Great content. Will always remember the example of two people aged 25 saving for retirement, both the same contributions, but one started five years later at age 30.. No surprise at age 60 the person who started five years earlier, had double the fund size.
It can. A notional number is only part of the job. Utilising a dynamic spending approach in retirement can help. Remember also that values can increase sharply at times, just as inflation can. Most things revert to mean over time though.
You can have comfortable retirement on much less than £45,000 a year. Minimum though would be £25,000. As people get older, they have lower outgoings because they're not as active.
@@chrisbourne-retirementplanner True, if people want to maintain a lifestyle they had while working. I and my friends, we just want to stop working and have a more relaxed life, slower paced, enjoying the simple things, not so much going on expensive cruises, etc. I think that's something people need to think about, do they want to retire but still have a busy life, or a more relaxed, homely retirement.
So to achieve this in a saving account at 5% he would have to save over £3365 a month!! After he had paid all his bills. Lets use some realistic numbers please
Not quite… you’ve used a flat contribution amount - this model assumes a growing contribution amount over many years. Remember that the value of money will depreciate, so you’ll need more of it as time goes by. Also, what is realistic for one person may not be for another, but that doesn’t mean figures are wrong. This imaginary person has income of £100k, with an excess of £20k unspent every year. Whilst this might be above the UK average, at least 75% of my clients who are still working have income of at least that level. A number of them earn many times that amount. The beauty of software such as this though, is that the figures can be whatever you want them to be.
Haha 😂 Don’t worry… as the value of money decreases, you just need more of it. A seven figure number will be much easier to reach in 25 years time than it would have been to reach now, having invested over the past 25 years. At just 2% inflation, £1.5m then would be the same as about £750k today. Naturally, contribution amounts will get bigger as the amount of money you earn increases… what seem like large figures today, won’t be so large in the future.
Hi Chris, first time watcher of your vids. Looking for lots of tax guidance here in the UK. In this video you don’t mention debasement of the pound. This is highly relevant today and in the future. Any Thoughts?
Chris, I retire in 15 years and am all in on the SNP500. Dont know if I should change to a all world ETF now or just stick with it. Can you do a video on this please.
Thanks Dan. I guess it’s subjective. I wouldn’t know really which way the market is going to move. A lot will depend on whether the US can engineer a soft landing out of the the tightening of monetary policy and remain the driving force of global growth - that’s anyone’s guess. Other parts of the world look better value at the moment that’s for sure, so a global fund is the lower risk option, but may not end up outperforming.
Hi Chris. Is there an option to continue access to Voyant once the initial period has expired ? If so, what is the annual cost and is it available for all the course options ? Also is there perhaps a potential video suggestion showing the major differences between ClientGo and VoyantGo ? Thanks !
Hi there. Yes there is. It’s just £120 a year. The difference between ClientGo and VoyantGo is vast - ClientGo is a very basic forecasting system that provides some useful insight for the absolute beginner. VoyantGo is a professional planning software that allows you to model almost any scenario you can think of.
Once I've paid off the mortgage in a couple of years - should I pile everything into pension via salary sacrifice, or split in a ratio with ISAs for more flexibility in retirement?
The pension is likely to generate the better growth result, the ISA will allow you to access money earlier if that is important. Check out my video titled 'This Retirement Account OBLITERATES All Others'.
Hi Louise. It would be relatively straightforward to work this out using Voyant. We always have to remember of course that projections require estimations, but by making an estimation as to what your NHS pension is going to pay (inflation adjusted), we could work out the amount of excess capital you’d need.
Whilst voyant is a good tool but you as just as well in using an excel spreadsheet , which is want voyant basically is. It’s all good until you get a drop in the market along with high inflation,
I’ve seen a lot of spreadsheet attempts - none come close to Voyant. You can format a spreadsheet, but having the full UK taxation framework built in, including all wrapper rules, allowances and bands, as well as all the Insights that display things in a clear and logical way, simply can’t be matched by a standard spreadsheet. So in answer to your comment, I don’t often say this, but you’re completely wrong - you’re not just as well using an Excel spreadsheet.
It’s a good starting point knowing what the target is. Fortunately, advanced cash flow modelling systems like Voyant allow you to forecast with more confidence, so you don’t have to work to rules of thumb like a 3% rule or 4% rule.
Interesting stuff ….I think in any scenario where I might slip into the higher tax bracket in the future I would look to do something different maybe :- Take more from the pension up to where the 40% tax bracket kicked in. Invest in an isa the same funds as pension and supplement pension later on to avoid paying higher rate tax. Or Maybe don’t spend all the money in the isa first …keep some to supplement income later on to avoid hitting that 40% tax band. Anyway nice problems to have given the average uk pension pot at 64yrs is circa £110,000 Maybe an annuity at the current rates might provide the same income for life cheaper with Zero inflation or investment risk and you can keep your tax free cash for an orange and some nuts at Xmas 😂
45k retirement income from 60 ? You don’t pay NI 12% and don’t pay pension (10%) you would need a salary of 55 k to receive the same take home pay as 45k pension !!
@@Banthah I was on a salary of 44k when I took early retirement I didn’t need to have a pension of 44k to have the same monthly income just making sure if people have a target of the same income in retirement you don’t need to match your current salary
Hi David. I said make your current lifestyle expenditure your target, not your current income. They’re different things - you may have excess income at the moment that you’re using to fund investments.
@@chrisbourne-retirementplanner I retired 2 years ago at 55 bought a canal boat and spend summers on that so I’m at the other stage now I’m in SIPP drawdown mode with a decent DB pension doing most of the heavy lifting to be fair
There’s no data to support 10% being a safe long term withdrawal rate. There would need to be long term evidence of it being successful for many people, for many years. Otherwise, it’s best to be conservative when projecting forward.
@andy.m265 it's not a withdrawal rate. My dividend portfolio is paying out just short of 9% yield. I brought at pretty much year lows and a lot during covid when it tanked. The sp500 has historically produced annually over 10% return, with dividends being reinvested in the last 100 years. Good dividend stocks and maybe sp500 nasdaq and probably an alworld index is a good way forward. Good indexes beat 95% of fund managers anyway.
@@dubsdolby9437 I would heavily caveat this by saying that 10% might have been the average long term return, but it is just that - an average. That does not make a 10% withdrawal rate sustainable because there are times of extreme value falls, where such a concurrent rate of withdrawal would destroy capital irreparably, particularly if you are relying on dividend yield because you would have to sell a lot of shares at a low price, which means that even when prices recover, your dividend income would never be what it was again. Also, the notion that indexes beat active managers is only partly true and over generalised. It is one of those lazy tropes that is often repeated but not fully understood by content creators who base their ‘expertise’ on reading a few books rather than actually studying market dynamics… The US market has historically been hard to beat because it is highly efficient and accurately priced. In other geographies though, and in other classes aside from equities, it is less true.
@chrisbourne-taxfreeinvesti9688 It's like anything it depends on what you pay for it at the time. Funds in fashion 1 year are out the next fund managers leave, and fundamentals change. I agree 10% withdrawal is unsustainable. You will find it hard, imo to beat index trackers, particularly the nasdaq sp500 iitu continuously over time . Trust net did a recent article pointing out that no fund has beaten qqq etf nasdaq over the past 10 years. There are excellent blue chips that are reliable, high dividend payers, not particularly great on growth, but other vehicles can produce growth.
i don't believe in it being a number. a portfolio valued 2 years into a bear market and 50% off peak levels should expect better future returns than one at all time highs. that sort of thing needs taking into account. we don't un-retire when the market drops after all. we have it factored in as a down in the normal ups and downs.
Yes having a notional target is helpful to understand progress though, and measures should be put in place to reduce the sequence risk when we retire as mentioned above.
Great content. Will always remember the example of two people aged 25 saving for retirement, both the same contributions, but one started five years later at age 30.. No surprise at age 60 the person who started five years earlier, had double the fund size.
Yes I've often used that example in the past - unbelievable isn't it how 5 years can make such an incredible amount of difference?!
The problem is the income need can change quite sharply. Inflation is a real killer and can be unexpected.
It can. A notional number is only part of the job. Utilising a dynamic spending approach in retirement can help. Remember also that values can increase sharply at times, just as inflation can. Most things revert to mean over time though.
Always look forward to your content Chris......thanks buddy
Many thanks Will I appreciate that 👍🏼
Thanks Chris. I will try adding a downsize event to my Voyant plan and see how it pans out.
Cheers Stuart - hope the video is useful reference. Let me know how you get on.
One day, Rodney, we'll be millionaires.
Mange tout.
You can have comfortable retirement on much less than £45,000 a year. Minimum though would be £25,000. As people get older, they have lower outgoings because they're not as active.
It really depends on the lifestyle you’re accustomed to. Some of my clients spend more than that on holidays every year.
@@chrisbourne-retirementplanner True, if people want to maintain a lifestyle they had while working. I and my friends, we just want to stop working and have a more relaxed life, slower paced, enjoying the simple things, not so much going on expensive cruises, etc. I think that's something people need to think about, do they want to retire but still have a busy life, or a more relaxed, homely retirement.
So to achieve this in a saving account at 5% he would have to save over £3365 a month!! After he had paid all his bills. Lets use some realistic numbers please
Not quite… you’ve used a flat contribution amount - this model assumes a growing contribution amount over many years. Remember that the value of money will depreciate, so you’ll need more of it as time goes by. Also, what is realistic for one person may not be for another, but that doesn’t mean figures are wrong. This imaginary person has income of £100k, with an excess of £20k unspent every year. Whilst this might be above the UK average, at least 75% of my clients who are still working have income of at least that level. A number of them earn many times that amount. The beauty of software such as this though, is that the figures can be whatever you want them to be.
Looks like I won't be retiring ever 😂
Haha 😂 Don’t worry… as the value of money decreases, you just need more of it. A seven figure number will be much easier to reach in 25 years time than it would have been to reach now, having invested over the past 25 years. At just 2% inflation, £1.5m then would be the same as about £750k today. Naturally, contribution amounts will get bigger as the amount of money you earn increases… what seem like large figures today, won’t be so large in the future.
Hi Chris, first time watcher of your vids. Looking for lots of tax guidance here in the UK.
In this video you don’t mention debasement of the pound. This is highly relevant today and in the future. Any Thoughts?
Thanks for the video , interested in your Voyant course. Does Voyant produce monte carlo simulations?, thanks
Hi there. Yes it does.
Chris, I retire in 15 years and am all in on the SNP500. Dont know if I should change to a all world ETF now or just stick with it. Can you do a video on this please.
Thanks Dan. I guess it’s subjective. I wouldn’t know really which way the market is going to move. A lot will depend on whether the US can engineer a soft landing out of the the tightening of monetary policy and remain the driving force of global growth - that’s anyone’s guess. Other parts of the world look better value at the moment that’s for sure, so a global fund is the lower risk option, but may not end up outperforming.
Hi Chris. Is there an option to continue access to Voyant once the initial period has expired ? If so, what is the annual cost and is it available for all the course options ? Also is there perhaps a potential video suggestion showing the major differences between ClientGo and VoyantGo ? Thanks !
Hi there. Yes there is. It’s just £120 a year. The difference between ClientGo and VoyantGo is vast - ClientGo is a very basic forecasting system that provides some useful insight for the absolute beginner. VoyantGo is a professional planning software that allows you to model almost any scenario you can think of.
Once I've paid off the mortgage in a couple of years - should I pile everything into pension via salary sacrifice, or split in a ratio with ISAs for more flexibility in retirement?
The pension is likely to generate the better growth result, the ISA will allow you to access money earlier if that is important. Check out my video titled 'This Retirement Account OBLITERATES All Others'.
Trying to work out my no alongside my nhs DB pension and confused
Hi Louise. It would be relatively straightforward to work this out using Voyant. We always have to remember of course that projections require estimations, but by making an estimation as to what your NHS pension is going to pay (inflation adjusted), we could work out the amount of excess capital you’d need.
@@chrisbourne-retirementplanner Thankyou I will try and do this tomorrow 🤞
Whilst voyant is a good tool but you as just as well in using an excel spreadsheet , which is want voyant basically is.
It’s all good until you get a drop in the market along with high inflation,
I’ve seen a lot of spreadsheet attempts - none come close to Voyant. You can format a spreadsheet, but having the full UK taxation framework built in, including all wrapper rules, allowances and bands, as well as all the Insights that display things in a clear and logical way, simply can’t be matched by a standard spreadsheet. So in answer to your comment, I don’t often say this, but you’re completely wrong - you’re not just as well using an Excel spreadsheet.
Can voyant model changing your expected spending rate as you get older say at 75, then 80?
Yes, absolutely.
I need £90,000 of per year, which means I need £3m invested in a global tracker if following the 3% rule
It’s a good starting point knowing what the target is. Fortunately, advanced cash flow modelling systems like Voyant allow you to forecast with more confidence, so you don’t have to work to rules of thumb like a 3% rule or 4% rule.
Sorted Luke, whats it like being that skint? 🤣
😆
Interesting stuff ….I think in any scenario where I might slip into the higher tax bracket in the future I would look to do something different maybe :-
Take more from the pension up to where the 40% tax bracket kicked in. Invest in an isa the same funds as pension and supplement pension later on to avoid paying higher rate tax.
Or
Maybe don’t spend all the money in the isa first …keep some to supplement income later on to avoid hitting that 40% tax band.
Anyway nice problems to have given the average uk pension pot at 64yrs is circa £110,000
Maybe an annuity at the current rates might provide the same income for life cheaper with Zero inflation or investment risk and you can keep your tax free cash for an orange and some nuts at Xmas 😂
Like you say Phil, all nice problems to have! I like to model these types of scenarios out to see what produces the best tax result long term.
45k retirement income from 60 ? You don’t pay NI 12% and don’t pay pension (10%) you would need a salary of 55 k to receive the same take home pay as 45k pension !!
Not sure I understand the point of your comment? What are you saying?
@@Banthah I was on a salary of 44k when I took early retirement I didn’t need to have a pension of 44k to have the same monthly income just making sure if people have a target of the same income in retirement you don’t need to match your current salary
Hi David. I said make your current lifestyle expenditure your target, not your current income. They’re different things - you may have excess income at the moment that you’re using to fund investments.
@@chrisbourne-retirementplanner I retired 2 years ago at 55 bought a canal boat and spend summers on that so I’m at the other stage now I’m in SIPP drawdown mode with a decent DB pension doing most of the heavy lifting to be fair
@@davidpearson243 Gotcha. Yep, you definitely don’t need the same gross income to get the same net income. That 25% tax free goes a long way 👍
£1,500,000
Is that your target Jonathan?
@@chrisbourne-retirementplanner yes, I think that's achievable.
I am generating 30k off 360k at the moment and have done for a while tax free within an isa 4 % is to low.
There’s no data to support 10% being a safe long term withdrawal rate. There would need to be long term evidence of it being successful for many people, for many years. Otherwise, it’s best to be conservative when projecting forward.
How are you managing to get those sort of returns ? I’d be interested to know, I’m getting virtually nothing on 450k over 2 years !
@andy.m265 it's not a withdrawal rate. My dividend portfolio is paying out just short of 9% yield. I brought at pretty much year lows and a lot during covid when it tanked. The sp500 has historically produced annually over 10% return, with dividends being reinvested in the last 100 years.
Good dividend stocks and maybe sp500 nasdaq and probably an alworld index is a good way forward. Good indexes beat 95% of fund managers anyway.
@@dubsdolby9437 I would heavily caveat this by saying that 10% might have been the average long term return, but it is just that - an average. That does not make a 10% withdrawal rate sustainable because there are times of extreme value falls, where such a concurrent rate of withdrawal would destroy capital irreparably, particularly if you are relying on dividend yield because you would have to sell a lot of shares at a low price, which means that even when prices recover, your dividend income would never be what it was again. Also, the notion that indexes beat active managers is only partly true and over generalised. It is one of those lazy tropes that is often repeated but not fully understood by content creators who base their ‘expertise’ on reading a few books rather than actually studying market dynamics… The US market has historically been hard to beat because it is highly efficient and accurately priced. In other geographies though, and in other classes aside from equities, it is less true.
@chrisbourne-taxfreeinvesti9688 It's like anything it depends on what you pay for it at the time.
Funds in fashion 1 year are out the next fund managers leave, and fundamentals change. I agree 10% withdrawal is unsustainable. You will find it hard, imo to beat index trackers, particularly the nasdaq sp500 iitu continuously over time . Trust net did a recent article pointing out that no fund has beaten qqq etf nasdaq over the past 10 years.
There are excellent blue chips that are reliable, high dividend payers, not particularly great on growth, but other vehicles can produce growth.
i don't believe in it being a number. a portfolio valued 2 years into a bear market and 50% off peak levels should expect better future returns than one at all time highs. that sort of thing needs taking into account. we don't un-retire when the market drops after all. we have it factored in as a down in the normal ups and downs.
Hopefully you’d have the income needed in the most immediate few years in something that’s not affected by such market changes.
Yes having a notional target is helpful to understand progress though, and measures should be put in place to reduce the sequence risk when we retire as mentioned above.