Two weeks ago I wrote a post about the Dutch Pension system (If you haven’t read it: Dutch Pension System). While writing this post and the comments I got (on the site and by mail), I decided to write a post about my personal pension situation. So here are my possible retirement dates. Hopefully more bloggers will do the same, so we can learn from each other.
As I wrote in my earlier post, we have in The Netherlands 3 pillars in our pension fund. So I looked up the numbers for my state pension and for my company pension (ABP) (The first and second pillar). Fortunately my company pension has a great website, which allows me to see my pension at different ages.
For the third pillar of my Pension system I have my wellknown Vrijheid Fonds. So I did some calculations for my Vrijheid Fonds to determine future values.
Conditions
But before I show you my numbers, I have to disclose some conditions that I have used in my calculations. And I will use these conditions again every year, to show my progress.
All the amounts I present here are net amounts. As already mentioned for my state pension and company pension I have used the numbers from my personal website of my company pension. The amount of the state pension depends on numerous factors. In these calculations I used the numbers for the state pension as provided by my company pension fund.
To determine the future value of my Vrijheid Fonds I have used the following conditions.
 Annual donation of fresh capital: € 6,000
 Average Dividend Yield: 2.8%
 Annual gain: 2.2%
 Dividend Growth Rate: 6%
Therefore the annual ROI will be: 11%
I have calculated the Future Value for 4 specific dates.
 Present date
 Date when I’m 60
 Date when I’m 65
 Date on which my State Pension will start
At this moment the legal age on which our State Pension will be paid is around 66 years. However the State Pension depends on the average life expectancy. In my case it will be around 70 years ;(.
Calculations
Year  State pension  Company pension (ABP)  Vrijheid Fonds  Total  Coverage of total expenditures  
€  €  Value  Dividend  Net per month  %  
Today  0  0  71,842  3,060  255  7 
60 year  0  1,660  754,195  21,117  3,420  93 
65 year

0  2,370  1,312,340  36,745  5,432  148 
70 year

500  2,830  2,252,874  63,079  9,417  257 
Table 1. Overview of my possible retirement dates
If I retire from my job at age 60, this of course will affect my pension. I will receive €1,660 net a month from then on till I turn 70. From then on my company pension will be 1,440 and the state pension will then be € 720 net a month.
If I retire from my job at age 65, this of course will affect my pension. I will receive €2,370 net a month from then on till I turn 80. From then on my company pension will be 2,370 and the state pension will then be € 470 net a month.
Conclusion
As you can see, with these conditions, I can retire around the time I turn 60. So still a long time to go! And this is approx. 20 years after I started as a DGI. This corresponds to the textbook examples of compound interest of a stock portfolio.
One little note: When I turn 65 my mortgage will be zero. So my expenditures will be lower from then on. Of course I try to lower my mortgage debt every year.
What are your possible dates for retirement? How do you calculate the Future Value of your portfolio? I like to hear from you.
Thanks for reading.
Cheers,
Pollie
Hola Pollie,
I understand you add up the yield and portfolio gains. But the 6% dividend growth rate is calculated on the dividend of that year, or actually the dividend of the previous year. So a €100.000 portfolio would yield €2.200 + (€2.200 * 6%) = 2.332. Add the annual gain and the actual ROI should be 4,5%, right?
For me: I don’t really focus on the future value of my total value, but more on the cashflow it produces. I use a spreadsheet with a row per month with: portfolio value / dividend / dividend / dividend from new capital. I calculate a 5% dividend growth in.
Hello Edwin,
Thanks for taking the time to write a comment. I appreciate this.
I was in doubt when I did my calculations with the dividend growth rate. I saw several calculations on the web where the took the DGR and added it up to get a ROI.
I also did a calculation the same way you described it. I’m not completely sure what is the correct way.
After a few days I think your approach will be more accurate. So next year I will use your approach.
cheers,
Pollie
Yeah, I get lost in the numbers too sometimes. I am pretty certain the 11% isn’t the actual ROI, though.
I would recommend taking into account inflation and VRH, as Mr FOB suggests. Since the average inflation is 2% per year and your VRH might be around 1% per year, this has a significant impact on your ‘real’ portfolio valuation and dividend in the future.
Since I’m a freelancer and am not building a company pension anymore, it’s even more important for me to take into account inflation and VRH, although it’s not sure what the future will bring for both of these.
Thanks for your open book on this. I might have misunderstood, but are you sure you should add the dividend growth rate of 6% to your ROI? Do you account for “vermogensrendementsheffing”? Anyhow, keep on stashing!
I hope to be financially independent by age 55. I use 67% annual growth rate of my portfolio and take “vermogensredementsheffing” into account. I am stashing 5060% excluding intrinsic portfolio growth, but including dividends.
Hello Mr FOB,
See also my reaction on the comment of Edwin about DGR and ROI.
I don’t take the taxes into account. This is something I can’t change.
Dear Pollie,
Very interesting article… I have never thought about considering the three streams of income at the same time at different ages. In my case, I have four: my own state pension, other country pension (I was an expat for some time), my company pension plan and my investment.
By the way, I have already opened my blog (as I told you it is in spanish :S :S :S) and I want to make a report about this topic every quarter. I will give more details on these post and I will use someway your structure.
Kind regards,
Kind regards,
Homo Investor
Hello Homo Investor,
congrats on your website. I’ll take a look in the coming days.
And I try to read it in Spanish, although it is a little bit rusty 😉
Hey Pollie,
I sincerely hope that you will be able to FI a lot sooner than you are currently calculating. But I have to admit that taking into consideration taxes is an important thing to do.
We are personally aiming for anywhere between 2020 and 2024. But it may actually become a partial FI too, Mrs CF still lover to work.
As for future value, no, have not done this to date but probably should (or at least add inflation to our expenses).
I hope so too 😀
Hej Pollie,
Very interesting read! I think you can be more positive. A lot of costs you now make very month will be gone by the time you retire. Your mortgage is gone. If you have children, then they probably live on their own, maybe you can do with 1 car (if you have 2 now), you have less costs for your car since you don’t drive as much anymore and maybe you can think of other things depending on your personal situation.
On the other hand, I would include the “vermogensrendementsheffing”. I know you can’t change it, but it is a cost you are facing and that you can’t avoid.
Good going!
Pursuit2Freedom
Thanks!