u/klawUK

I’ve been using Copilot to help as a sounding board to run through a few scenarios and make my plan more robust. It needs a nudge so you need to know your numbers, but it has been helpful.

One thing that has surprised a lot this weekend is .. death. The basic plan looks fine - stress tested for 2% returns and monte carlo etc. Relatively low withdrawal rate made me wonder at one point could we do 57 (instead of 58) and still have some excess for car replacement and gifting. Then I stress tested one of us predeceasing the other - and that changed a lot.

Until 65 we still have a decent life insurance policy in place so we’re focusing on after that. from state pension age our joint withdrawals are pretty low. Two state pensions and my DB pension covers all essential expenses and we only need a 3k pa draw from my DC for that extra bit of fun money. From 75 we’d even be saving money as we’d cut our income needs and the guaranteed incomes would more than cover that. And we’d already predefined the bridge fund as ringfenced.

But if one of us dies (specifically me at the most impactful) - the DB gets cut in half, and we lose one state pension. Now even after state pension age we need 20k a year, and still 5k after 75. putting a fund in place to cover the worst case - eg me dying at 66/67 - we estimate we should reserve a pot of around £135k at retirement as a ‘survivorship fund’ - can’t touch it during the bridge as its needed at state pension age. At around 75 if its not been needed yet we could probably take a little from it, but that still means a more than 50% increase in our estimated pot needed to cover retirement.

In our case, our original estimated numbers at 58 (using very conservative 2% real return) *just* give us enough to retire at 58 with all funds fully covered. But no spare for gifting, whereas before we were hoping for 100k to start with which could grow independently. If returns are better that’ll help obviously, but likey any big gifts will need to wait for a while

Have you stress tested your plans for one of you predeceasing the other? Haven’t worked on the actual rulebook yet as my wife won’t actually know how to draw things down etc, but that’ll need to be covered.

Doing my numbers I’ve pulled my dates in from 60 to 58. Still looks ok if income continues

Further breaking things down our main high income need is the bridge to state pension. I’m currently pushing into my wife’s SIPP to try and leverage her personal allowance as tax free for that period. I estimate our total need is about £210k (plus DB pension plus 2x state pensions)

The vast majority of that - £195k - is to cover the bridge. Only 15k is needed by 58 to grow and cover top up after state pensions

If contributions continue that should be more than fine - we modelled 2% real growth and a 250k target so some buffer. With 4% we should have around 100k above the plan which should feel comfortable but aiming for 40k income a year that feels like it could disappear quickly with a bad run of inflation etc.

For now I’m ok with it and it’s a very conservative estimate. Main question for this group is : what contingency are you factoring in? Eg are you allowing your discretionary budget to be the contingency or you have some above that too?