RE: To All The Retired People Out There15 Jun 2021 10:22
I'm not retired, I'm in my 30s but I'm interested in planning early retirement and loosely follow 'FIRE' priciples.
You can take out any amount you like from your pension, but obviously the more you take the higher the risk you reach old age with nothing left. The 4% guideline was based on a retrospective american study that concluded that over a 25 year retirement, with a sensible split of bonds and equities you shouldn't run out of money. A lot have people have concluded that the 4% value is a bit over optimistic for the uk and 2.5% or 3% might be more appropriate, but these people tend to be more cautious. Another factor to consider is that the cost of living in retirement in the UK is lower, healthcare is provided and the state pension kicks in eventually.
Expecting to spend 30-60k pa puts you right in the top bracket of retirees - most will retire on far less. Even if you dont expect to spend that much throughout the whole retirement, 10 years of spending on that scale will eat a huge chunk of capital, which you may need later for care/nursing homes, or that you may wish to pass on. The pattern of aging in western economies is now tahtw e live longer but with poorer health and poorer quality of life. Sustaining yourself during that period is actually remarkably expensive.
Have a play around with this site https://engaging-data.com/fire-calculator/ and it sister site https://engaging-data.com/will-money-last-retire-early/
The numbers are in dollars but you can treat it as pounds if you set up the tax etc properly.