To be super clear, we're talking about sustainable expenditure here. The software takes care of taxes. It's assuming you have no other income or capital gains coming in from other sources other than the state pension, as indicated.
@@ZelenoJabkobecause I imagine the vast majority of people watching this video will get some state pension, and a large percentage will get the full amount.
@@OMGxILoveNo0bx Perhaps not, you can make a copy from here: docs.google.com/spreadsheets/d/19C7lE25wEbcDbODnWIH7WK9B2UBTszlolItBJFwK78o/edit#gid=1103659851
I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
Consider buying stocks when the economy is not doing well, like during a recession. It could be a chance to buy them at a lower price and sell later when prices go up. Just keep in mind, this isn't financial advice, but sometimes it's better than keeping a lot of cash.
Accurate asset allocation is crucial. Some use hedging or defensive assets in their portfolio for market downturns. Seeking financial advice is vital. This approach has kept me financially secure for over five years, with a return on investment of nearly $1 million.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
'Grace Adams Cook' , is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
I am 27 and i just started my ROTH IRA and deposited the max for 2024! I feel stupid for how long it took to get my life straight. The problem here is, what is the best way to invest the money to grow for retirement?
I believe every Investor should start with ETFs for a solid foundation, then diversify across asset classes and maintain disciplined, regular investing to minimize risks and maximize growth.
You don't need to find the next NVDA to succeed in the market. Just choose top-notch ETFs and partner with a CFA like I did. I turned my $90k inveestment to one that yields $50,000 in annual dividends-a significant milestone for me today.
Impressive! I admit I'm scared about retirement as I approach that chapter. I need to ensure I have enough savings to survive on. My retirement account isn't doing great. Now, I need that professional rescue. Please direct me on how to reach a sound adviser
There are a handful of xperts in the field. I've experimented with a few over the past years, but I've stuck with ‘'KATHLEEN CHERYL CONSTANTZ” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
Kathleen sure knows her onions in this industry, from her intimidating profile which I went through, on her web home page. I started off last year tailoring a colleague's tradin strategies but it didn't pan out well. Hopeful that Kathleen will attend to my message.
The concept of mini-retirement changed my life. I'm no longer waiting for some retirement paradise when I'm 65. It helps to know how to fund the lifestyle. You know, making money while you sip that piña colada by the beach does help. I wouldn't have been able to do it otherwise.
Yeah, people miss that part. You don't jet out to Puerto Rico with your life savings. Proper investing and a good business acumen are big pluses. Invest in the stock market, real estate, build businesses. That's just it.
Safe to say not everybody has the skill to pursue investing. But it's always easy to follow the advice of someone who knows how to i.e a financial advisor. You could anywhere between 10--40k with the right ones. Online businesses are a good bet too if you are savvy.
Carol Vivian Constable is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you so much for your helpful tip! I was able to verify the person and book a call session with her. She seems very proficient and I'm really grateful for your guidance
(NYSE:ARR) is a high-yield mortgage REIT paying monthly dividends. The stock has a dividend yield of about 14%, as of August 14. If the stock has increased sharply because the business is performing exceptionally well, it could still be a bargain. I'm still looking for companies to make additions to my $350K portfolio, to boost performance. Here for ideas...
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown. its important to seek the guidance of an expert
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
Viviana Marisa Coelho is her name. She is regarded as a genius in her area and works for Empower Financial Services. By looking her up online, you can quickly verify her level of experience. She is well knowledgeable about financial markets.
Thank you for the lead, searched Elisse by her full name and at once spotted her consulting page, she seems highly professional having over 12 years of experience. amazing!
Loved every second of my watch to the very end. I could really use your help James, I’m 52 and disabled since 2007, still own a small business with $80K in savings. But I'd still love to grow my investments ahead of my retirement.
@@hullbruce Exactly, why I stopped taking financial advise from RU-vidrs, because in reality I end up with a collection of confusing stocks. Whereas, all I needed was a real market expert to have made over $350k in less than 2 years.
Exactly, why I stopped taking financial advise from RU-vidrs, because in reality I end up with a collection of confusing stocks. Whereas, all I needed was a real market expert to have made over $350k in less than 2 years.
@@Jaymilnere Alicia Estela Cabouli is a hot topic among financial elitist in Manhattan. She's gained some reputation especially during covid. All the info. you need to set up an appointment is on her web page.
I just want my money to keep growing faster than inflation. That’s why I’m looking for companies to invest my retirement savings of $250K I have sitting in the bank. I just don’t know the best strategies to use to make solid gains with steady cash flow.
Some financial circumstances, in my opinion, are best addressed in consultation with a financial counselor, while others may be managed on your own with sufficient research.
You're right. A few neighbours and I in the Bel Air area work with an advisor who prefers that we dollar-cost average across different promising sectors rather than making a lump sum purchase. As a result, my portfolio grew by 40% last quarter.
That is just amazing. I've attempted to employ a financial advisor by doing some research on my own, but it's somewhat daunting. Would you kindly refer the people you work with?
"Amber Michelle Smith" has always been on the top of my list..She is regarded as a genius in her area and well knowledgeable about financial markets. I highly recommend you look her up if you want excellent collaboration.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
I have a $90,000 portfolio that I've been working on for 5 years, but lately the volatility in the market scares me... Is the bull market over? I'm thinking about moving my investments to safer options like a hysa or T-bills. What do you think?
It depends on your goals-whether you're looking to grow your money, earn income, keep your savings safe, or how much risk you can handle and how close you are to retirement.
Accurate asset allocation is crucial with an Experts guidance. I have 850k in equity, 75 cash earning 5.25 interest, 685k in roth ira, 120k in 401k, Gold and silver bars. age is 48. My advisr helped me realign my portfolio to my risk tolerance and it boomed shortly.
Monica Shawn Marti is the advisr I use and im just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.
Another great video James. I'm sure I've told you this before, but you really need to get your videos into schools so that the age group 16/17/18 especially get to see this stuff. (appreciate it's accessible to them through here, but I think giving them a nudge to come look would be highly beneficial) I'm 34 now and really wish I had this sort of advice when I was 18 and just started working. My pension got fairly neglected into my mid 20's, a large influence on this was poor (nonsense) advice from older relatives stating things like "pensions are a scam" etc. Videos like this help to illustrate just how easy it actually is to save for a comfortable retirement if you start early. Thanks Rob
Completely agree. And you're still young, we only properly looked at our finances in our early 50s. Luckily we'd been paying into pensions for years through work but had no idea which funds we were in. We've got ourselves on the right track with the help of RU-vid but the best thing is that I've talked about it with my children and started JISAs and JSIPPs and they now understand investing and compounding as teenagers. They're paying small amounts into their ISAs themselves and I see that as a big parenting success!
Pensions COULD be a scam. The government could change their mind tomorrow and "poof" your pension doesn't exist anymore or you can't access it until 80 or whatever.
@@esmeecampbell7396private pensions. Also, pensioners are an incredibly unlikely group to fuck over in a democracy - they vote at the highest rate and generally for the most status quo policies with a bit of selfishness built in
I have spoken to a couple of financial planners to try and work this out. I dont have the data to work out the numbers, but i thought the concepts were pretty straightforward. Neither of them could answer these questions. Thanks for putting it here.
Having an investment advisor is the best approach to the stock market right now. I was going solo without much success until my wife introduced me to Steph . I've achieved over 80% capital growth this year, excluding dividends.
CORRECTION: At 10:00, I said NI for the basic rate tax band is 10%, but as of April 6th 2024, it has been reduced to 8%. I should really stop filming videos at 10pm at night...apologies for the mistake.
Also, in Scotland the higher tax starts at £42k so the earnings band band between 42 and 50k in Scotland has 42+8=50% deductions a huge mark up for salary sacrifice
@@kykslrthis to me is unconscionable. That's a huge chunk in low middle earners take home pay and many Dont realise it. I try to salary sacrafice below this into pension for now until weans or life events come along. I don't have faith state pension will be anything remotely meaningful if at all by the time we ever retire so better let it grow a bit now for longer.
Yes. I've noticed that to some extent already just between 55 and 65. The other consideration is that spending will reduce if one has nobody (partner or friends) to share experiences with. Holidays, meals out, etc alone aren't as attractive as shared ones. Do things while you can.
70 year olds mostly spend nothing ,their Zest for Sex ,Food ,Beer and fast cars has long gone ,as has the desire to travel ..Comfort is the Norm .. I semi retired at 36 and have seen em all .. They all regret not doing sooner . I saw my dad slowly Die of Dementia at 90 ..Crack on whilst you can is what I see on an almost daily basis . Most people dont actually live that long ,so bare that in mind ,as well as the potential for WW3 and UFO ,s that are coming /here ,Not to mention Covid episode TWO ,lol. .. Lots of variables out there other than $$$$$$$$$$$$
@Lookup2Wakeup £2k/mnth before or after tax? I ask as I’m 51 and want to retire at 57. Collect part of my DB pension at 60 and trying to see how much people live on. I know everyone is different. Wife says I should as I have ailments and enjoy it while I can!
@@darrenholden7447Do a few budgets and see how they look. Basic, comfortable, Best Living… Big question. Have you proven to ALWAYS live within your means? If it’s proven you have always lived in debt, take car PCP deals, expensive holidays…then these traits are likely to continue. Old Dog and new tricks….
@@darrenholden7447I've worked out that to cover our bills and do a few nice things like meals out and a holiday or two we'd need about £35k pa post tax. Holidays could be off peak and most restaurants do cheaper lunch specials. Hopefully we'll have our freedom passes so free travel in London (if they're not scrapped by the time we reach 60!) It's the council tax which is so high, all other bills will be quite reasonable once the kids have left home.
I realized that the secret to making a million is saving for a better investment. I always tell myself you don't need that new Maserati or that vacation just yet. That mindset helped me make more money investing. For example last year I invested 30k in crypto and made about $246k, but guess what? I put it all back and traded again and now I am rounding up close to a million.
How can one start,most times people don't know where to start when it comes to crypto. But it would be great if you can provide proper guidance on steps to follow please
As a beginner investor, it’s essential for you to have a mentor to keep you accountable. Myself, I’m guided by Alex Gomez. A widely known crypto consultant
Great video James, excellent information! I am state-side and sat down last week and did a year by year retirement analysis to age 95, looking at annual inflation, social security income, personal investment returns, along with reducing annual spending as I progress through my 80’s and 90’s with my spouse. I landed exactly where you did with your approach. Thank you for sharing your insights and analysis, much appreciated!
Solid video James. I think if people really want to retire comfortably, they need to look at Property too, at least half of all household wealth is sat in Property, those that held onto property the last 2 decades will have seen really solid capital growth. Lastly there is 1 more stream most people forget and that is investing in a business. Most wealthy indians I know in the UK today all have businesses and many retired into their 50s as they did well in business. Consequently they paid off their mortgages and have become portfolio landlords sitting on multiple freehold properties.
Hi James, I recently found your channel off of some other financial channels I watch. I am someone (possibly) quite typical in that I am just realising that although I’ve paid into pensions (workplace and private) for some time I may not have been giving it the attention it deserved and at 58 (this year) need to pull the finger out, it’s good to put figures (even if they are ballpark and dependant on returns) to the amounts needed to sustain (in my case) 20 to 30k a year once retirement comes.
I don't think I will ever retire as such, I have 2 businesses and have taken a few months off in the past but being in contact with people and just doing stuff is really rewarding. Gotta keep moving 👍
You can still be in contact with ppl and very much have a rewarding life without work. Life, for some people, is so much freer and expansive without the construct of work. Taking regular breaks from work has allowed me to appreciate the opportunities for life. I have a wonderful job, don’t get me wrong, but there is a world out there that needs to be enjoyed.
Same here I’m in a well Paid Easy stress free job but they still have my time for 8 hours a day and I hope to get rid of that at 60 and do what I want to do each day.
A great video with a lot of insights. For me there is this challenge of save, save save and you end up dying 3 years into retirement (all too common story) The balance of living a life you want to live NOW enjoying the things you appreciate more NOW is key. Obviously I am not advocating splurging all of your cash and having nothing for when you finish work I just think each case is different. You don't want to have nice cars, foreign holidays and expensive things when you are 75 so therefore don't need a large amount of wealth at that age
This video is absolutely excellent James. I can't believe how clearly you managed to explain what is a very complex topic. Edward Tufte would not be especially disapproving of your charts, I think, and that's really helping.
Nice tool it validates my own assumptions of where I'll end up on a conservative 4% interest (My SIPPS rate is 12.42% so defintly on the conservative side). I know what I'm contributing and timescales, it's the goal which is a little fuzzy. I finangled the target in steps to fit in my plan. £257 for 1 year, £357 for 19yrs then up to £530 for the last 14 once my mortgage is paid off. £380K at 68 seems pretty positive when my take home after tax is only 21k. Looks like I'll end up with a choice between more income then when I was working or retiring earlier. Probably a bit of both.
@@christopherjhall It would be nice, unfortunatly I'm not particularly career driven and easily get complacent. My goals have generally been to afford a house & make enough that I don't have to go days without electric or food like I did as a child. It's part of why it's taken 11yrs to get to 26K as I've already got that. Unfortunatly there is also not much in the way of job opportunities locally and my natural skills would have me do well in areas like social care or working with special needs. Areas not particularly known to be a lucritive career path.
Great video James! Retirement planning is the real gap since pension freedom. I work in investments and took some free advice from our IFA division recently, all they wanted to do was 'move me onto the platform (with a "staff discount")....all I wanted to know about was tax efficiency, retirement planning and paying into my partners pension as a more efficient way of drawdown in retirement....we spent most of the hour talking at crossed purposes!! I have been looking at 75% (global) equity with 25% spot price gold as a buffer....I know it's not traditional equity bond, but after the truss budget I have less faith in bonds being a buffer any more......have you ever thought of doing backtesting on equities and gold? would be interesting to see........
Thank you for for bring up this video! Recessions are an unavoidable part of the economic cycle; all you can do is prepare for them and plan accordingly. I graduated into a slump (2009). My first job after graduating from college was as an aerial acrobat on cruise ships. Today, I work as a VP for a global corporation, own three rental properties, invest in stocks and businesses, run my own company, and have increased my net worth in the last four years.
Remember, by the time you retire, you will have already purchased most of the things you want. You don't need a large pension. Ever wondered why retired people always buy new cars? It's because thry son't have anything else to buy. Retire earlier on a smaller pension, you can't buy more time.
None of this is rocket science, however if you're not financially savvy, it can really appear so. James has a real strength in being able to break it down and explain it simply. The psychology of investment and the ability to sleep at night, which he touches on are super important and these can prevent the "mistakes" he mentions. Good work James.
It destroys it which is why it was not included. The reality is that you can only hope you run out of time before you run out of money. Those on the higher end, with 50k per year can just about support one individual requiring care. But if you are a couple, then your significant other has no income for retirement, or worse they also require care and you need to sell off your assets either way. You would require an income of 100k per annum matched with care home inflation fees to avoid this scenario. This is not feasible for many. *To clarify, this is for care home assisted living. For private carers to visit your home it is somewhat more manageable, but it would still require a great amount extra, although not double. It’s made somewhat easier with Disability Allowance etc.
I know that ISAs are not as tax efficient but I have been contemplating having an ISA for income top-ups and to delay drawdown. Essentially buffer plus a big excess. ISA just in case I need money before retirement. Seems like a sound plan in my head
Only after my dear mother passed away and I acted as executor on her estate did I realise how brilliantly she did as a professional woman and the way she looked after her finances over decades. She could easily have afforded to have retired earlier and avoided doing a couple of jobs she did not enjoy, as well as spent some of her money to make her life easier and more enjoyable. The message here is, if we are going to put all this effort into looking after our future finances we should also make plans on how to enjoy that money when we are older. The goal should be to retire around 55-58 years of age and enjoy our lives, whilst making provisions for our legacy. Be great now and your future you will be grateful!
Another quality video 😊 Its a shame we cant cover every eventuality! As nobody's guaranteed govt pensions now as the age is getting further & further out of reach ...im mid 50s ' not the best health now and to expect to live into my 70s and receive a state pension @70 now is pretty unrealistic. My grandparents & parents never made it to 70 😮 Genetics & luck is needed ! Whilst iv saved €200 k for when im 60plus its a pipe dream for many to reach thus age ! 🙏
Not advice but I would seriously consider withdrawing your 25% tax free at 57 & putting it various length cash Isas inc a no or short penalty free access one 👍
Loved this, clear, accurate and unbiased. You put into words what I have looking at and working towards for the last 5 years. I agree the answer is not straight forward and needs thought especially around the nuances of the related issues like drops in stock market, changing investment thoughts, fees and investment balance. Thank you for this.
Don't forget: the government has shown they're capable of messing with or raiding your pension. So far they haven't touched the ISAs - I'm guessing having paid full income tax on it, it's harder to justified scalping it. For that reason, I'm trying to make sure my ISA has close to half of my retirement fund assets in it.
Thank you. Retiring at 55 would be a bit of a dream as I’m only a couple of years away but I can at least see that the value of my pension pot which currently feels like way too little isn’t so far away from being enough. Hopefully I can quit before I’m 60 😊
Go where your savings work hardest for you. Expenses 30%+ less in SE Asia, great quality of life and private medical care, particularly Thailand, Malaysia.
That's a bit sad unless U really want to live there. U gonna leave your grandkids behind and move to Uruguay because U didn't save enough to live a decent life in the UK?
@@FlorinVZahariabit sad trying to tell other what they should or shouldn't do they may not have grandchildren and they may have great savings but it will certainly go a lot further in other country's could take the family with them the uk lost its way a long time ago and is only getting worse anyone able to should leave while they can this country is not great anymore it is a cyst pit of utter bs soon as I retire I will also be out of this country as quick as possible
Best video out there to show much much u actually need. Thank you for making this video, makes me feel reassured I’m on the right path and will give me confidence when I reach 55.
Hi James. Great video and particularly useful for us as the scenario you use as an example closely reflects our circumstances. What would be really useful is if you could expand on the pot size details for a married couple retiring at 62 with disposable incomes of £30k/£40k/£50k (including state pension). TIA (if you don’t ask etc etc 😊)
Could you do a video like this for those of us looking to retire in our mid-late 40's ? as the calculations seem far more risky when there are many years before we can access any pension benefits.
Also your asuming that there will be a state pension and triple lock will continue, which lets be honest the country can't afford, with a reverse pyramid of population and age groups and lower birth rate. I think anyone retiring after 2050 should start to question if UK state pension will be as generous or at least become means tested.
Yes but I would say people were saying the same in the 1990s when I was in my 20s, so I planned accordingly. So agreeing with your point is helpful regardless if it comes true or not. There are other issues you are ignoring, like the voting patterns of retirees.
We have paid into private pension, not huge ones at that, but since we have started to claim our state pension we are taxes to the point where any increase in the state pension is swallowed up in extra income tax.
Hi James great video as usual, a spread sheet of the first part would be good. I have a few comments, if you have a cascade of pots the net effect would surely mean you need less, as per your other vids you could dynamically draw down? Re pension, if you lucky your company will add their NI savings, for anyone worried I believe salary sacrifice pension is the best vehicle to get to the big numbers, but important is to check for yourself how you pension is invested. A theme you keep touching on are care home costs which could be relatively biblical, how should one think about this, a bit cliche but it’s a concern a long term frugality might be swallowed up by care fees, what are these scenarios likely to look like?
Love your videos James. So much so that they’ve educated and influenced me to change direction in my career and get into financial planning. Start a new job in financial services in 3 weeks, can’t wait to get going. Thanks for everything
I wouldn't worry about when to retire. Your goal should be to get as quickly into the stock market as possible. The median US income has grown by x1.62 since 1980, while the US GDP has grown 10x, the same as the S&P 500. You have an extreme disadvantage living from a salary, on average; therefore, do not ask when you can retire but instead, how early can you start investing in ETFs, stocks, and bonds as early as possible to escape the median income trap--in order to have a few million USD left at the age of 65.
Hi James, Great video again. I can't seem to get the How much to save tool to either download or send to an email address. Perhaps it's just me. Keep up the good work.
Amazing video thanks James. I was fortunate enough to find your and other similar channels about 5 years ago when I was 27 and have been making sure I have been investing a substantial portion of my income ever since. I know it might not be quite as popular , but you be able to do a video for those wanting to retire at 55 with 60-100k in retirement. I think it will be really good to motivate as well as inform us of what is required? Or updating the excel you kindly shared for the amounts needed? Thanks!!
A good addition to something like this is - how much money would you need, and need to be investing per month at 20, 30, 40 years old to reach this. I know how to work this out myself but it’s mind blowing when you see it spelled out - the power of compound growth and how little you need if you start early vs late. I still have colleagues in their 20s who have OPTED OUT of our employer pension!
thanks James, very informative as usual and much appreciated. You mentioned briefly about the potential very high costs of funding healthcare in later years. I presume that this would have massive and dominant impact on the calculations, is there a reason why you don't take it into account? Many thanks!
Originally, I thought that there are too many additional assumptions related to end of life care that it would be hard for people to relate to. Length of care? Both going into care? What types of care? Are you happy to sell your home? Where do you live (affects costs a lot)? We have default assumptions for our clients, £80k per year for 5 years before they die. But I think I would have to spend 5 mins justifying those assumptions! However, on reflection I should probably have just showed one scenario and then rolled it back and continued on without it.
Gloriously simple. Well done James. That tool looks like fun. I'd love to know what the spending of pensioners who own their own home is by year. At 65 you need £blah. at 75 , etc. I always imagine I'll spend very Little but “assumption is the mother of all mistakes” .
This is a very useful video thanks James. Also, would like to query why some of the comments from other viewers seem to be focussed on US-related retirement and investment structures. Isn’t 401k a US-based approach? Why are these people commenting on what is clearly a very useful guide for the U.K. - not for the US?!
I enjoyed watching every second of this video. Additionally, People are lucky who are able to retire early. I have 15 months till 65 and need to look at calling it quits, my only fear is running out of funds much later, thus keen on investing. What could be the safest possible ways to invest for cashflow, in order to afford my lifestyle after retirement?
@maria_casey truly appreciate the implementation of ideas and strategies that result in unmeasurable progress, thus the search for a reputable advisor... mind sharing info of this person guiding you please?
Well explain thank you for bringing up this video Financial education is indeed required for more than 80% of the society in the country as very few are literate on the subject. Regardless of how bad in the economy I still make 140k from my investment of 35k Thanks to Kelra Watson for her helpful guides
But, just as a thought experiment. What if you retire at say 65, and you spend like crazy for 15 years, travel, classic car, give to kids, dinners out, nice clothes. Then at 80 your funds are depleted and you lower your lifestyle costs to basic until you die. That could be 5 years that could be 15, would you have made a mistake? Because in my personal experience I spent every penny I made from 16 to 25 on travel, living abroad, changing cities, jobs, learning & experiencing the world and now that I'm 30 and I'm more sensible and I'm far richer, I am not happier or more fulfilled. I'd give all this invested money up to regain some of my youthful naivety and sense of adventure. Sometimes I think all this hyper focus on financial outcomes just kills the spirit
We all sit on a spectrum of living for today vs living for tomorrow. Many people live for today without truly considering the consequences and how they might be robbing themselves in the future. At the other end of the spectrum, people can spend their lives living in the future. They look forward to a point in time when they've saved enough or got to a level in their careers, and THAT's the time when they'll start living, start feeling fulfilled. But often, when they do get there - if they ever get there - they don't feel what they were expecting. Financial planning is not about maximising financial outcomes; it's about using money to optimise for maximum lifetime fulfilment. Although an extra £1,000 invested today could turn into £5,000 at retirement, would spending that extra £1,000 today give you more fulfilment than having an extra £5,000 at 65? Bill Perkins, the author of Die With Zero, gives some good advice on this, I would check out his book.
I absolutely ragged it until my early 30s because I was a youthful idiot. Took poorly-paying jobs that were interesting. Travelled instead of saving, said yes to every social invitation, took months out of work at a time to read, learn, catch up with friends. I'm much poorer now as I try to backfill my pension, and will not have enough to retire in luxury. Would not change a thing.
I've just stumbled across your channel James and have watched a couple of your videos. I wish I had taken retirement planning seriously 30+ years ago. I have a few small work pensions but these will add up to bugger all in the grand scheme of things. It is only in recent years that I have invested seriously in a share ISA, which is my main pension vehicle. One thing on many people's mind is IHT and the burden this could leave on our loved ones. This has not been mentioned in retirement planning videos, but surely it is something that also needs to be considered and planned for in the same conversation, right?
Thank you for such succinct description. As an NHS employee is there any chance you could do an in-depth look at the old pension they had and new one CARE and how it maybe feasible to reduce it to 65 retirement instead of Gov retirement age? How it maybe possible to boost it. I know a vast amount of people who would be interested as the calculators on the sppa website aren’t always working and the statements are not clear or continued when old portion of pension taken but CARE left in to take later. Many thanks though for all the videos you do. Very much appreciated
Hi James. I think it's time for a video on the new lifetime allowance rules. First, there's a limit of £268,275 'lump sum allowance' equal to 25% of the new 'lump sum and death benefit allowance' Now unless you are desperate to pay off a mortgage, most people will not take 25% of their pot at retirement. If you have a £500k pot at retirement, for example, hopefully it will grow over the years and you will be able to take more than £125,000 tax free. So two questions arise. Who is supposed to keep tabs on the actual amount of tax free cash you withdraw? And what will happen if you breach the limit? And a question that I've always had, which may now be moot unless the lifetime allowance is reintroduced by a different government, if your pot continues to grow and looks like it will breach the £1,073,100 limit, at what point should you start to take large amounts out so you don't end up paying huge amounts of tax?
I'm not understanding why the 2 year cash buffer does not affect the total required. That cash will gain far less value through investment over time, possibly even lower than inflation, and you're making a lot less money through your stocks and bonds.
I have a personal pension that all my employers have paid 5-7% employers contributions into it. That, combined with the tax relief means I have ended up with a bigger pension than the amount I have put into it would suggest. Employers contributions really help.
The drawdown as a % of capital is on average 5-6%, so it's not far off the 4% rule. I think it re-enforces that the 4% rule is pretty safe & conservative. Spending will definitely decrease as one gets older though. Medical expenditure will increase though.
A drawdown of 6% is a LOT different than drawing 4%. You would then be taking 50% more from your pot. A 4% drawdown that ended up lasting 25 years, may only last 16.7 years with a 6% drawdown, all other things being equal.
All you need is a public sector pension. The public sector unions never mention these Government backed, index linked assets. I took an early pension with max tax free lump sum. I retired at 60 with £70k tax free lump sum. £22k index linked age reduced early pension until 65. With a second £70k tax free lump sum at age 65 and a 25% increase in my pension to the full pension amount of £30K. That with my state pension at age 66, slightly lower due to public sector pension opting out, I will be on at least £37k indexed linked and government guaranteed pension until I die. Hopefully 100+. Ya, but the public sector need a big pay rise.
Thank you for this incredibly generous free content. It answered so many questions that I’ve had on my mind in one sweep. Excellent stuff. I have a question about the calculator sheet you provided. I’ve experimented with an online compound interest calculator, and one useful feature is the ability to build in a fixed contribution percentage increase each year, e.g., 5% increase,or whatever. Does your sheet use similar assumptions for its calculations? Thanks again.
James this resource is fantasic. You mentioned thinking for couples in your video but I' wondering if this spreadsheet can show this as well? My wife and I process all our income and expenditure jointly, so jointly planning our needs would be helpful.
Hi James, saw your pinned comment, the word "expenditure", implies the money is NET of tax, sustainable or otherwise (I assume by sustainable, you mean inflation adjusted). Unless all your investments are only in a very large ISA, you need to know how much is in an ISA vs SIPP vs outside a tax wrapper. Say you use the 4% rule, £50k would be equivalent to a SIPP of NAV £1.25M, which unless you have fixed protection2014/16, means your 25% cash component is still capped at £1.073M. It's nice to keep things simple, but sometimes the devil is really in the detail. Also think "backtesting a 100 years" is a waste of time. How bonds and equities behave now is completely different for the 1930's, 40, 50's. Eg. I don't think people would have blinked an eyelid if the Chinese property market crashed in 1930!
£16,700 p.a. from a 500K pot (3.35%) seems sustainable and most tax efficient . Thats £1400 per month, no tax to pay. £400 for bills, 1000 for spendy. Easy. Can probs save £500 a month from the £1000, I've no idea how you'd spend £1000 a month unless you're an uber-eats type.
@Lookup2Wakeup I'm 53 single, live in South East, band G house. I live very comfortably on £1K a month (self imposed - the rest is stashed!), I watch with bewilderment these videos of people that want to know if they can retire, as they want to have 30K, 40K, 50K to spend in retirement. By the time you're 50's, you've made all the big purchases - house, furniture, car, tools, etc. Still, I'm happy to know these people are around in abundance, paying back heaps of cash and VAT back into the economy.
@@pvelectronics4291Where we are council tax is £300pm! Admittedly we have a big 5 bed house as kids still at home. We will downsize eventually but probably to a 3 bed house. I think we'd need £30-35k pa to live comfortably, pay the bills, go out to eat, socialise and a couple of holidays each year.
7:20 presumably to get the reduced capital you’ve also accounted for the full £20k/yr needed from age 55-67. However, did you include an amount of money you need per year to pay into the state pension until 67? My works pension forecasts were scarily bad. If I retired at 62 it was going to pay out 12k per year. Felt pointless. More so as my target retirement was 55, with my mortgage paid off by then. I’m more than happy to live frugally before or after retirement. But I feel the pension was a rubbish way to go; I’d need an investment, and not just a lottery gamble on stocks.
You work for a 40yrs to have £1m in your retirement, meanwhile some people are putting just £10k in a bitcion coin for just fe months and now they are multimillionaires thanks to Charlotte Grace Miller
I'm surprised that you just mentioned and recommended Charlotte Miller, I met her at a conference in 2018 and we have been working together ever since.
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I worked at a company years ago, just for a few month , just got a letter from there pension(the pension people), I have a massive 175 quid in it , should I cash it in now ive just gone 55
I watched your 4% rule video and if my understanding is correct the numbers don't tally - for 50K you'd need 1.5m at 55 - even including a second state pension it doesn't seem to come close to the figures in your 4% video, be great if you could explain the difference in the models.
