How Much To Invest To Retire Early
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- Опубліковано 23 лис 2022
- How much money do we need to become financially independent? And more importantly, how much do we need to save and for how long in order to get there?
This video shows how to address those questions and shows some tools we are now offering to our Premium website members to help them plan their retirement during both their pre-retirement saving and post-retirement drawdown. Even if you have a run of bad luck these tools show how random fluctuations in prices may affect your investments so that you can err on the side of caution and reduce the chance of running out of money.
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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.
#RetireEarly #Investing #PensionCraft
I am 55 and my wife and I are very worried about the future. We have had our savings dwindle with the cost of living into the stratosphere, we are finding it impossible to replace it. My condolences to anyone like myself retiring in this crisis, it gets tougher by the day.
Excellent as always Ramin. Thank you very much for your informative video! Best, Philippe
Fabulous content as always. Thank You
Always enjoy your content.
Excellent video. Thank you Ramin🙏
I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made. Great video! Thanks for sharing!
Very inspiring! I love this
My wife and I both have SEPs invested in stock/bond mutual funds, ETFs, and Index funds. Don't anticipate needing any withdrawals until 2025. With the current market turmoil, would it make sense to suspend dividend and capital gain reinvestments and save the cash (re-evaluate market conditions each quarter). We are early 60s and have cash in taxable accounts for 2-3 years. Thanks
Retirement planning starts with thinking about your retirement goals and how long you have to meet them. Then you need to look at the types of retirement accounts that can help you raise the money to fund your future. As you save that money, you have to invest it to enable it to grow.
“I believe that the biggest mistake that most people make when it comes to their retirement is they do not plan for it. Congratulations you made it to retirement-now what? Investing in retirement is much different than investing for retirement. This is because you finally get to use those savings to live the life you’ve worked hard to achieve. Learn how to wisely withdraw and invest your retirement funds to make sure they provide the income you need, keep up with inflation, and last as long as you need them.
After 70 you really only need the basic essentials of life to be content. Comfort such as warmth and food, some companionship even if it's just a dog or a cat, pain free health. You won't have the energy to do much more than daily tasks, go for a walk or just sit and watch TV and the computer screen. Reading a good book, gardening or doing the cryptic crossword will be the highlight of every day. You don't need a huge wad of wealth to enjoy the basics. And the best things in life will be free like watching a squirrel trying to get into the bird feeder.
Or you can wait till you’re over 70 and run for the President of the United States…🤔
That's so true @stevo72882 I enjoy most of those things already! Thanks, Ramin.
Everyone is different there are many in their 70s doing active things. Healthcare improvements mean a better quality of old age.
@@sexysilversurfer People in their 70's living an active life are very prone to life debilitating injuries. I've seen it several times where 70 year olds perform active lives and end up with broken hips.
@Jürgen Schneider Quite impressive but HOW!!?😊 I know it's possible, my colleague at work always get 40K every week, I would appreciate if you show me how to go about it.
I prefer the cashflow method - keep buying assets which are inflation-protected and produce cashflow (e.g. rental property). Once cashflow exceeds my expenses I can retire. No assumptions needed. No simulation. No sophisticated calculations.
Great stuff Ramin, well explained video and that calculator looks great. A lot of detail and inputs to fiddle with, and entirely agree with Monte Carlo method to really stress test your choices. As a few people have mentioned, getting some PortfolioCharts vibes, which is a compliment!
I was wondering if you would consider adding drawdown rules, for example Guyton-Klinger guardrails, as a tab on your tool. This would also probably require a video as well... Or is Guyton-Klinger not something you would recommend?
please do a video on perpetual withdraw rates, what is the highest percentage one can draw down whilst still allowing the portfolio to grow?
Loved the bit where you mention the importance of luck (some idiots claim you can ‘make’ luck)- very important to catch the right time in the economic cycle especially when investing for a short time frame
Another great video Ramin.
Excellent Video Ramin, Having a realistic Accumulation plan is a must have, but equally important is a planning what to accumulate within i.e the Tax wrapper. For U.K. Pensions a Defined Contribution SIPP but also what so many people under appreciate is the use of an ISA for Tax Free growth and Income. Particularly for those that are planning / working on achieving a Perpetual Pot and retiring early. Pensions are taxed at Income Tax Rates (20, 40 or 45%), so having a large Tax Free ISA becomes really important. I’m speaking from experience and indeed error of Not using ISA’s enough and now ending up with a pensions pot way over the Pensions Lifetime Allowance which can be taxed at 55% on the excess of the LTA.
Ramin, perhaps you could do a follow up on this video to consider the importance of TAX considerations for the Accumulation / Drawdown perspectives, albeit recognising that your fan club originates from many countries that run their tax regimes somewhat differently, but there are many common principles.
Great video.
I have recently retired at 53 after investing over the last 25 years.
How I went around achieving this was make all my investments within my isa maxing yearly limits so all income becomes tax free. My sipp has been also used as well as possible. No bonds mainly high quality blue chip offering heigh yields. I buy at close to year lows to increase yield. Sp500 etf plus a few funds hear and there. I also have to factor in debt,dependents etc
I retired on no debt no dependants. My income is around 50k tax free yearly without harming my pot.
Kudos. Sadly, I had to start from zero at the age of 37.
Ramin, how about a video on this guy's idea of using ISA's in this way?
Great content
Thanks @Donal Mee
Excellent content and tools! Do the Monte Carlo simulations assume a normal distribution for returns, or they resample from historic data?
Hi @Mike W this is assuming log-normal returns. Thanks, Ramin
Excellent video as ever, it's scary really how much you need to save to be able to have a comfortable retirement. I am 50 and plan to retire in maybe 10 years (15 at a push) and have nowhere near those figures. I am pretty clued up on all this, i feel that the large majority of people in the country are sleep walking into a very poor retirement
Hi Raymond the 5th percentile is pretty pessimistic but if you're cautious I'd say it's important to plan for those bad streaks where there's a succession of poor returns. And as you suggest it's better to know than not to know, but also to know what income you will be able to afford safely. Thanks, Ramin.
Sad but true, aye. I am one of those sleepwalkers who only opened their eyes a couple of years back that my company pension was at a pitiful level and hard times were ahead of I didn’t do something about it. Cue a large up ramp in investing … just in time for the twenty year run of good years to come to a screeching halt!
Thanks Ramin
Glad you enjoyed it @Noah .V Erickson
Is something wrong with the savings forecast graphs? I don't understand how it would render a log type shape.. shouldn't we be seeing the compounding effect over time? Thank you
Thanks Ramin, that's a nifty tool. for me retirement looks like a nightmare and i hope to be working part time until i drop. i am already on this path working 50% fte and putting 50% of that into mutual funds. so instead of having a specific retirement target date i will be adding and drawing simultaneously hopefully for a long time. this eases the possible bad timing of a coincident draw and downturn in markets since i will be continuously cost averaging for longer
I retired in 2019 just before covid. It’s been a nightmare, however suffice to say your hopes and dreams do adjust and you can still enjoy life, albeit simply.
@@simon1066 why do you say "nightmare"? I'd be curious to know if you're comfortable sharing.
Hi @A.G. Smith that sounds like a bit of a nightmare but hopefully, you enjoy your job? As you say the downturn would be much less important early in retirement as you won't be crystallizing a loss by selling your investments at a loss. The money that you leave alone will have longer to compound (or recover from a drawdown). Thanks, Ramin
@@Pensioncraft thanks. sorry i wasnt clear. what i mean to say is that not working and not contributing to society and going on cruises and otherwise acting like i dont need to do anything but be selfish aka "retirement" sounds like a nightmare.of rot. working part time to me is the perfect sweet spot.
Being retired I would say spend less , as you get older you do less..
I moved to the Philippines , cost half of the UK ...if you have a small state pension ..and rent your apartment out in the UK ..you can live like a king ...Good cheap hospitals , English is spoken. Rent a great apartment at 1/3 of the price in the UK...visa is easy....have a small pot for emergency ..
I think he is greatly over estimating what you need .....
What about income tax? Does the tracker take this into account?
Personally I would do the maths and then just spend less money in years with negative growth on my portfolio.
You have to take everything into account build a budget and know everything in and out. We lived as cheaply we could for years take nothing on debt . I left work at 64 my wife will leave at 62 we adapt and adjust as we go along with a strict budget each month. We are lucky we are old fashioned everything into a central pot and work from that. We love the freedom from work at the end of day chasing after the Jones leaves more clutter behind. We came with nothing we leave with nothing
For the UK you eventually gain the State pension and possibly workplace pensions. Means you cannot actually hit zero for your income assuming you have these, and your charts do not incorporate that safety net (there always will be money entering the bank account).
Not true for workplace pensions if defined contribution. Also, state pension could easily change in time. There is always a way for a government to push people further into debt; look at the history of university student funding. Maybe give out loans and pay back out of your estate when you die (if estate insufficient take all that there is and write off the rest). The weakness that the government can exploit is the inability and unwillingness for lots of people to estate plan well in advance of their death, and animosity or cowardice within families to treat the situation like adults. IHT and LTA is forecast to be frozen for years at a time when inflation is 10%, but few understand the practical outcome. Or maybe the state pension will be means tested against the sum of any of your non-state pensions and/or savings. It could screw over those middle earners who have worked/sacrificed hardest over their lives to actually save something. Or the state pension age will keep getting older and older. There are lots of possibilities.
Hi @ED G the number you enter is the desired additional income above your state pension and other sources of income such as property rentals etc. So it's the income you want to generate directly from your investments. Thanks, Ramin.
@@Pensioncraft Thank you Ramin. What would you enter if you want to retire early then get the state pension 10 years later?
@@jam99 Absolutely. Student loans were soooo cheap at first, then your trapped with £40,000 in debt. I fear, that's what the tories will do with the NHS. it will start of with something we all think is reasonable, first the rich, then the wealthy, professionals, then those who work, the healthy, then the unemployed, the sick, then they will come for you, by that time its too late and no-one will speak up and say NO. we accepted that the gov can force us to sell our homes when we run out of money to pay for care, so yep, They always find a way to push money out of our pockets and into the tax office.But to fund what exactly! I can7t help but wonder, once you become a modern rich country, with a falling population the only other way for a country to make money is to have a debt trap.
@@JohnGreenwoodPhotographyI run two models. One to take me to state pension age. The second one to include the state pension with what’s left over from the first model
I have always had a question on these calculations - does drawdown to zero mean you are left only with home equity? Time for a reverse mortgage at that point? Or do financial resources include home (real estate)?
You would still have home equity (if you own your own) & your state pension which is about a measly £10k a year
And/or use leverage.
If you're in the UK, best approach is to max investments into your workplace pension and your employer will match your contributions helping your accumulation pot grow. Any additional payments in a year will get a 20% uplift from the UK gov. If you start in your 20s then by your 40s you should have a decent pot. If you're confident enough to manage your own SIPP you can move your pot and setup a portfolio with investments that pay monthly, quarterly, bi-annually and annual dividends. If you re-invest these dividends this again will help your portfolio grow with future increased dividends. Dividend paying stocks help offset any market volatility on the long term investments. Then when you can access your pot, take 25% tax free and live off the annual dividends so avoiding running out of money. At 67, assuming access to full state pension you can reduce your SIPP drawdown making your portfolio last longer. Two important points - your are investing for the long term so stay invested and don't panic when the market drops see this as an opportunity to invest!
I don't think you can assume a 9% stock market performance based on the last 10 years. This is a very short sample period and I think you said yourself that the last decade was very good for stocks, especially growth ones.
Hi @Apache Attack Helicopter the US stock market has returned 9.7% total return over the period since 1900 (6.6% real). The UK stock market has returned 9.1% (5.4% real). Thanks, Ramin.
@@Pensioncraft Thank you for clarifying the figures using real. I had an endowment policy 25 years ago, and after the dot come bubble, etc it barely broke 3 %, although my vanguard fund of 15 years I think has nearly doubled, and that included going through the 2008 crash, and pandemic. I wonder if that product might come back in the future if people can't afford to buy.
@@Pensioncraft Thanks Ramin, I think it is more reasonable to assume 5% real return for the global stock market as investing everything in just USA or UK is too risky
Wait till you see the next ten year.. pension pots being systematically destroyed.
If you are initially going to live off dividend income and not touch the principle like I'm planing then I'm not worried about running out of funds. I'll only touch that principle later on or if necessary to prop up a lower income year.
Exactly. The principle should never be touched.
Talking with young people I notice how many of them feel they have no stake in practically anything. Students are loaded with loans; property/deposits are out of reach. Others have unavoidable living expenses such as transport or childcare. Somehow younger people need to be enfranchised and enabled to build a future. Perhaps more generous SIPP ISA LISA allowances would be a positive thing.
Just use dividend income and never touch the capital. Yes it may fluctuate, but not excessively. You then never have to worry about selling on a market downturns or running out.
Yes, very good. My concern is I am still scared stiff the markets, especially in the US, remain over-valued, and I am 59 so I cant afford a big fall, so my pension is mainly in cash and not getting 7% returns! I don't know what to do.
I hear you. i am 58 but i have been using 30% cash to move in and out of things and a wide diversification strategy with the rest (stocks, bonds, commodities,intl). the way i think is that if for some reason the market has a long downturn that would destroy the 70% that is permanently invested then some kind of huge reset would occur and it wouldn't have made that much difference and ill be growing my own food anyway :)
@@agsmith001 :)
This is the perfect time to slowly start buying back in. Perhaps by using dollar cost averaging to buy stocks each month over the next two years, at some point you'll be buying back in at the bottom and should enjoy a nice return over the next 5 - 10 years
@@gilesjohnson So the financial advisers say. But did they also predict the recent massive volatility in bonds?
Go 100% on some 3-4% bonds.
Thank you Ramin.
Thanks @David Pearce! Ramin
Quick answer as much as possible
The drawdown is too stressful for me…I’ll be getting an annuity.
Does the basic Pensioncraft membership grant access to this new Tracker ?
Hi @Mateusz Gołąb it is the Premium membership that include the Trackers and you can find out more about that here www.pensioncraft.com/investor-education/membership/ Thanks
Anyone know one of these calculators that's free?
The 2 main issues people face are kids (and the cost of them) and then the lifestyle they want to live (and the cost of that). Because lets face it if you can save 70+% of your income but you are miserable then there is not much point. I saved about 50% of my income and then invested it (S&P and VLS100 plus a few stock picks and property) and it took me around 7 years to FIRE. I had a head start as I had already been saving up to that point just not as aggressively. This was actually about 2 years ahead of my planned FIRE date. However now the fun part.... seeing if the pot will last!!!
The main issue people face in the US is the need for good healthcare. It keeps people shackled to their jobs instead of being able to retire early.
Should also be able to bank on a full state pension if you have 35 full NI years (can check on gov.uk). So if the pot does run out, you'd still have some kind of income guaranteed for life.
@@orome9793 And the main issue in the UK is that our healthcare is awful. If you go into hospital you are lucky to come out alive, that's if the Ambulance doesn't take 5 hours to arrive and you are dead by then.
@@georgea3575 No guarantee this won't be mucked around with. There is plenty of space for a government to move the goalposts.
@@jam99 Going from not removing the triple lock (which many are arguing is indefensible as working families struggle) to scrapping the pension altogether is quite a ‘moving of the goalposts’! I think the State Pension is safe for some time to come. It’s almost as much a sacred cow as our ‘wonderful’ NHS.
It looks like the program is missing the annual income from the government pension
Totaly agree that saving for your pension is important, however, it is worth noting that for tax purposes you can only make contributions of £40,000 a year although you can take account of unused allowances in the three previous years this certainly restricts your contributions. Further more the allowance is subject to taper when you earn in excess of £200,000 a year resulting in overpayments of pension contributions being subject to tax.😮
Both of those are a travesty especially the £40k limit
@@neilfox9540 Well, you've got £20k if ISA, too. The real travesty is the frozen LTA and IHT.
Hi Jonathan that's true for the UK but we have members from over 18 countries and tax and retirement systems are very varied. Thanks, Ramin.
Shades of porfoliocharts there 😅. I hope we can build a good pot and use a perpetual portfolio to keep the money pot while drawing down without running out. Golden Butterfly and Permanent portfolios may come into play at the end of accumulation. 🎉
So much gold tho
@@james1000 aye, if only vanguard offer funds for them
@@akosiamarillo it wouldn’t be too hard to recreate though right?
VTI - 20% (or VT to include international)
VIOV - 20%
VGLT - 20%
VGSH - 20%
SGOL or GLDM - 20%
@@james1000 yes, that would do it thanks
01:50 I’m wondering why is there a sharp fall in wealth on drawdown? £30k annual withdrawal on a ~ £1m portfolio growing at 7% p.a. means you could withdraw £70k for perpetuity (assuming theoretical constant returns). Even when accounting for inflation, the real growth rate exceeds withdrawal rate.
I wondered that as well, so I've assumed the £30k at time of retirement is actually £83k (37 years at 2.8% inflation). This then becomes over 8% of the retirement pot.
The numbers looks fine to me. The 30K expenses are expressed in today's money. At age 67 you'll actually be paying ~85K, and that number will rise every year (or if you want to express things in today's money, you'll be paying 30K from a starting pot of only 360K)
@@chrisf1600 Ah that would explain it. I thought £30k was at drawdown. Thanks.
@@glynwood9916 Makes sense.
£30k a year savings might be tough. The equivalent of saving the average salary in the UK every year.
Would it be possible to make a video about the upcoming change to Early Retirement age from 55 to 57
I believe that I can afford to retire at 56, but just as I become 56 the minimum age moves to 57.
If I retire in March ahead of the change in April 2028, and during that year put £40k into my pension, would that be deemed meeting the max allowable, or does retiring at end of tax year deem that the tax year allowance was now reduced to £4k as you are technically retired during the year ?
Hi @Selwyn Hammond this guide from Aviva may help www.aviva.co.uk/retirement/pension-basics/changes-to-pension-age/. Thanks, Ramin
So, you’re suggesting I save £60,000 per year eh? What about paying my mortgage, paying my student loan, paying 60% tax and NIC, paying my car loan, paying for electricity and gas, food as well I guess. How much would my current employer have to pay me?
I think the point is to show you can model what the outcome is from a given scenario. Obviously, you can only save what you can afford. At least if you model that, it shows where it leads, and you have to decide what it is in your power to influence. Basically, the sooner you start saving the longer it has to grow. I can't remember the numbers but if you spend a pound age 25 as opposed to saving it, it costs you several pounds later. There are no easy answers. Everyone has the same hurdles. I was surprised when I got to age 55 how much my 'pot' had grown to. I think a lot of it was because I started early. I will also say I have never had a new car in my life. Every car I ever had was at least 3 years old. My sister always has a new car, loses a shed load on depreciation and pays loads on interest. Waste of money.
@@MrGman2804 Indeed. And, most importantly, not to have unrealistic visions of the future that stop you addressing early financial planning decisions.
I love your videos but saving £30k a year for most people is way out of sight if you can save that much you could build a massive property portfolio with it and have a lot more control over the risks you would face , correct me if I’m wrong 🤔
🙏
The sums are wrong on the first graph. The total wealth is nearly a million, at £30k a year drawdown, it would take 33 years to run out, assuming no growth, not (84-67) 17 years, which was meant to include growth. Also, using those numbers the initial pot would be closer to £550k assuming your return minus inflation was 4.2%.
Nope it's fine. The 30K expenses are expressed in today's money. At age 67 you'll actually be paying ~85K, and that number will rise every year. The starting pot of 973K is still growing at 7%, but that's not enough to offset the spending. Or expressed in today's money, you'll have a starting pot of only 360K that grows at 4.2%, with expenses of 30K fixed. Either way, it'll be gone in about 15 years.
It's accounting for inflation. £30k per year in todays money is not £30k per year when you retire (when a litre of unleaded is probably £10)
What is "LifeStategy"?
www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds
@@Pensioncraft If you look at your video and your site. You are missing the letter "R" in several places. 4:54
LifeStategy 20
LifeStategy 40
LifeStategy 60
LifeStategy 80
LifeStategy 100
It's just a mistake, but it makes it look less than professional.
I enjoy watching your channel. Excellent video but the saving levels are absolutely not within most peoples financial ability.I'd like something a bit more realistic, and to take into account our government pension. EG a nurse, a teacher, or someone on 25,000 pounds a year. I've always enjoyed your videos, but if anything, this only makes it seem pointless. Also we need to take into acount as people get older, they actually spend less. if anything if you end up in a nursing home, we can guarantee, your money will never last if your paying 1000 pounds a week..Great point about luck. Saving 40% would be unbelievable when you think young people have to save for a home. I am wondering if you could do a video on say reducing work at 60, and taking a drawdown for 7 years until the Uk pension kicks in, reducing the drawdown further. I'm Saving 800 pounds a month and that's seems a stretch at times. I started saving for my kids.I put all the child support money into stocks and shares vangauard ISA, and that's managed to give him massive head start. My worry is, do I A) give him the money to pay for UNI and return to zero , B) give him the money for the purchase of a home, and again return to zero, or C) keep it a secret a let it run for another 30 years, and when he pays digs, secretly pop that into his account.
Hi Scott the income number you enter is the income in addition to your state pension e.g. if your state pension is £10,000 and you want £30,000 you'd simply enter the difference i.e. £20,000 as your retirement income. I don't think it makes it seem pointless i.e. I'd rather know the risk of a shortfall than discover that I've run out of money because my plans were too optimistic and didn't take volatility into account. But you're absolutely right about reduced spending as you get older (I think Abraham Okusanya describes it as the go-go years, slow-go years and then the no-go years). But care costs can be huge if you need care. This makes it much more difficult to know exactly what you'll need so these tools are at best a guide. Thanks, Ramin.
@@Pensioncraft Thanks for clarifying that state pension. Really like the vids. I was wondering if there is a part time retirement, EG, retire at 63, do a draw down for 4 years, to top up your earnings, and enjoy that free time while your healthy. I mention it because I was a NHS nurse. Sometimes, its good to enjoy your money, and quality of life e while you are a little younger.Or at least spending more time with the family. It is also important to remember that the average doesn't mean EVERYONE will reach retirement age. the life expectancy maybe 82 for a man, but many will not have quality of life as they become more disabled. keep up the good vids. I'll be watching for sure!
8.3% volatility in a 60/40 portfolio? That seems awfully low...
No one ever talk about super early retirement.
Like say your parents left you money
If you own a house and just take 2.5 percent should that last forever. And grow
Expat life thailand
Until you are so old you need daily care.
How can I possibly save £2000 monthly to achieve desired retirement income of £40000
You can't. It's fucked. Wealthy and lucky members of the previous generation have eaten your lunch, unfortunately.
It’s all well and good saying you should save thousands of pounds a month just to make the spreadsheet work. But you have to live in the real world and there are too many other expenses that have to be paid before one can consider saving. Also, to have this sort of money available to save each month - how much must one earn. And if one is earning mega bucks, one’s employer will expect blood.
@@wilsonmark7077 HOW! I would really appreciate if you show me how to go about it. Please can you list the platforms ?
I'm a gullible moron too, count me in !
@@jacksonwilliams4346 It's a scam, don't fall for it.
I created a much better spreadsheet that could put a profile of inflation and returns in to model some years having high inflation or stock market crashes. You need to do this really to see what shocks will do to your plans. Consistent inflation and return is pointless as it never happens
Now add gold and watch what happens to the simulations.
Gold, and its use in dampening volatility without reducing overall returns (as ~10-20% of a portfolio), seems to be a general blind spot with a lot of financial commentators.
@@MuninnsBeak Indeed. I did some math: a linear regression of both the gold price and the S&P500 onto the M2 money supply (and the residuals indicate cointegration) and then calculated the 50-year correlation, which turns out to be -0.64. Pretty nifty for a shiny pet rock that doesn't produce anything and basically only prevents you from getting poor in certain economic situations.
How can I find the balance between saving, paying mortgage off early and living a fun life now?
Damn good question. Apparently many people are so concerned about running short of money for retirement many spend way too little and go to their graves with a lot of unspent money, or leave a lot of money around which will fund their carehome until it runs out while others get it all for free, same home.
@@voice.of.reason One day we may actually be allowed to plan when we finish our own lives but that waits for a more civilised and grown up society. For now, this is illegal and so our lives are not our own.
How do you think financial advisers make their money? They will help you find that balance! :)
You won't retire by planting whole cobs of corn.
8th comment boom
If you eat more than 20 cobs, you’re going to get a belly ache.
I’m hoping the future is like film “Surrogates” so we won’t need to leave house, just connected to a AI device were we exist in a metaverse. Can be fed via a tube of nutrients through the day. We won’t need money to actually leave homes so pensions will just pay for upgrades in this ai system.
WHO THE HELL RETIRES WITH OVER 1M IN A PENSION POT?
Well if you start at 20 with absolutely nothing, and put in £200 per month, you will.
If you increase your contributions by 2.5% each year for inflation, by the time you’re 65 your pot will be worth around £1.4 million.
And that’s not even taking into account your employer’s contribution or the tax benefits of putting into a pension. Take, say a 5% contribution on a £30k salary from your employer as well, plus the tax relief you get from putting into a pension, that £200 per month you’re putting in actually becomes £375 going into your pension.
You’ll actually end up with about £2.6 Million at 65. Or if you think £1 Million is enough to live on you can call it a day at 54 years old.
If you start later, you need to put more in.
If you’re 35 and start with nothing, then £550 per month into your pension will be worth £1Million by the time you’re 65.
If you’re 45 and start with nothing, then you need to have £1,500 per month going into your pension to get £1 million at 65.
This is why it’s so important to start early.
It’s not complicated.
But if you’re too old to start early, and you can’t put more in, then tough - that’s just the way it is…
You can’t pull it out of thin air!
@@Banthah
What about if you have £450,000 at 50 years-old with no further contributions?
@@VoiceOfThe Not sure what your question is exactly, but a £450,000 pot would historically average out at around £1M in 10 years or so
@@Banthah
Thanks. That was the question. Gives me an idea.