Retirement savings TOO big?
In early 2025 I should comfortably tick over £1m in retirement savings (M44). When I forecast the numbers out to 68, with some reasonable growth, but minimal additional savings and full retirement and some very chunky withdrawals from 57, the numbers get large. Very large. Too large I think (like 9m!).
And I'm not even a massively high earner (c.150k TC but no kids).
Obviously there are alot of assumptions in these numbers. But at this stage, it's almost unavoidable unless we have some kind of global macroeconomic meltdown (which is possible I suppose).
It's too much to spend down tax efficiently. I feel like I need to divert into different assets or go offshore in the long term.
EDIT Some interesting debate in the comments about assumed growth rates and real vs nominal. Update on assumptions:
I accept the last couple of years have been extraordinary for equity returns and this won't continue forever. So very happy to use a more realistic growth rate of 8%.
- Applying a 'real' return of 5% on existing balance of c.£1m 1a) assuming investment savings of £80k per annum from 5 more years till age 50 (and then ceasing) = c.£2.6m. Assuming 4% withdrawal rate from 57 = c.£3m at 68. 1b) assuming savings continue to 57 = c.£3.3mn and 4% withdrawal = c.£3.7mn at 68.
Whilst I understand the need to think 'real' in terms of spending power, I think ignoring nominal ignores the reality of the actual number I will be dealing with in terms of the tax framework (especially considering how brutal fiscal drag can be over many years).
- Looked at on a nominal basis (8%) the above results at 68 look more like c.£6.2mn (ceasing saving at 50) and c.£7.5mn (saving till 57).