I have had a total reset since Budget Im 66 on full state pension i have a final sary pension of £600 a month and i have a SIPP in draw down for around 100k I looked at how long i would expect to live and calculators say around 83 so what i have done is divided the 100k by 17 years which is 5882 per year around £490 a month I have been reading a book called Die with zero and they say the first 10 years of retirement are go go years you still have heath so spend it you will hit your no go years this is the last years of your life you will lose heath and you will not be spending so spend it and dont worry about the No Go years I am taking 750 a month not 490 and giving money to my son and grandchildren Dont delay you have not got time to delay if your over 66
A bold strategy! I am also rethinking after the budget, and expect to do something similar - take more than I need and pass down to children now, rather than when I croak. All the best!
I’ll be retiring age 60 ( in 6 years time ) with about 400k in my pot which is more than enough for me to live on with 4 holidays abroad a year I’ll withdraw 18k a year for first 7 years Until my state pension starts then I’ll withdraw 6k a year to top up my state pension
£1500 a month seems very low. You assuming you need to grow the pot by 5% (incl inflation) and increase your 18k with the 2-3% each year to cope with inflation ?
@@coderider3022 I get paid about 4500 a month 1500 of that goes st8 into work pension ( work place pension ) I usually have around 3000 a month go into my savings account ( my wages all get paid into a savings account ) And wages varys each month due to more of less overtime And on pay day I transfer £1000 from savings account to current account And at the end of most months I have a couple of hundred left If I so I only transfer 800 to get current account back up to 1000 Very ,very ,very rarely do I not have anything left in current account when pay day comes round a again Some months I have 400 pound left in current accout. ( As only spend 600 that month )
@@coderider3022 I presume with a paid-off mortgage, and being single, this works out as a frugal but not painful retirement - but even so I'd want a little more of a buffer.
@@AgileSnowWeasel yes no mortage or car payment No debt at all My wife works also Every bill in our house , all utilities, council tax , insurances , food , phone bills , etc etc etc comes to 900 a month This is the amount we need to pay for everything each month We put 450 each into a pot and that covers EVERY THING I then maybe spend 300 a month of nights out , hobbies , eating out etc So I’m only spending 750 a month now ( excluding holidays abroad ) which 750 a month is 9000 a year And I save the rest of my wages. ( usually about 3k a month ) Me and my wife have no idea what most people spend there money on We believe they waste it buying things they don’t really need
Chris this was exactly what I was after so thanks for an excellent presentation. I guess like many the changes announced at the Autumn Budget have forced me to rethink my previous plans and this information has helped me greatly thank you.
So rough rule of thumb: £1k/month for every quarter-million should be about right? Plus state pension and (mustn't overlook) defined benefit workplace pension, if you're fortunate enough.
One question. If you stop working att 55, will you still get a full state pension? I do like Monte Carlo simulations but you have to put your own numbers in. Also you will spend less money as older you get i suppose. I would take that into my long term budget. Thank you for this video, Chris.
Thank you for watching! You have to complete 35 years of qualifying NI contributions, so you could do that by 55 if you start work at 18-20 years old. Otherwise, you may have to make some voluntary NI contributions.
but that ‘take more and spend by SPA’ would mean £26k intiially and then around 24k from SPA so pretty stable? maybe more useful for planning than £14k followed by £37k.
Quite possibly. Only while two of you are alive though in this example. Many people will choose to take more earlier and less later from their private pot though, and that works.
So, as a single, pre 40, no mortgage, no kids/partner, lucky to have investments beyond the 1m, and still working... What it sounds like, is I should afford to live a little more than I am... I suck at that bit.
"You can always get more money, you can never buy more time." My dad retired at 63 and 3 months later my mum dropped dead of a stroke, they were married 40 years and retirement was all planned out but "BANG" all gone in a split second. He's now 84, fit as a fiddle and stil very active but he's spent his entire retirement without the one person who should have been there. Shit happens when you least expect it, that's life. I'm 53, like you no debts, mortgage cleared in 2015 when I was in my 40s I've and been saving 25% of my takehome for the last 35 years without fail while working a well paid IT career. I have now hired a pensions IFA to sort my stuff out and get me ready, I've quite literally put an exact date in the calendar for when I'm going to retire at the age of 56. Unless my company is willing to pay me a huge contract rate to stay, it's a non-negotiable date. I see my pensions and savings as the way I will buy my freedom from wage-slavery, I will literally buy time back from the company I would otherwise waste working for them. I won't be stinking rich but I'd much rather be comfortable, happy and free than own the best looking tombstone in the boneyard that the company paid for.
You could prob retire any time you like, but what's point in that if you love your job and current lifestyle. All these early retirement videos seem to assume that everyone hates their job.
@@tomwright5738They are born from seeing people delay retirement to then be the richest person in the graveyard. As you approach your 60’s - early deaths become all too apparent all around you.
I retired 2 years ago, now 68. I combined my 2 pensions and have not withdrawn anything, I have been keeping an eye on it and am amazed at how the value fluctuates daily. Over this past year i think it has done welll 17.2 % but over the past week it has lost £6k, £4k yesterday. This is in a caution fund. It seems to me a very precarious way to rely on this in retirement, there could be a crash and you lose everything.
I started planning my retirement around age 50 during COVID as I hope to retire around 56. I had to contend with managing my funds inside my various pots, never done it before in my life and the one thing I've learned these past 4 years is "don't sweat the small things". Like most things in life, experience will give you confidence. One thing I do every week is collate and record my numbers so I can chart them in Excel, and over the last few years of stats I have my numbers have either stagnated here and there or gone up, the odd days like the last two I just write off as bad luck. If you don't then you'll drive yourself bonkers worrying all the time. This is one of the aspects of sequencing risk that we all need to be aware of for sure . Sadly the worst part is that it's hard enough for those who are on their game like us, those of us who do their homework and try to plan things around these risks. The real shocker is that we're in a minority, the vast majority out there often have no idea what or where their pots are, even if they have any, let alone how to plan and utilise these resources efficiently as we're all trying to learn to do. We're in a much stronger position as we're aware, many out there don't even have a clue, never will and will truly be paying a literally awful price for their ignorance.
You won’t lose everything. Values go up, values go down but the overall trend has always been up over time. My pension is down £7k in last few days, give it a while and it’ll be back up. Sit tight 🙂
@@andypandy9931 Interested to know what funds it's invested in as mine is 100% in US stock market and fell earlier this week but recovered most of the loss by market close yesterday.
RULE NO.1: DO.NOT.LOOK.EACH.DAY. Once a month maybe, every quarter even better. If you're not planning on really needing it, better to remain oblivious. Assuming it's passive funds or someone other than yourself is actively managing it, of course.
in a relay all that count is the total time. if it adds up to less than the other teams you win. the whole point of sequence of returns is the same cagr in a different sequence effects the result in retirement.
great video. So at 55 is it better to dial down the risk and start moving from equity to bonds so as to achieve am allocation closer to a 60/40. (I'm 54 and have 83/17 at mo). but have an overall portfolio close to the upper level here. So an 8% avg (and less) return suffices. I'm thinking of retiring at 55
He found a couple of willing ones but think he decided it wasn’t worth the trouble in the end 😆 Thanks for watching and I’m glad you enjoyed the video.
Do you do any videos for those who have final salary pensions Chris? What options they might have to flex their income? People tend to think they have got it made but they can be very inflexible depending on needs. Apart from varying a tax free lump sum, commutation values might make this unattractive, are there other options? Where it’s a funded fs or care …….defined benefit one……..is transferring to a SIPP still worth investigating?
One of the best things I did last year was get a pensions IFA to look at my various pots, the guy did 9 months of chasing 9 pensions my wife and I had. We had some face-to-face meetings and not once did he mention any fees or payments. He was able to root through my DB pensions I had, workplace schemes my wife had and the latest active pensions we have got, picked through them all and found all the nitty gritty details, explained our options, tax efficiencies we can get, he did a full risk assessment of us both. We've been so impressed with his dedication we finally signed up as a client to let him manage our portfolio of investments as I want to retire around age 56 and that's only a few years away now.
Hi Ian. I did a video explaining how DB schemes work a while back, but I haven’t got one that discusses transferring a DB pot. There are few advisers who operate in that space now because the liability is just too great. Some will, but you just have to be very careful about the advice you’re getting.
Changing the assumptions to 100% stocks where the average long term growth is just over 10% and allowing for 30 years retirement for a £1m will give you substantial amounts of drawdown per year. That’s where I plan to be
@@porschecarreras992cabriole8 That’s the average. It doesn’t count for extremities, which is why data research shows 100% equities when backtested hasn’t been the optimum portfolio for income withdrawal. This is the problem with behavioural biases though - it’s extremely difficult to see that when living in a risk on environment.
It’s optimistic at the moment, but central banks still haven’t seen cause to alter their long term targets yet. Until they come out and say 2% is no longer viable as a target, it will be used in calculations like this. Like I said though throughout the video, this is a GUIDE and people should do their own modelling based on their own situations. Inflation figures really are a total fallacy because every individual will have their own unique inflation number.
2% inflation!!! You're naive if you think that. The voyant software is so expensive! It's about time the government produces a free version of voyant. These ifa's charge an obscene amount for advice. They make more from your pension than you do. Yet the risk is all yours. The ifa cannot lose no matter what advice they give. Ifa's should only be allowed a % of the gains they earn you....
There are free cashflow modelling tools, and I provide a link in the description of this video to another video which compares one of these free systems with Voyant. I also explain how you can access Voyant for a substantially lower cost too. Regarding adviser charges, I don’t think you fully understand what a financial planner does. Personally, I don’t take a client on unless I can demonstrate how the value of my advice will create more monetary value than the cost of my service. That has nothing to do with investment performance because that’s not something I have control over - it is all based on tax planning and/or creating tangible cost savings.
@@chrisbourne-retirementplanner Hi Chris, I really appreciate the time and effort spent when creating these videos but I do have a question on IFA charges. As an industrially electrical engineer on fixed salary over the past 40 years in various global companies, I have worked on machines costing say £2000 to several million pounds. My salary does not change to fix a machine based on the value of the machine, nor what profit it makes for that company. Why should it be different for IFA’s? If I go into hospital the doctor does not look at my salary or my future money earning potential before deciding what the charge will be for treatment. Similar thing if I take a car for repair into say a Fords main dealers. Parts will be more expensive but the labour rate does not change if the car is at the top or bottom of say a Fords range of vehicles? If it was a pure supply and demand situation whereas market forces decides fees, than I understand, but the fact is the government forces us all to use a finance person if over £30K. Some people need financial assistance so it is good protection for them but not fair for others to be forced to pay thousands to a third party (i.e. IFA) if they know what they are doing and happy to take on that risk. I am personally OK to pay say 1 - 2 hundred for advice but forced to pay thousands!
I don't think your statement on the mix of equity and bond and the impact on success rates is factually correct. Higher equity gives better success rates but with higher stnd deviation
Actually, research shows that higher equity content only delivers greater success to a certain point… You would have greater success with a 60% equity content than a 20% equity content for example, but it doesn’t continue to increase the chance of success above its additional volatility all the way up to 100%.
@@chrisbourne-retirementplanner The paper " Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice." does challenge that though. It's also worth pointing at that in your comparison of standard deviation on equities vs bonds rather than looking at the absolute values you should be looking at the ratio of the average versus the standard dev value. This shows that volatility of bonds is closer to stocks than it actually looks when simply comparing absolute values. Finally a note on probability. Voyant ISN"T giving you a probability of future success. What it's telling you is a percentage of times that your testing scenario passed testing against historical data. Even if you are using a Monte Carlo simulation with an element of randomness in it it would still be wrong to think of it as a genuine probability of future success. One of the criticisms of Monte Carlo simulations is that they have difficulties in quantifying the uncertainty of irregular events such as market crashes. Which leads us to a certain paradox in the financial advice field that we're aware that past performance doesn't guarantee future performance yet it is past performance data that is used to produce future illustrations.
I tried Voyant and i really wanted to see what the simulations would produce but it was so complicated i couldn't find where you go to even do that so gave up. It's also really expensive and pointless for an individual, makes much more sense for a professional who uses it all the time
I use Voyant of the back of the Meaningful Money academy. It's like any software a little confusing without a manual or support. It may be expensive but the mistake I found in my plan with respect to Tax will repay me 1000's of times over. The alternative was to seek professional advice but that was upwards of £3k.
@@gwynsea8162 I had a mistake in my excel sheet for years when I had planned a big expense I was going into the 40% tax bracket but by taking more each year at 20% a saved a lot over the total retirement.
@@gwynsea8162 Voyant is a professional cashflow forecasting system, which is why the way I offer it is alongside a video based course that teaches you how to use it properly. If you went directly to Voyant, you would be expected to have the same knowledge level as an adviser, so that wouldn’t generally be suitable. It would also be far more expensive than the way I offer it because you’d needlessly be paying for a master license, whereas you only need a user license for your own plan. A master license is for when you intend to manage plans for multiple different individuals.
@@chrisbourne-retirementplanner I still don't think it makes sense even at £120 a year as I can't imagine having that much necessity to fiddle with or review the plan more than at most once a year. I notice your courses do not have anything that describes the delivery format, length, any pre-requisites etc before you sign-up which is very strange. Also this reduction from a "normal" price - is that an actual reduction (when was it the original price, how long and how long is the offer for etc) or just a bit of dubious marketing? I'm obviously in the wrong game - £400 an hour for learning to use software (with any regulated financial advice specifically excluded)? I'm afraid that it's not passing the sniff test. I do quite like some of the video content.
cheers Chris. No where near that amount of money in my private pensions but DB scheme mitigates it somewhat. have a great christmas and a cracking new year dude
Thanks but could you please do some examples to spend as much as possible to use all funds but still have it last to 95. I don’t plan on leaving anything. Cheers
i would look for a lifestyle or health channel for that. this is more for the financial side of things. i don't go to my doctor for help with my finances.
Last time I checked annuities they were a lot better than they have been. That being said the return on annuities are usually about 5% of your pot which is actually pretty achievable from dividends. The advantage of that is that you still retain your stocks and live off the dividends leaving the stocks from an inheritance point of view. This is why I think SIPPs are a good idea. Invest engine appear to have dropped the charges and trading 212 have been promising a SIPP for a while (still waiting) which will have the same charges as their Stocks and shares ISA, ie nothing except foreign currency fee.
Annuities seem like a mug's game but perhaps if you're happy to trade money for certainty that doesn't actually make you a mug, just someone with a reasonable concern and comfort level
Madness When you sell your pot to a annuity company The pot is then there’s When you pop your clogs They keep all your money Draw down And what’s left can be then given to your kids or your friends or your nieces or your fav charity The only reason I didn’t start a private pension when I left school was cos at that time only option was a annuity Over my dead body was I doing that
@@gwynsea8162they are a mugs game Selling your entire pot to a company worth billions who will invest your pot , give you a smaller percentage of what they make with YOUR money , then when you die , they keep all your pot Absolutely madness
One thing I would add is that the initial safe withdrawal rate should really be conditional on the stock market valuations. For example now with S&P at all time high the 4.8% rate (24K from 500K pot) would be particularly risky and in a market drawdown of say 30% you would really need adjust your spending significantly down or look for a part time job. Of course the market can go up another 30%, we don't know, it's just the probability of it going down is higher at the moment.
At 67 most of the UK workforce wouldn't need an income pot!!!! They'd need a pot to dribble in. 67 is a bit late to start enjoying life after work.......
Haha, after a career with 5 consecutive redundancies, I reckon I'm a decade behind where I would like to be so yes, I'll probably keep going if possible to that 67. I agree with you about the enjoying part but my approach will be to aim for flexibility. I'm well paid and could easily afford to sacrifice salary and do a 4 day week. That would allow a bit more balance between income and time to enjoy it. I could further take unpaid leave and while employed, still get medical benefits, so there's that to consider too. Yes it would have been nice to have retired a decade ago but just not going to happen for me.
![Lp. Сердце Вселенной #60 РОЖДЕНИЕ ЛОЛОЛОШКИ [Финал] • Майнкрафт](http://i.ytimg.com/vi/YoR0pAV9FVQ/mqdefault.jpg)
As always, my favorite financial planner on UA-cam. Thank Chris.
I prefer James Shack. I think it's an accent thing as I'm a proper RP southerner!
@gwynsea8162 Yeh, James is good too, always sounds advice
I really appreciate that - thanks for supporting my channel.
Hey Chris, Thanks for another great video. It’s particularly helpful as I think it’s very close to my own situation and targets.
Always good to hear it’s helpful. Thanks for your comment.
Great video, really well explained. I've watched lots of videos on this topic and this is the best I've seen.
@@palmtree-e2l Thanks very much it’s good to hear that.
Another great video Chris, it just makes me think more about how to plan a bit more for my future.
Thank you! Glad it was thought provoking.
I have had a total reset since Budget Im 66 on full state pension i have a final sary pension of £600 a month and i have a SIPP in draw down for around 100k I looked at how long i would expect to live and calculators say around 83 so what i have done is divided the 100k by 17 years which is 5882 per year around £490 a month I have been reading a book called Die with zero and they say the first 10 years of retirement are go go years you still have heath so spend it you will hit your no go years this is the last years of your life you will lose heath and you will not be spending so spend it and dont worry about the No Go years I am taking 750 a month not 490 and giving money to my son and grandchildren Dont delay you have not got time to delay if your over 66
A bold strategy! I am also rethinking after the budget, and expect to do something similar - take more than I need and pass down to children now, rather than when I croak.
All the best!
@@Sackbutsam Give with a warm hand not a cold one Labour has changed the game they are not going to get 40% of my pension if i have my way
@@Jeffybonbon Labour will just squander your hard earned on illegal immigrants and climate change bs. Spend it yourself, you earned it.
@@JeffybonbonThey are getting something though, likely increase in spending in the economy - as you/ your kids go on a spending spree!
@@wl660 Yes your right but at least i am getting something now before the buggers get 40% when i did on whats left
I’ll be retiring age 60 ( in 6 years time ) with about 400k in my pot which is more than enough for me to live on with 4 holidays abroad a year
I’ll withdraw 18k a year for first 7 years
Until my state pension starts then I’ll withdraw 6k a year to top up my state pension
£1500 a month seems very low. You assuming you need to grow the pot by 5% (incl inflation) and increase your 18k with the 2-3% each year to cope with inflation ?
@@coderider3022 I get paid about 4500 a month
1500 of that goes st8 into work pension ( work place pension )
I usually have around 3000 a month go into my savings account ( my wages all get paid into a savings account )
And wages varys each month due to more of less overtime
And on pay day
I transfer £1000 from savings account to current account
And at the end of most months I have a couple of hundred left
If I so
I only transfer 800 to get current account back up to 1000
Very ,very ,very rarely do I not have anything left in current account when pay day comes round a again
Some months I have 400 pound left in current accout. ( As only spend 600 that month )
@@coderider3022 I presume with a paid-off mortgage, and being single, this works out as a frugal but not painful retirement - but even so I'd want a little more of a buffer.
@@AgileSnowWeasel yes no mortage or car payment
No debt at all
My wife works also
Every bill in our house , all utilities, council tax , insurances , food , phone bills , etc etc etc comes to 900 a month
This is the amount we need to pay for everything each month
We put 450 each into a pot and that covers EVERY THING
I then maybe spend 300 a month of nights out , hobbies , eating out etc
So I’m only spending 750 a month now ( excluding holidays abroad ) which 750 a month is 9000 a year
And I save the rest of my wages. ( usually about 3k a month )
Me and my wife have no idea what most people spend there money on
We believe they waste it buying things they don’t really need
How do you have 4 holidays a year and live on £18k a year? I’d need 50.
I like the guardrail principle of withdrawal and cutting your cloth partially to your annual return.
Chris this was exactly what I was after so thanks for an excellent presentation. I guess like many the changes announced at the Autumn Budget have forced me to rethink my previous plans and this information has helped me greatly thank you.
Really glad to hear it Mike. Thanks for watching.
So rough rule of thumb: £1k/month for every quarter-million should be about right?
Plus state pension and (mustn't overlook) defined benefit workplace pension, if you're fortunate enough.
Fantastic video Chris! The way you explain complex things like SD is really helpful. Thanks a lot 👍👍
Thank you! It’s always good to hear that the content is useful.
Brilliant video keep the good work Up Merry christmas
Thank you! Merry Christmas and all the best for the New Year.
Thanks Chris. I'm a long time follower, 38 now with a 6 figure pension pot largely thanks to your videos. Keep the content coming!
I’m delighted to hear that! Thanks for supporting the channel and congratulations on the progress you’ve made.
How can we predict while the government is changing the fiscal rule in every budget?
Informative and food for thought, as ever...thanks Chris. By the way, I love your accent 🙂
I think 2% inflation is ambitious. I’d run the numbers at 3%
but using 7% for returns and 2% inflation means 5% real which seems reasonable for an illustration like this
One question. If you stop working att 55, will you still get a full state pension? I do like Monte Carlo simulations but you have to put your own numbers in. Also you will spend less money as older you get i suppose. I would take that into my long term budget. Thank you for this video, Chris.
Thank you for watching! You have to complete 35 years of qualifying NI contributions, so you could do that by 55 if you start work at 18-20 years old. Otherwise, you may have to make some voluntary NI contributions.
Great vlog Chris. Don’t like early retirement videos and switch off when I hear “you want to retire, but go part time or work 6 year longer.”
Thank you for watching glad you enjoyed it.
but that ‘take more and spend by SPA’ would mean £26k intiially and then around 24k from SPA so pretty stable? maybe more useful for planning than £14k followed by £37k.
Quite possibly. Only while two of you are alive though in this example. Many people will choose to take more earlier and less later from their private pot though, and that works.
So, as a single, pre 40, no mortgage, no kids/partner, lucky to have investments beyond the 1m, and still working... What it sounds like, is I should afford to live a little more than I am... I suck at that bit.
"You can always get more money, you can never buy more time."
My dad retired at 63 and 3 months later my mum dropped dead of a stroke, they were married 40 years and retirement was all planned out but "BANG" all gone in a split second. He's now 84, fit as a fiddle and stil very active but he's spent his entire retirement without the one person who should have been there. Shit happens when you least expect it, that's life.
I'm 53, like you no debts, mortgage cleared in 2015 when I was in my 40s I've and been saving 25% of my takehome for the last 35 years without fail while working a well paid IT career. I have now hired a pensions IFA to sort my stuff out and get me ready, I've quite literally put an exact date in the calendar for when I'm going to retire at the age of 56. Unless my company is willing to pay me a huge contract rate to stay, it's a non-negotiable date.
I see my pensions and savings as the way I will buy my freedom from wage-slavery, I will literally buy time back from the company I would otherwise waste working for them. I won't be stinking rich but I'd much rather be comfortable, happy and free than own the best looking tombstone in the boneyard that the company paid for.
You could prob retire any time you like, but what's point in that if you love your job and current lifestyle. All these early retirement videos seem to assume that everyone hates their job.
@@tomwright5738They are born from seeing people delay retirement to then be the richest person in the graveyard. As you approach your 60’s - early deaths become all too apparent all around you.
Yep, that's the mistake I made. I am now 55 and wish I had splashed out on more experiences.
same here. You're not alone. I think getting into the spending mindset instead of accumulation is not an easy transition. I'm 54
I retired 2 years ago, now 68. I combined my 2 pensions and have not withdrawn anything, I have been keeping an eye on it and am amazed at how the value fluctuates daily. Over this past year i think it has done welll 17.2 % but over the past week it has lost £6k, £4k yesterday. This is in a caution fund. It seems to me a very precarious way to rely on this in retirement, there could be a crash and you lose everything.
I started planning my retirement around age 50 during COVID as I hope to retire around 56. I had to contend with managing my funds inside my various pots, never done it before in my life and the one thing I've learned these past 4 years is "don't sweat the small things". Like most things in life, experience will give you confidence. One thing I do every week is collate and record my numbers so I can chart them in Excel, and over the last few years of stats I have my numbers have either stagnated here and there or gone up, the odd days like the last two I just write off as bad luck. If you don't then you'll drive yourself bonkers worrying all the time.
This is one of the aspects of sequencing risk that we all need to be aware of for sure . Sadly the worst part is that it's hard enough for those who are on their game like us, those of us who do their homework and try to plan things around these risks. The real shocker is that we're in a minority, the vast majority out there often have no idea what or where their pots are, even if they have any, let alone how to plan and utilise these resources efficiently as we're all trying to learn to do. We're in a much stronger position as we're aware, many out there don't even have a clue, never will and will truly be paying a literally awful price for their ignorance.
You won’t lose everything. Values go up, values go down but the overall trend has always been up over time. My pension is down £7k in last few days, give it a while and it’ll be back up. Sit tight 🙂
@ thanks, it’s gone down another £2k overnight
@@andypandy9931 Interested to know what funds it's invested in as mine is 100% in US stock market and fell earlier this week but recovered most of the loss by market close yesterday.
RULE NO.1: DO.NOT.LOOK.EACH.DAY.
Once a month maybe, every quarter even better. If you're not planning on really needing it, better to remain oblivious. Assuming it's passive funds or someone other than yourself is actively managing it, of course.
Another great vid Chris 👍
Thanks Graham much appreciated!
Like the gold and black graphics! 🐺
Waw 🐺
very nice video well explained in clear understandable language thank you sir
You’re very welcome thanks for the nice comment.
in a relay all that count is the total time. if it adds up to less than the other teams you win. the whole point of sequence of returns is the same cagr in a different sequence effects the result in retirement.
Made me chuckle that 1 year closer to death is rebranded as "1 less [sic] year to worry about" 😂
great video. So at 55 is it better to dial down the risk and start moving from equity to bonds so as to achieve am allocation closer to a 60/40. (I'm 54 and have 83/17 at mo). but have an overall portfolio close to the upper level here. So an 8% avg (and less) return suffices.
I'm thinking of retiring at 55
How much is it affected if you retire later ?
I’m planning on retiring at 60.
With a 250k pot and 100k savings
Spending capacity increases when the time frame decreases. In fact, the numbers at 14:21 give some indication of this.
Did your friend find the rich woman? Asking for a friend 😊
Joking aside, the relay runner analogy was excellent and thought provoking.
😂😂😂
He found a couple of willing ones but think he decided it wasn’t worth the trouble in the end 😆 Thanks for watching and I’m glad you enjoyed the video.
Thank you Chris.
You’re welcome!
Do you do any videos for those who have final salary pensions Chris? What options they might have to flex their income? People tend to think they have got it made but they can be very inflexible depending on needs. Apart from varying a tax free lump sum, commutation values might make this unattractive, are there other options? Where it’s a funded fs or care …….defined benefit one……..is transferring to a SIPP still worth investigating?
One of the best things I did last year was get a pensions IFA to look at my various pots, the guy did 9 months of chasing 9 pensions my wife and I had. We had some face-to-face meetings and not once did he mention any fees or payments. He was able to root through my DB pensions I had, workplace schemes my wife had and the latest active pensions we have got, picked through them all and found all the nitty gritty details, explained our options, tax efficiencies we can get, he did a full risk assessment of us both. We've been so impressed with his dedication we finally signed up as a client to let him manage our portfolio of investments as I want to retire around age 56 and that's only a few years away now.
Hi Ian. I did a video explaining how DB schemes work a while back, but I haven’t got one that discusses transferring a DB pot. There are few advisers who operate in that space now because the liability is just too great. Some will, but you just have to be very careful about the advice you’re getting.
Changing the assumptions to 100% stocks where the average long term growth is just over 10% and allowing for 30 years retirement for a £1m will give you substantial amounts of drawdown per year. That’s where I plan to be
@@porschecarreras992cabriole8 That’s the average. It doesn’t count for extremities, which is why data research shows 100% equities when backtested hasn’t been the optimum portfolio for income withdrawal. This is the problem with behavioural biases though - it’s extremely difficult to see that when living in a risk on environment.
2% inflation? That would be nice. Debasement is happening at more than 2%, so I think your models are optimistic.
It’s optimistic at the moment, but central banks still haven’t seen cause to alter their long term targets yet. Until they come out and say 2% is no longer viable as a target, it will be used in calculations like this. Like I said though throughout the video, this is a GUIDE and people should do their own modelling based on their own situations. Inflation figures really are a total fallacy because every individual will have their own unique inflation number.
My numbers for long term planning are 5.5% nominal growth with 2.5% inflation and costs 0.5%. Life strategy 40 as worst case scenario.
2% inflation!!! You're naive if you think that. The voyant software is so expensive! It's about time the government produces a free version of voyant. These ifa's charge an obscene amount for advice. They make more from your pension than you do. Yet the risk is all yours. The ifa cannot lose no matter what advice they give. Ifa's should only be allowed a % of the gains they earn you....
There are free cashflow modelling tools, and I provide a link in the description of this video to another video which compares one of these free systems with Voyant. I also explain how you can access Voyant for a substantially lower cost too. Regarding adviser charges, I don’t think you fully understand what a financial planner does. Personally, I don’t take a client on unless I can demonstrate how the value of my advice will create more monetary value than the cost of my service. That has nothing to do with investment performance because that’s not something I have control over - it is all based on tax planning and/or creating tangible cost savings.
@@chrisbourne-retirementplannerso you don't charge a % of investments then. That's good
@@chrisbourne-retirementplanner Hi Chris, I really appreciate the time and effort spent when creating these videos but I do have a question on IFA charges. As an industrially electrical engineer on fixed salary over the past 40 years in various global companies, I have worked on machines costing say £2000 to several million pounds. My salary does not change to fix a machine based on the value of the machine, nor what profit it makes for that company. Why should it be different for IFA’s?
If I go into hospital the doctor does not look at my salary or my future money earning potential before deciding what the charge will be for treatment.
Similar thing if I take a car for repair into say a Fords main dealers. Parts will be more expensive but the labour rate does not change if the car is at the top or bottom of say a Fords range of vehicles?
If it was a pure supply and demand situation whereas market forces decides fees, than I understand, but the fact is the government forces us all to use a finance person if over £30K.
Some people need financial assistance so it is good protection for them but not fair for others to be forced to pay thousands to a third party (i.e. IFA) if they know what they are doing and happy to take on that risk. I am personally OK to pay say 1 - 2 hundred for advice but forced to pay thousands!
@@chrisbourne-retirementplanner I appreciate that. I wish the ifa's I've used in the past were more like you. Thanks
I don't think your statement on the mix of equity and bond and the impact on success rates is factually correct. Higher equity gives better success rates but with higher stnd deviation
Actually, research shows that higher equity content only delivers greater success to a certain point… You would have greater success with a 60% equity content than a 20% equity content for example, but it doesn’t continue to increase the chance of success above its additional volatility all the way up to 100%.
@@chrisbourne-retirementplanner The paper " Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice." does challenge that though.
It's also worth pointing at that in your comparison of standard deviation on equities vs bonds rather than looking at the absolute values you should be looking at the ratio of the average versus the standard dev value. This shows that volatility of bonds is closer to stocks than it actually looks when simply comparing absolute values.
Finally a note on probability. Voyant ISN"T giving you a probability of future success. What it's telling you is a percentage of times that your testing scenario passed testing against historical data. Even if you are using a Monte Carlo simulation with an element of randomness in it it would still be wrong to think of it as a genuine probability of future success. One of the criticisms of Monte Carlo simulations is that they have difficulties in quantifying the uncertainty of irregular events such as market crashes. Which leads us to a certain paradox in the financial advice field that we're aware that past performance doesn't guarantee future performance yet it is past performance data that is used to produce future illustrations.
I tried Voyant and i really wanted to see what the simulations would produce but it was so complicated i couldn't find where you go to even do that so gave up. It's also really expensive and pointless for an individual, makes much more sense for a professional who uses it all the time
I use Voyant of the back of the Meaningful Money academy. It's like any software a little confusing without a manual or support. It may be expensive but the mistake I found in my plan with respect to Tax will repay me 1000's of times over. The alternative was to seek professional advice but that was upwards of £3k.
@@BracebarianMight i ask what mistake you found?
@@gwynsea8162 I had a mistake in my excel sheet for years when I had planned a big expense I was going into the 40% tax bracket but by taking more each year at 20% a saved a lot over the total retirement.
@@gwynsea8162 Voyant is a professional cashflow forecasting system, which is why the way I offer it is alongside a video based course that teaches you how to use it properly. If you went directly to Voyant, you would be expected to have the same knowledge level as an adviser, so that wouldn’t generally be suitable. It would also be far more expensive than the way I offer it because you’d needlessly be paying for a master license, whereas you only need a user license for your own plan. A master license is for when you intend to manage plans for multiple different individuals.
@@chrisbourne-retirementplanner I still don't think it makes sense even at £120 a year as I can't imagine having that much necessity to fiddle with or review the plan more than at most once a year. I notice your courses do not have anything that describes the delivery format, length, any pre-requisites etc before you sign-up which is very strange. Also this reduction from a "normal" price - is that an actual reduction (when was it the original price, how long and how long is the offer for etc) or just a bit of dubious marketing? I'm obviously in the wrong game - £400 an hour for learning to use software (with any regulated financial advice specifically excluded)? I'm afraid that it's not passing the sniff test. I do quite like some of the video content.
cheers Chris. No where near that amount of money in my private pensions but DB scheme mitigates it somewhat. have a great christmas and a cracking new year dude
Thanks very much and thanks for continuing to support my channel. Hope you have an excellent Christmas too!
Top stuff Chris
Thank you I appreciate the comment!
Thanks but could you please do some examples to spend as much as possible to use all funds but still have it last to 95. I don’t plan on leaving anything. Cheers
Once you get it 80 ( massive If you live that old )
You won’t need much money that’s for sure
Money isn't the only factor in retirement health is the main one I'd argue.
i would look for a lifestyle or health channel for that. this is more for the financial side of things. i don't go to my doctor for help with my finances.
@@leesmith9299 😂😂
Drawdown is not for me. Watching the markets every day would give me constant anxiety - it will be an annuity for me.
Last time I checked annuities they were a lot better than they have been.
That being said the return on annuities are usually about 5% of your pot which is actually pretty achievable from dividends. The advantage of that is that you still retain your stocks and live off the dividends leaving the stocks from an inheritance point of view. This is why I think SIPPs are a good idea. Invest engine appear to have dropped the charges and trading 212 have been promising a SIPP for a while (still waiting) which will have the same charges as their Stocks and shares ISA, ie nothing except foreign currency fee.
Annuities seem like a mug's game but perhaps if you're happy to trade money for certainty that doesn't actually make you a mug, just someone with a reasonable concern and comfort level
Madness
When you sell your pot to a annuity company
The pot is then there’s
When you pop your clogs
They keep all your money
Draw down
And what’s left can be then given to your kids or your friends or your nieces or your fav charity
The only reason I didn’t start a private pension when I left school was cos at that time only option was a annuity
Over my dead body was I doing that
@@gwynsea8162they are a mugs game
Selling your entire pot to a company worth billions who will invest your pot , give you a smaller percentage of what they make with YOUR money , then when you die , they keep all your pot
Absolutely madness
@@boyasaka I have no kids and my wife at some point will inherit her mother's house currently with £800k and another £200k in cash.
One thing I would add is that the initial safe withdrawal rate should really be conditional on the stock market valuations. For example now with S&P at all time high the 4.8% rate (24K from 500K pot) would be particularly risky and in a market drawdown of say 30% you would really need adjust your spending significantly down or look for a part time job. Of course the market can go up another 30%, we don't know, it's just the probability of it going down is higher at the moment.
At 67 most of the UK workforce wouldn't need an income pot!!!! They'd need a pot to dribble in. 67 is a bit late to start enjoying life after work.......
Haha, after a career with 5 consecutive redundancies, I reckon I'm a decade behind where I would like to be so yes, I'll probably keep going if possible to that 67.
I agree with you about the enjoying part but my approach will be to aim for flexibility.
I'm well paid and could easily afford to sacrifice salary and do a 4 day week. That would allow a bit more balance between income and time to enjoy it.
I could further take unpaid leave and while employed, still get medical benefits, so there's that to consider too.
Yes it would have been nice to have retired a decade ago but just not going to happen for me.