Great info! I have a question - I'm 35. I set up a pension today, after watching this video. But after doing some simple math, it all feels a bit pointless to me and maybe you can shed some light on why it would be worth my time to continue to pay into it... So... I currently live a very simple life that doesn't cost me much. As I'm self employed, I keep track of all my outgoing and incoming cash, so I have a good scope on what a life in retirement would cost, if I didn't have any business-related expenses. Through this knowledge, at retirement, I expect that I'll be able to tailor my life so that it costs me around £17,000 per year, in today's money, whilst still providing me with a comfortable and enjoyable quality of life. Now, I guess this is where my thinking gets a bit spicy and the reason I’ve always put off getting a pension… And by the way… maybe I’m completely wrong with this thinking, which is what I’d love to get your insight on... Over the last 100 years, the UK economy has held an average inflation rate of 4%. With this in mind and due to the compound effect of inflation, that £17,000 per year goal, will jump up to around £56,000 per year in 30 years (aged 65), £84,000 per year in 40 years (aged 75), and £125,000 per year in 50 years (aged 85). If I take the median of £84,000 per year, to ensure that I have enough money to enjoy a quality of life proportional to that £17,000pa lifestyle (in today's money) and presuming that I’m going to retire at the age of 65 and enjoy 20 years of retirement before I bite the dust or my health deteriorates to a level where I really can't do anything, I'd have to build a pension pot of around £1.68m over the next 30 years. The S&P 500’s annual rate of return is just shy of 12%. When adjusted for inflation, that figure becomes around 8%. If I were to set up a SSIP pension that invested solely in the S&P 500 (which I don’t want to do, as it contains a load of socially and environmentally destructive companies), I estimate that I’d have to invest £900 per month (topped up to £1,190 with the government’s 25% tax bonus) for the next 30 years. To me, investing £900 per month for 30 years, in order to get a 20 year monthly payout of £1,400, in today's money (that original £17,000pa lifestyle amount, divided by 12 (months per year)) seems like an insane decision to make. But... what's the alternative? Work forever or have nothing? Because a pension doesn't seem (to me, at least) to offer anything outside of a modest lifestyle for 20 of your final years and requires a hell of a lot of sacrifice to your present enjoyment of life and time, in order to achieve that. Thoughts?
@@EMBEE742 Hey buddy, yeah, kinda... Or at least, I got somewhere with it... (Obviously, this isn't financial advice, as I'm just a person with no qualifications in any of this). I spoke to a financial advisor, who recommended putting a percentage of my earnings away, instead of a fixed amount each month. It sounds like a super simple solution, but it makes sense - As inflation rises, so should the amount of money I put away. I'm freelance, so the way I do it, is every time I get paid by a client, I put a percentage of that into a high interest, instant-access saving account. Then, at the end of the tax year, I assess whether or not I can responsibly transfer it into a pension pot. If the answer is yes, I do it. By doing this, I always feel as though I have a bit of a safety net, as once your money is in a pension pot, I don't think you can access it until retirement. This doesn't mean that inflation won't be eating away at my pension pot. But it does mean that the goal mentioned above (£1.68m by 2048, to have the equivalent of a £17k per year retirement lifestyle, in today's money), may be a bit more realistic to achieve (although, still very much a ridiculously dystopian goal). Hope this helps!
In agreement with the few other comments that said the content didn't really match the title, which is a shame. I'm back to the drawing board of looking for information about how to start a pension as a newly self-employed person.
Thanks for the video. I just wondering: In a DC pension, if you don't take the 25% tax free at or before age 75, do u loose the right to it? Also, again in a DC pension pot, if you transfer your funds to a drawdown product, is it still exempt from IHT? Thanks
Looking into SIPPs , do that 20% the Gov adds up got me excited, but then they’ll tax the 75% of the amount at the end (at 55yo when money is available) which sounds kind of the same? Am I wrong?
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $675k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
Interesting I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation.
Thank you for the video. I didn’t think there was much content, though, that specifically reflected the title of this video.
Great info! I have a question - I'm 35. I set up a pension today, after watching this video. But after doing some simple math, it all feels a bit pointless to me and maybe you can shed some light on why it would be worth my time to continue to pay into it...
So... I currently live a very simple life that doesn't cost me much. As I'm self employed, I keep track of all my outgoing and incoming cash, so I have a good scope on what a life in retirement would cost, if I didn't have any business-related expenses.
Through this knowledge, at retirement, I expect that I'll be able to tailor my life so that it costs me around £17,000 per year, in today's money, whilst still providing me with a comfortable and enjoyable quality of life.
Now, I guess this is where my thinking gets a bit spicy and the reason I’ve always put off getting a pension… And by the way… maybe I’m completely wrong with this thinking, which is what I’d love to get your insight on...
Over the last 100 years, the UK economy has held an average inflation rate of 4%.
With this in mind and due to the compound effect of inflation, that £17,000 per year goal, will jump up to around £56,000 per year in 30 years (aged 65), £84,000 per year in 40 years (aged 75), and £125,000 per year in 50 years (aged 85).
If I take the median of £84,000 per year, to ensure that I have enough money to enjoy a quality of life proportional to that £17,000pa lifestyle (in today's money) and presuming that I’m going to retire at the age of 65 and enjoy 20 years of retirement before I bite the dust or my health deteriorates to a level where I really can't do anything, I'd have to build a pension pot of around £1.68m over the next 30 years.
The S&P 500’s annual rate of return is just shy of 12%. When adjusted for inflation, that figure becomes around 8%.
If I were to set up a SSIP pension that invested solely in the S&P 500 (which I don’t want to do, as it contains a load of socially and environmentally destructive companies), I estimate that I’d have to invest £900 per month (topped up to £1,190 with the government’s 25% tax bonus) for the next 30 years.
To me, investing £900 per month for 30 years, in order to get a 20 year monthly payout of £1,400, in today's money (that original £17,000pa lifestyle amount, divided by 12 (months per year)) seems like an insane decision to make.
But... what's the alternative? Work forever or have nothing? Because a pension doesn't seem (to me, at least) to offer anything outside of a modest lifestyle for 20 of your final years and requires a hell of a lot of sacrifice to your present enjoyment of life and time, in order to achieve that.
Thoughts?
Did you ever get any further insight from anywhere that you could share? in a similar position
@@EMBEE742 Hey buddy, yeah, kinda... Or at least, I got somewhere with it...
(Obviously, this isn't financial advice, as I'm just a person with no qualifications in any of this).
I spoke to a financial advisor, who recommended putting a percentage of my earnings away, instead of a fixed amount each month.
It sounds like a super simple solution, but it makes sense - As inflation rises, so should the amount of money I put away.
I'm freelance, so the way I do it, is every time I get paid by a client, I put a percentage of that into a high interest, instant-access saving account. Then, at the end of the tax year, I assess whether or not I can responsibly transfer it into a pension pot. If the answer is yes, I do it.
By doing this, I always feel as though I have a bit of a safety net, as once your money is in a pension pot, I don't think you can access it until retirement.
This doesn't mean that inflation won't be eating away at my pension pot. But it does mean that the goal mentioned above (£1.68m by 2048, to have the equivalent of a £17k per year retirement lifestyle, in today's money), may be a bit more realistic to achieve (although, still very much a ridiculously dystopian goal).
Hope this helps!
Im self employer without pension. Can u help me?
Gave up half way through. Too much side tracking, no useful information, and did nothing related to the video title
Very informative, thank you.
In agreement with the few other comments that said the content didn't really match the title, which is a shame. I'm back to the drawing board of looking for information about how to start a pension as a newly self-employed person.
Thanks for the video. I just wondering: In a DC pension, if you don't take the 25% tax free at or before age 75, do u loose the right to it? Also, again in a DC pension pot, if you transfer your funds to a drawdown product, is it still exempt from IHT? Thanks
Looking into SIPPs , do that 20% the Gov adds up got me excited, but then they’ll tax the 75% of the amount at the end (at 55yo when money is available) which sounds kind of the same? Am I wrong?
I am self employed 46 years old with no pension
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $675k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
Interesting I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation.
Thanks for the video, lots of great information
Hello I am a virtual assistant and singer/songwriter
Take sip from your cup 😊
hi I am self employed with no pension