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The Retirement Newsletter: How long can I expect to be retired?
Welcome
Welcome to issue number 8 — this week, how long can I expect to be retired? Yes, this is a slightly depressing question, but it is important as it impacts the ‘burn rate’ on pensions.
Pension savings ‘burn rate’
In retirement, we all need to consider our pension savings ‘burn rate’, which is how quickly we are using up our savings.
Ideally, we want to spend our savings at a rate that means we don’t run out of money or die leaving behind a stack of cash, which we could have spent doing all the fun things we wanted to do.
In essence, I am talking about long-term budgeting. But the questions are: How long term? And what else do I need to consider?
The way we calculate our ‘burn rate’ depends on many factors. These include our type of pension — do we have a regular income (annuity), or are we living off interest and savings? Is our income increasing in line with inflation? And our general health — how long do we expect to live.
If we have a regular income, the maths will be easier. We can view the regular income as day-to-day living expenses and the savings as…
