Your retirement just got more expensive!
I think the solution is you drawdown between 0.75% - 1.00% every 3 months of market value, then the fund will never run out.
I retired aged 52 on 30 September 2014, the price of T class Accumulation units of Fundsmith was €17.58. 9 years & 9 months later on 28 June 2024 Fundsmith T class Accumulation units were €63.44.
€100,000 in Fundsmith has grown to €360,866 in that time
When I retired I was expecting to spend 2.5% of capital a year, since then I have got married, my wife who was working stopped after she had cancer & we have moved to substantially more expensive properties. Today 2.5% is about what I am spending.
I think 2.5% is relatively conservative and should last ‘forever’ even in what currently appears to be risky times.
Also, technically, if you withdraw 25% of market value every 3 months, it will also never run out
The amount should drop over time as I can take a Swiss Pilar 1 from next year & we both get full UK OAP’s in 2028/9
How many years out of the 44 maximum did you pay into the Swiss Pillar 1?
20 years above the top limit, If I take it 2 years early I get 997 CHF according to the calculation I did 5 years ago, although I need to pay Swiss health insurance, which as you get older becomes very good value.
If I die before 80, I have gained cash by taking early, so it’s a pretty good deal.
This decision is quite an interesting one as there are many factors to consider. Just looking at the economic break-even: the break even comes at around age 78, but average life expectancy at retirement is 84/87 (men/women).
This doesn’t apply to you, but for those in Switzerland, you still have to pay AHV contributions when you draw AHV early so (assuming you are not working) you then also need to multiply the AHV income by 20 and add it to your wealth for ‘AHV on wealth’ contribution calculation purposes.
For those with enough funds outside of AHV to last them to 70, deferring AHV buys more longevity protection.