monte_carlo/
How do the Uni costs feed in to your model, are you assuming that pension contributions are reduced by that amount?
How do the Uni costs feed in to your model, are you assuming that pension contributions are reduced by that amount?
Essentially yes. It assumes draw down so it'll just reduce the pot by 9k each year that uni fees are paid.
Personal bias coming in again tho - I'm 45 so my kids will be at uni after I've retired - I've not run a test case for uni fees whilst still contributing. It should work tho.
I got charged board by parents who didn't need the money. When I asked if they'd be prepared to lend us money while we got the business up to speed they said no (happily the business was making money within weeks) - typical of the social circles they mixed in and reading above still the attitude of some.
So I have never charged junior rent, we've paid his fares when he visits us, he left education with zero debt as we paid the lot, we paid for a year off in Berlin, I'm currently providing accomodation for him in the Alps, I've lent him my car for the Winter, I still pay his phone bill. Sure we'd have a bigger pension pot if we didn't support him financially but he's happy, we're happy and what elese would we do with the money? A world cruise, more stuff, a flasher house and car - no ta. I'd rather spend it on him now than leave it in a will for when he'll probably no longer need it.
Has this made him lazy? Nope, he's a grafter and successful. Would he have been so successful if he'd had to work in MacDo' while studying or done a succession of poorly paid jobs to keep a roof over his head? I doubt it.
History hasn't reapeated itself.
paying board...... learning to stand up for yourself.
left school in 1982. got on a YOP scheme. £25 per week. paid my mum £15.
1983 got a job as a coal merchant. £100 per week. paid my mum £25.
1988 worked as a blacksmith. £150 per week. paid my mum £30. saved £50 for upcoming mortgage which started in late 88.
Paying board also means you have less money which limits your choices. The thing I did appreciate my parents doing was letting me do A-levels when nearly all of the other kids at school were sent out to work. From 18 I've lived on what I've earned and/or the government generously handed out as a grant (today's kids get handed a pile of debt which amounts to a graduate tax on earnings above a certain amount). I think kids are for life and cutting them off financially and letting them fend for themselves at 18 or any age for that matter is counter productive. It'll limit and influence their choices, perhaps they'll decide they can't afford a qualification in the short term which will pay in the long term. Perhaps with a bit more cash in the bank they could set up a business and get out of that day job, and maybe strike rich. Perhaps they could turn a hobby/passion into a career. money is choice, not enough is a prison.
Standing up for yourself will get you so far, standing together I suggest will get all concerned further.
I'm strongly of the view that once an offspring is out of education they should be paying 'board and lodgings' at a realistic rate. It means they have an appreciation of how much things cost (that "stuff" is a limited resource), and make rational decisions about whether to stay living at home or to make their own way.
On the other hand, if the parents didn't actually need the money it's a perfectly rational thing to stick all that 'rental income' in a savings/investment account and give it back to the kid at some point in the future - whether it's for starting a business, deposit on their own home, wedding, travel or whatever.
So you have so little faith in your kids' ability to manage their affairs that you make them "save" by paying you board you might one day give back. Controlling behaviour, they can have their money back maybe if you approve.
Have faith, be generous, make them feel welcome.
How many of us are going to "need" all the wealth we have? No pockets in shrouds. Our kids on the other hand belong to a generation that for many means student debt increasing their tax burden, supressed wages, high rents, out of reach property, can't afford kids, low job security... . A bit of vertical solidarity from a generation that has done OK is an answer. I see covering costs as a transfer of wealth between generations that isn't just handing over lump sums.
Paying a share of expenses is not controlling behavior. It can actually help people learn about the reality of life and once they have paid a share it is not their money anymore so if a parent gives them some money down the line it's not giving them their money back. Different people have Different circumstances so it's not one size fits all.
If you haven't yet taken your PCLS you will get £4190 tax free on top of that £12570
Please correct me if i am wrong but by doing this your provider will automatically trigger your MPAA which may be important if you want to make contributions later (over £10k pa) the additional £4190 will also come out of your overall 25% tax free allowance so isnt really "new" tax free money. You can withdraw that at any time.
How many of us are going to "need" all the wealth we have?
MrsJ and I made a calculation of how much money we will need to see us into our graves and gave the rest to MissJ to buy a flat. We are bloody lucky to be in that position and we don't take it for granted. Of course our calculation may be wildly wrong and we may regret it, but for now we are thinking the same as Ed - that the current generation have it rough compared with us and we're grateful to be able to help.
I think it's more a case of different people have different perspectives and attitudes. Your kids, you decide whether to be a help or a hindrance. Some people are mean with their kids, some generous, anecdotally it depends little on their (financial) "circumstances" and more on their attitude. On this thread there's no correlation I can see between what people have declared their Income/pots to be and how generous they are - that goes for people I know IRL as well.
Some people are mean with their kids,
I think that's a bit unfair. Nobody is mean with their kids - well, except a few deplorable individuals - but people see different ways to help, maybe depending on the mentality of the kids themselves,
I think my wife and I are in a reasonable position for pension by the time we retire at around 60-65, but truthfully, I'm not as clued up on this as I should be. Both of us are in DB pension schemes, but neither of us started contributing until we were in our 30s (late to Uni) and whilst my wife's pension is the higher @ 1/57th vs mine at @ 1/100th, my higher salary should offset the delta. I think even without considering AVCs or State - we should be on a high enough combined income to be quite comfortable with the mortgage paid and significant renewables for energy.
Still not sure - it's all a bit of a minefield and I've never had the time to properly sit and sort it.
Nobody is mean with their kids - well, except a few deplorable individuals
I went to Aberystwyth university, I'd qualify several of the parents of fellow students as mean with their kids. Students making ends meet with poorly paid jobs then the parents roll up in a flash car and stay in the most expensive hotel, or they'd fallen out completely andweren't even paying what was due. In every country I've lived in student sex workers are fairly common, 56000 in the UK according to ITVx, 6% of students saying they'd do sex work if necessary and 3% actually doing sex work.
Which is more important, loading up your pension pot or your kids' future? I've made my choice and really won't miss that cruise.
If you spend the time to understand what you currently spend and what your income will be at different points when DB and State pensions kick in you may come to the conclusion you can retire earlier or not. Or if you need to add more to those pension or a SIPP now to allow for this.
Please correct me if i am wrong but by doing this your provider will automatically trigger your MPAA which may be important if you want to make contributions later (over £10k pa) the additional £4190 will also come out of your overall 25% tax free allowance so isnt really "new" tax free money. You can withdraw that at any time.
Yes, t seems this is UFPLS which does trigger MPAA.
Still not sure - it's all a bit of a minefield and I've never had the time to properly sit and sort it.
Unless you're really into financial planning as a hobby, as some are on here it seems, this is what independent financial advisors are for. Should take into account all your various investments and incomes rather than just the pension pots. I'm going to do this in a couple of years as I think I'll be able to start drawing a deferred pension at 55 while still working and paying into another.
I reckon you can live comfortably on £10,000 per year, so you've got what, like 40 years saved up? Do it, you're here once 😎 Work less, play more.
Really.....?
I don't think so!
I wouldn't really consider it a hobby, more a necessity. You're going to spend your whole working life investing for your retirement, which if you're lucky could be 30+ years, why wouldn't you spend some time exploring the options available to you before you reach the point you've had enough?
I've no issue with using an ifa, but I'd want to be walking into that meeting with enough knowledge to discuss the options they put forward. Getting to this point having done no/little research of your own and finding you haven't nearly enough funds to cover the lifestyle you've envisaged is going to be a bitter pill, almost as bad is finding you've more than enough and could have retired 5/10 years earlier.
I reckon you can live comfortably on £10,000 per year, so you've got what, like 40 years saved up? Do it, you're here once
Work less, play more.
https://www.retirementlivingstandards.org.uk/
As ever that link confuses me. Comfortable retirement includes a fortnight in the Med plus a few long weekends.
My naive intention was basically to be on holiday pretty much constantly, with occasional rests and even more occasional stints doing house/ admin.
Whatamimissing?
which if you're lucky could be 30+ years
Gawd no – I wouldn't want to live deep into my nineties. I'd rather shuffle off in my late 70s/early 80s.
Having been practicing for retirement since 2002 you're missing that constant holiday is wearing, thegeneralist. After a month of walking a GR or Compostelle it's nice to get on a bus and head for wherever you consider home, have a shower, unpack and set the washing machine spinning. Then get back into the routine of MTB club on Saturday, horse Thursday, roady club Tuesday, swim when it's sunny, play guitar with a mate... . When the weariness is replaced with new enthusiasm walk into the travel section of the library, pick up a pile of guides and start thinking about the next adventure, but not straight away.
I initially did too much, even though only 42 at the time my tendons and skeleton couldn't cope with unlimited free time, so I cooled it a bit and enjoyed it much more.
Madame Edukator has four months holiday a year, when she retires I don't think we'll spend any more time away, we'll just change the times of year when we go. We have a long list of things best done in September and January.
I'm mortgage free, small 2 bed house and child free...
I've worked out I need 18k per year net (at current prices) that includes 1x2week cheap holiday.
It doesn't include big ticket items though.. New car eventually when the current one becomes uneconomical to maintain... I think the pointing and a bit of maintenance needs done at some point on the house walls.. That'll probably be about ten grand. New roof for the house maybe at some point too.. Unforeseen expensive stuff.
So really I'm probably looking more like 25k net a year to have some contingency. And that's at current prices...
As we know prices always rise over time, or you get less goods and services per £ spent.
which if you're lucky could be 30+ years
Gawd no – I wouldn't want to live deep into my nineties. I'd rather shuffle off in my late 70s/early 80s.
I suppose it depends on when you knock it on the head, early to mid fifties, you're fit and healthy, it's quite possible you could have 30 years of active retirement.
you're missing that constant holiday is wearing, thegeneralist.
Oh no I'm not....;-)
pretty much constantly, with occasional rests
https://singletrackworld.com/forum/bike-forum/do-old-people-just-go-on-shorter-holidays/
Alas I'm well aware of it.
Good thread, thegeneralist, sorry I missed it.
Just looked back on that thread and I'm happy to report that we did it all and more. 😎
As ever that link confuses me. Comfortable retirement includes a fortnight in the Med plus a few long weekends.
My naive intention was basically to be on holiday pretty much constantly, with occasional rests and even more occasional stints doing house/ admin.
Whatamimissing?
TBH that link was a bit grim, didn’t seem to have provisions for the new bike fund and didn’t really sell retirement.
Is it funded by the Pension providers to make you retire late and save more,so they can pay out less 🙂
which if you're lucky could be 30+ years
Gawd no – I wouldn't want to live deep into my nineties. I'd rather shuffle off in my late 70s/early 80s.
I suppose it depends on when you knock it on the head, early to mid fifties, you're fit and healthy, it's quite possible you could have 30 years of active retirement.
TBH I don’t think you can pull stuff out your pension till 55(and I think this going up to 57), I think you’d have to think 15-20years and be pleasantly surprised if it’s longer.
That link says £600 a year for home maintenance….really? I pay a she’d load more than that now and I’m barely in it!
don’t think you can pull stuff out your pension till 55(and I think this going up to 57)
I think most people who are lucky/ organised enough to be retiring mid fifties will have a significant chunk of their money outside pension and so can use it when they want.
That link says £600 a year for home maintenance….really? I pay a she’d load more than that now and I’m barely in it!
Exactly my view. That's barely two days work on the house. No way that works over 30 years for the pile of shit I live in.
The most glaring assumption in that link is that people own thier own home when in fact 35% of households rent.
Rather than persuading people to save more it looks to me like they're trying to con people they can live on a state pension and still have a hot shower.
That link says £600 a year for home maintenance….really? I pay a she’d load more than that now and I’m barely in it!
Exactly my view. That's barely two days work on the house. No way that works over 30 years for the pile of shit I live in.
TBH I don’t remember seeing many old people living in homes that you’d go ‘love the decor’ in my life :-).
Yeah but repointing a chimney to stop it falling on people costs how much? Cleaning out the guttering now and then, a broken tile, a leaking joint somewhere, a broken drain, a problem with the electrics or heating - just a few of the bank breaking bills my mother has had to pay recently.