We tend to give ourselves a hard time about... most things. So it's important to take some time to zoom out and realise the good things you have going for you. However small they might seem.
In most things I feel like I'm doing okay. Should have a reasonable fund to retire on, but for various reasons/life choices/state of the market I find myself 15ish years from retirement and still renting and worry about this in retirement. Nearly all pension predictions seem to be predicated on the fact of owning a home and being mortgage free by retirement.
Thank you so much for making this video, it gave me much more confidence in my position. Yes I don't have 100s of £k in my pension at 47, but I do have something in there an a thousands in equity tied up in my house. Thanks again and keep the videos coming, I have learned so much from you so far. Cheers!
I know, I saw Damien's video right after i finished filming this yesterday. I couldn't believe it! We've clearly been taking inspiration from the same places!
Thank you so much for this video, James. I am not from UK or even from any western countries, but I can totally relate to your insights in this video. I am a worrier type, especially about money, and always feel that I am not doing well financially for my age. I always compare myself to other people who seem to live the high life,while my husband and I are stuck with our monthly mortgage (another 6 years to go) and saving every pennies that we can manage. You have indeed taught me that comparison is the thief of joy. I should be grateful that my husband and I own 2 houses (small but beautiful), his pension should be more than enough for us to retire comfortably at age 55, and yes, my husband,being such a great head of the family, has 2 life insurances to ensure that our child and I are well taken care of if, God forbid, something happened to him. Your video makes me realize how ungrateful I have been because I keep on feeling like I am behind. I am an extremely lucky woman with my beloved husband and son, and that is definitely all that matters now . Bless you,James.
Omg. This video is so "me", a chap who only start investing at 40s, paying a mortgage that sees my income tighten by months end, etc., (despite knowing my property value is going up). And the cycle repeats itself over and over. Nice & comforting video. Thank you.
Thank you for sharing this. Didn’t realise how much I needed to hear this. Makes me feel significantly better about my current situation and has certainly realigned my thoughts and shall continue to do what i’m doing.
Fantastic advice, I’m a senior and already retired. And have already gone down the roads you’ve described. So in other words been there done that. And you are absolutely spot on in this advice. The only other thing I wished I had known earlier was to plan not only for your retirement but where will you (age)or live after you retire. Which will be quite costly when you reach that age. Especially if you don’t have family to live with or depend on. And who can plan on depending on family. Being able to help with your expenses when you’ve aged will be better all around. This is something we don’t think about until you have to. Because you’ve reached a certain age. But by that time everything is quite expensive and would have been beneficial if addressed during the primary working years. When we’re younger we often think I’ll deal with that when the time comes. Or I’m going to live for the moment for now. And when that time does come, as it will, having planned for it, is a greater asset than not having a plan.
Great video James. People don’t give themselves enough credit for the efforts they are making! I just took a look around the room and was suddenly thankful for everything I’ve done for me and my family.
Yeah, I’m really sceptical… I’ve been doing all those « right things » I’ve forgone fancy holidays and midlife crisis motorcycles and yet for the last 5 years my pension has really disappointed me…. The more I put in, the more it seems to stay the same… I’m moving through my 50’s now still waiting for that magic compound growth!
Could just be the best video you have made.....passionate, fact based and thoroughly positive assessment of situations which millions of us face. Thank you James
My first job in 1990 ( to 1995) was with a US company and was advised the pension was very good. Never looked at it until 2019 when I requested from the fund manager the current transfer value and was told £146,000. The power of compounding and the much higher growth US stock market. Had that been in the FTSE, it wouldn't be worth half of that. So the lesson, get in early and get it into the US stock market.
I started paying into my pension in early 2002 at the age of 32 (a little late). I was lucky i was able to buy back about 3.7 years as i work in NHS. The pension now is growing very fast i was amazed at how much it is worth. If you have opportunity get a lump sum into the pension as soon as possible as this grows very fast over time. James is 100% correct get a pension as early as possible keep growing it monthly and never stop paying in. Its free money. 20% tax free and the company you work in pay into it also. Then you get the interest from the stocks and shares that are invested on your behalf each year. Be smart.
My goals were simple based on my income…get completely out of debt with a reliable older model Honda and a roof over my head paid for. I retired at 65 with that goal complete but with very little in savings which I’m working on with the extra income from no house or car payment which amounted to approximately $1500 a month. Wish I had done this earlier in life. I won’t be taking a world tour but never expected a lavish retirement since I’d never had a lot of anything but debt. It’s all relative..live within your means with realistic expectations for retirement and you’ll do fine.
I set myself realistic and achievable goals on a weekly, monthly & yearly basis. I take no notice of social media, peer pressure and keeping up with the joneses.
Some major assumptions going on here. Starting regular full time work with a decent pension at 20, kids having flown the nest at late fifties, managed to get on the property ladder at all... Gonna be so many people for whom one, two or three of those aren't true. And anyone that needs reassuring that they're not doing too badly when they've managed to hit all three of those milestones needs to get their head checked.
I live in the US and at 27 I had already started feeling the way you described! Luckily for me, I began realizing your point a few years back. I have a very solid government job with a great retirement options. THey match up to 5% of my salary if I choose to put it towards retirement. I didn't even realize that alone puts me way ahead of large majority of my peers. Next goal is to buy a modest place instead of renting followed by maxing my retirement contributions in the next 3 years. Currently I put in about 4500$/yr into my retirement, but that number can go up to 9500(that is my cap in the US unless you put more into a private investment fund). The sad part is that if you are in your 20s, just not having debt puts you in the top 20% of people financially. That is bad debt, not debt that is moving you forward.
Hi James, this might be niche, but any chance you could do a video on what people should consider doing with any excess once they have filled their ISA and Pension allowances each year? CGT and Dividend allowances are being cut for unwrapped investments, so where to go, BTL will be impacted by house prices dropping amongst other issues, speculative assets are not usually as good as productive assets etc
That is perhaps too niche for youtube, but I've started up a newsletter where I'll be digging into more technical details like this. To answer your questions, the main tools in the tool kit once you've done pensions and ISA is VCTs, EIS and Offshore bonds
It doesn't; everyone would be better off if we had lower housing costs. But lack of supply due to planning rules and the UK's obsession with BTL property (from locals and foreigners) means that prices have gone through the roof. I always thought that, at some point, house price growth must be limited by wage growth. That there would be a point at which costs as a % of take-home pay would get unsustainable. But that does not seem to have happened. In the 1940s, the average house was 4x the average wage. But now it's 8x the average. One possible explanation for this resilience is that many more women are now in the workforce, and dual-income families can afford much higher housing costs. So, for dual-income families, housing costs may not be much more expensive than in the 1940s. I'm not an economist, so I have no idea, but it's a theory I've heard.
@@JamesShack Appreciate the reply, and like the theory of female workforce increase... but where is the future growth for that concept... other than the fact that assumed ever-improving economic efficiency is now working on two family members rather than one...? Isn't a big reason behind the detachment of income to house prices due to the reliance on (often older) family members to fund such purchases? Although that would be hard to model (for me at least), I could see a potential for both the increased lifespan (and income-earning years) of the population as a whole, fueling a greater leaning toward such inter-family reliance over time. Such structure is surely both precarious and also promotes a declining population (a numbers game favouring more rich donor figures - to less 'in need' receiver first time buyer-type people) ...? I am asking too many questions, but is the restriction of planning rules grounded in safety / environmental concerns, or a wealth protection measure from those with power? One could also form a similar question regarding 'BTL obsession' and 'appeasing' rules/conditions, but I believe a psychological component, namely concerning how a property is a tangible, physical asset plays some part here in human biases at play.
At 5 mins in i can tell i AM behind XD im 40, only held min wage jobs, been disabled 10yrs and bar N.I. never contributed to a pension of any kind. I can be proud that im not in debt and the current cost of living is just about tolerable, but ive never been able to save long term, iv always had to sacrifice some lower priority essential (wearing clothes with holes in them etc) and i am lucky in that im a low maintenance type of woman, with no social life. i.e. the pandemic lockdowns did not change my life in any aspect (albeit due to my disability) I stopped work before the 8% pension contributions started, but i believe i am getting N.I. credits while on ESA with extra enhancement
Been working now for 6 years (aged 24 now) and for over 2 years I have had to opt out of paying my pension because the 8% pension payment was nearly £200 a month, money I need more now than I will in 45 years time, this video shows me that was a bad decision, that people who can’t afford to pay into a pension right now aren’t doing well enough… be careful about the advice you give. I came to this video to hopefully find acceptance with my financial situation, not to be further discouraged.
People who are coming to this video for help are likely having to make every penny count, saying things like “you don’t even notice your pension coming out” or “saving hundreds of pound a year” which is a massive amount for some people, is really ignorant.
I think it's mainly just to give people guidance on what is the ideal situation. If you can't meet those requirements currently, you'll likely have to continue working later in life. I don't think any offense is meant by any of these videos.
Thanks for doing these videos. They haven't changed my strategy as I was basically adopting the approach you recommend anyway. However especially when things get volatile, it is really helpful to be able to listen to rational and positive reinforcement of the 'stay the (diversified) course' principle.
I don’t agree with the mortgage repayment position but the rest of the points are reassuring. Thank you. Insurance for illness or death is an unsaid item.. including drafting wills and LPOA
Thanks James, I DO feel a lot happier about my speed on the motorway - and not comparing it to others! After all, I’m driving my choice of car and might be being overtaken by a sports car… their journey vs my own! 😊
I wish I could find a Life Insurance company that I could speak to without the hard sell. I responded to an ad last year, and was bombarded with calls, and when I finally spoke to them, they hung up on me when I said I need time to think about their quote. Seems no-one is allowed to recommend anyone these days, so I'm now stuck. These insurance companies are all the same.
Hi James excellent video thank-you, one issue I have with down sizing is the change in the property market, unfortunately in my area buying decent retirement style property doesn’t really leave that much money in the pot even when you sell your own larger property. Yes I could possibly buy a cheaper property away from my current area but that’s not too appealing when you have friends and family nearby and love the area you live in.
Good vid, sometimes we need to slap ourselves around the chops as much as pat ourselves on the back. Taking stock and recognising progress and achievements is important.
Young people, please please please save as much as you can afford to. I semi-retired a few years ago and am now in my 60s. I could kick myself for not contributing more to my retirement when I was in my prime earning years. I know it's cliche, but time does fly. Before you know it, you'll be my age, wanting to fully retire but unable to because you can't quite make ends meet on your pension. PLEASE save, save, save!
Given how likely it is that the state pension will soon be seriously eroded in value and pushed several years further away in terms of qualifying age I'd say millions of people are now much further behind than they'd planned for.
James, I'm not sure if you'll read this, but I feel like you've gone inside my head today and filmed this video just for me! I've been struggling for a while balancing the thoughts of 'am I doing enough', with 'I don't know what more I can do?!'. This has confirmed I'm on the right trajectory. My life is well insured, I have a teachers pension which I've been paying 11% into for 14 years (now 37), and I have the home I need for my family to safely and comfortably grow in. Yes, I have some short term debt I want to get rid of ASAP, but it is nothing that isn't insurmountable with since careful budgeting. Sometimes you need a telling off by Dave Ramsay, but sometimes it's good to have a gentle pat on the back and 'keep going'. Thanks 🙏
My family HAS NOT been living paycheck to paycheck since 2016. That is good to me. I remember the days of living check cashing shop to check cashing shop.
Great video james 👍 never thought about the downsizing when older etc a video on best place to invest be great, vanguard lifestratergy or s&p 500 etc, not sure if there is a vanguard s&p 500 isa ? Thanks dean
Sometimes it is better to think you are not doing so good, gives you extra motivation to put more in whether that is in your pension or overpaying the mortgage.
On the other hand you are in a position where you are 54 and can continue to work. A position not everyone your age finds themselfes in. So you are ahead depending on who you compare yourself with. The ability to be able to work and create wealth is only available to a small percentage of the worlds total population. It’s all relative.
@@nunuknowstheway6710 The ability to create wealth is available to an awful lot of people. It's not how much you have but what you do with a little on a consistent regular basis - there are plenty of options and information is readily available. Think "compound interest".
Indeed, unfortunately it's only those that have already experienced losses that to understand this! But should be the first part of any financial plan, as you know!
And, it's not just the capital tied up in a newly empty house that is costing you money. It's the damn heating bill as well. We are fully intending not just to downsize, but to also invest in a Passiv house to largely eliminate heating costs in retirement. Two fingers to the cost of gas in other words!
So much of a mental battle in ones own head. I am happy with where I am, but always have the doubt that my future earnings will drop. 52 yo, been employed at the same place for 30 years, but still feel unsecure about my ability to carry on paying into pensions and save at the same rate, mad I know.
@@JamesShack Engineering in the UK so always up and down. We had several years of no profit then the MD was ousted so we are now on a better footing than before and into a healthy profit. I think it's more my own insecurities !
I was well ahead of the game no debt lovely cars etc but covid came destroyed my business then i fell washing my outside windows breaking legs hand elbows achillies badly damaged so have been using my savings to finance my every day living. Now am £476 overdrawn in bank cars were sold which helped me help my son buy his first house but leaving me broke. Am 61 now and a few months away from full recovery
Fantastic video James, even if you are aware of this just reminding yourself allows you to take stock and make better decisions - thanks for making this!
I live in a modest house in Australia which I will own in 3 years. I drive a newish car which I paid cash for. Now the bad - I am mid fifties and wish I knew this information in my twenties. I have about ten years left to work and only have $228 000 In superannuation. Hopefully I will be able to increase it once I am free of house payments.
My fiance died in an accident 3 years ago. We had no life insurance, and I had to start freelance working. It's my biggest regret as I'm in rental at 65. I'm now motivated to create a six figure income, but if we'd had life insurance, I would have had a financial safety net.
Expectations,,I’m going spongy I can keep working ,,,but will have enough money to pay for food heat etc then I can enjoy my life ,,things that don’t cost anything ie countryside etc it’s really just what I always wanted
Meanwhile I’m 41 and still can’t afford to buy a house let alone afford to have a child. Stuck in renting a basement apartment. Unfortunately, this work isn’t designed for people with health issues that prevent them from working full time
In general raises at or above 3% are quite rare. With inflation some raises have been higher than that, but it takes more of that to buy things that are needed such as utilities, medical care, insurance, and of course food. My home is paid off and is of humble size, has been for years, i have a 401K and IRA, I invest in through Robinhood. I am 50. I feel behind and i do not want to sell my home to retire if i am so blessed to live to that age.
I started investing in stocks in the mid 90’s. I have Google, Amazon and Apple stock from then. I retired at 39 and am currently in my mid 50s. Besides my net worth of 2.2m, I have 2 pensions paying around 4K a month another 1,800 a month in 10 years from social security. Zero debt. My kids college is already paid for (529 plans in the U.S.). $1m life insurance for my spouse and I. Despite all of that, I still wonder at times if it’s enough for many of the reasons outlined here. I know I should be fine but still…
I don't have what you would call traditional wealth, but I am heavily invested in body art and have spent most of my discretionary income adding ink. It's sort of like a 401K, but with some of the leading tattoo artists not some Wall Street hedge fund manager.
This reminds me of the quote from Pete Mathews book ‘you should have some sort of insurance to protect against disaster’ Are you going to be writing a book anytime soon James? Because I’d sure buy it
Haha I don't have one in the pipelines, but who knows in the future! Yes, Pete, as a fellow financial planner, will always put insurance before all else!
Can't wait to have my over priced house taken off me by the state to pay for care costs 😅. But fair play making a positive video. Very much needed for many and a nice change to the usual doom and gloom (even if it is a little rose tinted!).
Went and paid up my pension, I had 34 full years and 2011-2012 I owed £230 or there abouts. I rang the pensions people and ended up having to pay more than £3000, so payed about 38 full years 🤷🏽♀️I was already feeling ripped off, when I started work I was told that it’s good that I was paying for University education for others because when I have children they will have free education too……nope, my son is now in debt. I was told I would get my pension at age 60, wrong, hit 60 a few years ago…..still waiting. I’m going to make sure I live to me 380yrs old to get my moneys worth 😂😎👍🏽
James! Loving all the content, definitely a highlight when a new video comes up. Can you consider doing a video on cashflow planning whilst in retirement? I.e., strategies to top up cash buffer after a market down turn? Thank you for all this information.
One thing i’d advise younger viewers to be careful about is to keep an eye on the pension funds, especially ones run by companies themselves. Over the last twenty five years i’ve seen two such pension funds (i’ve been involved in ) fold , and have nothing to show for those funds. As a result my overall pension fund at 55 is only about a third of its possible value.
There's lots of things people don't realise, because most people don't think very far ahead. On the mortgage front, your payments become cheaper over time due to inflation, your debt devalues as well in addition to capital growth and compounding down payments. When your house is fully paid off, you can also set up income equity release. So you can fix an agreed total drawdown at a fixed rate, but instead of taking a lump sum and paying a ton of interest whether you spend the money or not, you can take a small monthly payment. And you are only charged interest on those payments as they acrue. You could have a private pension in addition to state pension, plus a monthly income from your property.
You are right, the equity release market now has many more solutions that are at more competitive rates. They're still higher than a normal mortgage but much better than they used to be.
Another great video, James, with some important messages that all investors should take note of. One minor observation - you used growth rate of 7% in your example - seems a little ambitious going forward?
Hi James, your videos are great, so informative and I'm certainly finding them helpful. I was wondering if you could do one on people that have final salary pensions, and how they could find a way to retire early given the pension penalties for doing so. There are around 10 million of us in final salary schemes but very little advice, other than to stay in the scheme. Cheers. Happy to share my circumstances as a test case if that would help. Marc
Hi Marc, defined benefit schemes are a bit of a regulatory minefield. Even general information about transfers is highly regulated. The FCA thinks that most people should stay in them, but lots of people want out. I’m not regulated to give DB transfer advice, but even if I was I probably would not be allowed to talk about it on TH-cam. It’s difficult because the FCA insists you need advice, but no one wants to give it because of the regulatory risks.
How do you add pension to net worth? I think the 4% rule works good for this, so a $40,000/year pension is equivalent to $1,000,000 in retirement savings. Am I thinking correctly?
Hi James, many thanks for this. Do you recommend equity release for those of us without children? We have been frugal with the house (in terms of size) but its worth 3x what we paid. However, also heard the horror stories! Thinking this might help as we are moving into later retirement (currently 50). Many thanks.
The fifties can be a time for accumulating but can also be a bit of a snipers alley when it comes to redundancy (happened to my wife at 56, she found work but was never happy and took her small works pension this year at 60) or disability (happened to me, issue undiagnosed for years., Still working but not for much longer , 54).
Great video James So much truth in what you say. I retired early at 56 after a 38 year career and am fortunate to have a very good pension. My main issue is when the stock market takes a beating. That's when I begin to feel I'm not doing well. Its then that I begin to feel I can't do the things I want to do as I have to save money and forgetting how investments work. this a common and what advise would you have please?
Hi James. As always a great video. I have a quick question...I'm about 5 years from retirement and spend quite a bit of my time planning for this event. I love watching your videos and enjoy managing my own pension/ISA investments. However, I would like to pay a professional to look at what I have in place and offer advice on any improvements to what I have. What I'm not interested in, is paying a financial advisor/planner to manage my portfolio going forward and paying them a % of it's value - I'm looking for a (mobile phone analogy) PAYG rather than a monthly contract. Do you offer such a service or do all advisors/planners look to manage for a portfolio % contract? Hope that makes sense 😁👍
I’ve paid off my mortgage. I have a deferred pension from a local authority which I paid from 21 for 30 years. I’m now 58 years old and my pension is worthless. My children visit we require the 2 extra bedrooms. I can’t even think about retirement for another 10 years. I even paid into an AVC. So I’m definitely not doing Great.
@@JamesShack these are the amazing Gold Plated pensions everyone keeps going on about and when I took Redundancy I was on 30K a year
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Another great video James, thanks! However, for many of us whom couldn't enter into the house property club, and have only a very limited capital saved, what are the chances to retire with enough? There must be another way that is not the typical house property one... Thanks!
I think it’s fascinating that a national retirement program in the UK, like a pension is invested in the stock market because in America, we have Social Security, which is essentially the same thing however, people are very anti-investing those funds in the stock market, so I guess they’re in treasury bonds or something
Thanks to the obsession with social media, we are made to feel that we are behind on everything, everyone has better cars, vacations, kids, lives, Blah blah blah. When I grew up in the 1960s we were doing about as well as everyone else in our community. Stop trying to impress people you don’t even like!
We tend to give ourselves a hard time about... most things. So it's important to take some time to zoom out and realise the good things you have going for you. However small they might seem.
Hmmmm, not sure. I don't really agree with the extrapolation, the assumptions seem excessively optimistic.
In most things I feel like I'm doing okay. Should have a reasonable fund to retire on, but for various reasons/life choices/state of the market I find myself 15ish years from retirement and still renting and worry about this in retirement. Nearly all pension predictions seem to be predicated on the fact of owning a home and being mortgage free by retirement.
Great James, so helpful and comforting. You mentioned having the 'right' products to protect your family...how do you navigate this minefield?
Thank you so much for making this video, it gave me much more confidence in my position. Yes I don't have 100s of £k in my pension at 47, but I do have something in there an a thousands in equity tied up in my house. Thanks again and keep the videos coming, I have learned so much from you so far. Cheers!
If you don't have debt you are doing better then 90 % of people.
This is similar to Damien’s video…getting deja vu! No shade as I love your channel
I know, I saw Damien's video right after i finished filming this yesterday. I couldn't believe it! We've clearly been taking inspiration from the same places!
@@JamesShack Was going to say the same thing haha
Yup was thinking the same too! I wonder where they get their inspiration from.
@@alexkf_ Wherever they do, I need some too haha. I am all out of ideas
Great minds thinks in the same ways... :-)
There’s no doubt it’s tougher out there than it has been in the past, but good to recognise successes and have a positive outlook
Thank you so much for this video, James. I am not from UK or even from any western countries, but I can totally relate to your insights in this video. I am a worrier type, especially about money, and always feel that I am not doing well financially for my age. I always compare myself to other people who seem to live the high life,while my husband and I are stuck with our monthly mortgage (another 6 years to go) and saving every pennies that we can manage. You have indeed taught me that comparison is the thief of joy. I should be grateful that my husband and I own 2 houses (small but beautiful), his pension should be more than enough for us to retire comfortably at age 55, and yes, my husband,being such a great head of the family, has 2 life insurances to ensure that our child and I are well taken care of if, God forbid, something happened to him. Your video makes me realize how ungrateful I have been because I keep on feeling like I am behind. I am an extremely lucky woman with my beloved husband and son, and that is definitely all that matters now . Bless you,James.
Omg. This video is so "me", a chap who only start investing at 40s, paying a mortgage that sees my income tighten by months end, etc., (despite knowing my property value is going up). And the cycle repeats itself over and over. Nice & comforting video. Thank you.
Thank you for sharing this. Didn’t realise how much I needed to hear this. Makes me feel significantly better about my current situation and has certainly realigned my thoughts and shall continue to do what i’m doing.
Fantastic advice, I’m a senior and already retired. And have already gone down the roads you’ve described. So in other words been there done that. And you are absolutely spot on in this advice. The only other thing I wished I had known earlier was to plan not only for your retirement but where will you (age)or live after you retire. Which will be quite costly when you reach that age. Especially if you don’t have family to live with or depend on. And who can plan on depending on family. Being able to help with your expenses when you’ve aged will be better all around. This is something we don’t think about until you have to. Because you’ve reached a certain age. But by that time everything is quite expensive and would have been beneficial if addressed during the primary working years. When we’re younger we often think I’ll deal with that when the time comes. Or I’m going to live for the moment for now. And when that time does come, as it will, having planned for it, is a greater asset than not having a plan.
Great video James. People don’t give themselves enough credit for the efforts they are making! I just took a look around the room and was suddenly thankful for everything I’ve done for me and my family.
Good you for Grant. Gratitude is the solution for more things than you’d think.
Yeah, I’m really sceptical… I’ve been doing all those « right things » I’ve forgone fancy holidays and midlife crisis motorcycles and yet for the last 5 years my pension has really disappointed me…. The more I put in, the more it seems to stay the same… I’m moving through my 50’s now still waiting for that magic compound growth!
Could just be the best video you have made.....passionate, fact based and thoroughly positive assessment of situations which millions of us face. Thank you James
Thank for the continued support. You’re very welcome!
My first job in 1990 ( to 1995) was with a US company and was advised the pension was very good. Never looked at it until 2019 when I requested from the fund
manager the current transfer value and was told £146,000. The power of compounding and the much higher growth US stock market. Had that been in the FTSE, it
wouldn't be worth half of that. So the lesson, get in early and get it into the US stock market.
I started paying into my pension in early 2002 at the age of 32 (a little late). I was lucky i was able to buy back about 3.7 years as i work in NHS. The pension now is growing very fast i was amazed at how much it is worth. If you have opportunity get a lump sum into the pension as soon as possible as this grows very fast over time. James is 100% correct get a pension as early as possible keep growing it monthly and never stop paying in. Its free money. 20% tax free and the company you work in pay into it also. Then you get the interest from the stocks and shares that are invested on your behalf each year. Be smart.
My goals were simple based on my income…get completely out of debt with a reliable older model Honda and a roof over my head paid for. I retired at 65 with that goal complete but with very little in savings which I’m working on with the extra income from no house or car payment which amounted to approximately $1500 a month. Wish I had done this earlier in life. I won’t be taking a world tour but never expected a lavish retirement since I’d never had a lot of anything but debt. It’s all relative..live within your means with realistic expectations for retirement and you’ll do fine.
Love this post. Sensible approach.
I set myself realistic and achievable goals on a weekly, monthly & yearly basis. I take no notice of social media, peer pressure and keeping up with the joneses.
Some major assumptions going on here. Starting regular full time work with a decent pension at 20, kids having flown the nest at late fifties, managed to get on the property ladder at all... Gonna be so many people for whom one, two or three of those aren't true. And anyone that needs reassuring that they're not doing too badly when they've managed to hit all three of those milestones needs to get their head checked.
I agree, also people are having less children so there will be less 'downsizing' if they manage to buy a house to begin with.
I live in the US and at 27 I had already started feeling the way you described! Luckily for me, I began realizing your point a few years back. I have a very solid government job with a great retirement options. THey match up to 5% of my salary if I choose to put it towards retirement. I didn't even realize that alone puts me way ahead of large majority of my peers. Next goal is to buy a modest place instead of renting followed by maxing my retirement contributions in the next 3 years. Currently I put in about 4500$/yr into my retirement, but that number can go up to 9500(that is my cap in the US unless you put more into a private investment fund). The sad part is that if you are in your 20s, just not having debt puts you in the top 20% of people financially. That is bad debt, not debt that is moving you forward.
Hi James, this might be niche, but any chance you could do a video on what people should consider doing with any excess once they have filled their ISA and Pension allowances each year?
CGT and Dividend allowances are being cut for unwrapped investments, so where to go, BTL will be impacted by house prices dropping amongst other issues, speculative assets are not usually as good as productive assets etc
That is perhaps too niche for youtube, but I've started up a newsletter where I'll be digging into more technical details like this. To answer your questions, the main tools in the tool kit once you've done pensions and ISA is VCTs, EIS and Offshore bonds
Serious question: why do we have so much wealth tide up in our homes? Why are our homes used a savings vechicles? Does this benefit the individual?
It doesn't; everyone would be better off if we had lower housing costs. But lack of supply due to planning rules and the UK's obsession with BTL property (from locals and foreigners) means that prices have gone through the roof.
I always thought that, at some point, house price growth must be limited by wage growth. That there would be a point at which costs as a % of take-home pay would get unsustainable. But that does not seem to have happened.
In the 1940s, the average house was 4x the average wage. But now it's 8x the average.
One possible explanation for this resilience is that many more women are now in the workforce, and dual-income families can afford much higher housing costs.
So, for dual-income families, housing costs may not be much more expensive than in the 1940s.
I'm not an economist, so I have no idea, but it's a theory I've heard.
@@JamesShack Appreciate the reply, and like the theory of female workforce increase... but where is the future growth for that concept... other than the fact that assumed ever-improving economic efficiency is now working on two family members rather than one...?
Isn't a big reason behind the detachment of income to house prices due to the reliance on (often older) family members to fund such purchases? Although that would be hard to model (for me at least), I could see a potential for both the increased lifespan (and income-earning years) of the population as a whole, fueling a greater leaning toward such inter-family reliance over time. Such structure is surely both precarious and also promotes a declining population (a numbers game favouring more rich donor figures - to less 'in need' receiver first time buyer-type people) ...?
I am asking too many questions, but is the restriction of planning rules grounded in safety / environmental concerns, or a wealth protection measure from those with power? One could also form a similar question regarding 'BTL obsession' and 'appeasing' rules/conditions, but I believe a psychological component, namely concerning how a property is a tangible, physical asset plays some part here in human biases at play.
At 5 mins in i can tell i AM behind XD
im 40, only held min wage jobs, been disabled 10yrs and bar N.I. never contributed to a pension of any kind. I can be proud that im not in debt and the current cost of living is just about tolerable, but ive never been able to save long term, iv always had to sacrifice some lower priority essential (wearing clothes with holes in them etc) and i am lucky in that im a low maintenance type of woman, with no social life. i.e. the pandemic lockdowns did not change my life in any aspect (albeit due to my disability)
I stopped work before the 8% pension contributions started, but i believe i am getting N.I. credits while on ESA with extra enhancement
Been working now for 6 years (aged 24 now) and for over 2 years I have had to opt out of paying my pension because the 8% pension payment was nearly £200 a month, money I need more now than I will in 45 years time, this video shows me that was a bad decision, that people who can’t afford to pay into a pension right now aren’t doing well enough… be careful about the advice you give. I came to this video to hopefully find acceptance with my financial situation, not to be further discouraged.
People who are coming to this video for help are likely having to make every penny count, saying things like “you don’t even notice your pension coming out” or “saving hundreds of pound a year” which is a massive amount for some people, is really ignorant.
I think it's mainly just to give people guidance on what is the ideal situation. If you can't meet those requirements currently, you'll likely have to continue working later in life. I don't think any offense is meant by any of these videos.
I like the music addition - a 'sit on the couch' vibe, and ill tell you everything's gonna be fine !
Thanks for doing these videos. They haven't changed my strategy as I was basically adopting the approach you recommend anyway. However especially when things get volatile, it is really helpful to be able to listen to rational and positive reinforcement of the 'stay the (diversified) course' principle.
I don’t agree with the mortgage repayment position but the rest of the points are reassuring. Thank you.
Insurance for illness or death is an unsaid item.. including drafting wills and LPOA
Thanks James, I DO feel a lot happier about my speed on the motorway - and not comparing it to others!
After all, I’m driving my choice of car and might be being overtaken by a sports car… their journey vs my own! 😊
I wish I could find a Life Insurance company that I could speak to without the hard sell. I responded to an ad last year, and was bombarded with calls, and when I finally spoke to them, they hung up on me when I said I need time to think about their quote. Seems no-one is allowed to recommend anyone these days, so I'm now stuck. These insurance companies are all the same.
Hi James excellent video thank-you, one issue I have with down sizing is the change in the property market, unfortunately in my area buying decent retirement style property
doesn’t really leave that much money in the pot even when you sell your own larger property. Yes I could possibly buy a cheaper property away from my current area but that’s not too appealing when you have friends and family nearby and love the area you live in.
Good vid, sometimes we need to slap ourselves around the chops as much as pat ourselves on the back. Taking stock and recognising progress and achievements is important.
Young people, please please please save as much as you can afford to. I semi-retired a few years ago and am now in my 60s. I could kick myself for not contributing more to my retirement when I was in my prime earning years. I know it's cliche, but time does fly. Before you know it, you'll be my age, wanting to fully retire but unable to because you can't quite make ends meet on your pension. PLEASE save, save, save!
Wise words
Given how likely it is that the state pension will soon be seriously eroded in value and pushed several years further away in terms of qualifying age I'd say millions of people are now much further behind than they'd planned for.
ᴛʜᴀɴᴋs ғᴏʀ ʏᴏᴜʀ sᴜᴘᴘᴏʀᴛ ғᴏʀ ʙᴇɴᴇғɪᴛᴀʙʟᴇ ᴅᴇᴛᴀɪʟs ᴏɴ sᴏᴍᴇᴛʜɪɴɢ ʙɪɢ ᴀɴᴅ ᴘʀᴏғɪᴛᴀʙʟᴇ. ᴡʜᴀᴛsᴀᴘ admin above 👆
James, I'm not sure if you'll read this, but I feel like you've gone inside my head today and filmed this video just for me! I've been struggling for a while balancing the thoughts of 'am I doing enough', with 'I don't know what more I can do?!'. This has confirmed I'm on the right trajectory. My life is well insured, I have a teachers pension which I've been paying 11% into for 14 years (now 37), and I have the home I need for my family to safely and comfortably grow in. Yes, I have some short term debt I want to get rid of ASAP, but it is nothing that isn't insurmountable with since careful budgeting. Sometimes you need a telling off by Dave Ramsay, but sometimes it's good to have a gentle pat on the back and 'keep going'. Thanks 🙏
Thank you from the bottom of my heart. I think you just made my stress levels come down.
Damien just did the same topic. Good work.
Still looking for original content 👀
So what 😮🎉🎉
My family HAS NOT been living paycheck to paycheck since 2016. That is good to me. I remember the days of living check cashing shop to check cashing shop.
Great video james 👍 never thought about the downsizing when older etc a video on best place to invest be great, vanguard lifestratergy or s&p 500 etc, not sure if there is a vanguard s&p 500 isa ?
Thanks dean
Sometimes it is better to think you are not doing so good, gives you extra motivation to put more in whether that is in your pension or overpaying the mortgage.
But can be reassuring knowing you are doing ok and better than you think.
I love your videos James, great content delivered brilliantly! Thank you!
Damien Finance smiled when he saw this video
Great video James. I’m 54 and wanted to be retired by now. Unfortunately I’ve gotta continued working for the next 10 years. So yeah I’m behind.
On the other hand you are in a position where you are 54 and can continue to work. A position not everyone your age finds themselfes in. So you are ahead depending on who you compare yourself with. The ability to be able to work and create wealth is only available to a small percentage of the worlds total population. It’s all relative.
@@nunuknowstheway6710 The ability to create wealth is available to an awful lot of people. It's not how much you have but what you do with a little on a consistent regular basis - there are plenty of options and information is readily available. Think "compound interest".
Nobody behind. Only possibility we exist is slim to zero. Just enjoy life!
Thank you Mr Shack, I needed this video 🙏
Nice video James. Solid message! 👍Point 3 is massive and under-appreciated.
Indeed, unfortunately it's only those that have already experienced losses that to understand this! But should be the first part of any financial plan, as you know!
Perspective = Everything
And, it's not just the capital tied up in a newly empty house that is costing you money. It's the damn heating bill as well. We are fully intending not just to downsize, but to also invest in a Passiv house to largely eliminate heating costs in retirement. Two fingers to the cost of gas in other words!
Expectations …my mum used to say that expectations are resentment on the making …
So much of a mental battle in ones own head.
I am happy with where I am, but always have the doubt that my future earnings will drop.
52 yo, been employed at the same place for 30 years, but still feel unsecure about my ability to carry on paying into pensions and save at the same rate, mad I know.
Thank you for sharing. Is this because if job insecurity?
@@JamesShack Engineering in the UK so always up and down. We had several years of no profit then the MD was ousted so we are now on a better footing than before and into a healthy profit. I think it's more my own insecurities !
Can I give you a hug? Thank you for this video!
I was well ahead of the game no debt lovely cars etc but covid came destroyed my business then i fell washing my outside windows breaking legs hand elbows achillies badly damaged so have been using my savings to finance my every day living. Now am £476 overdrawn in bank cars were sold which helped me help my son buy his first house but leaving me broke. Am 61 now and a few months away from full recovery
Great advice - focus on yourself as comparing to others is a great way to be miserable
Fantastic video James, even if you are aware of this just reminding yourself allows you to take stock and make better decisions - thanks for making this!
Thanks James, certainly helped me put things into context.
I live in a modest house in Australia which I will own in 3 years. I drive a newish car which I paid cash for. Now the bad - I am mid fifties and wish I knew this information in my twenties. I have about ten years left to work and only have $228 000 In superannuation. Hopefully I will be able to increase it once I am free of house payments.
Consistently great videos that provide a pragmatic approach to wealth building and take away a lot of the fear of retiring.
My fiance died in an accident 3 years ago. We had no life insurance, and I had to start freelance working. It's my biggest regret as I'm in rental at 65. I'm now motivated to create a six figure income, but if we'd had life insurance, I would have had a financial safety net.
Expectations,,I’m going spongy I can keep working ,,,but will have enough money to pay for food heat etc then I can enjoy my life ,,things that don’t cost anything ie countryside etc it’s really just what I always wanted
Still, at least you're not worried about having over £93k in your pension fund alone by 40 😂 The figures this kid kicks around are absurd 🤣
@@richardhammer187 yes ,true
Thanks James. I feel much better 😅
Meanwhile I’m 41 and still can’t afford to buy a house let alone afford to have a child. Stuck in renting a basement apartment. Unfortunately, this work isn’t designed for people with health issues that prevent them from working full time
the Psychology part was spot-on
In general raises at or above 3% are quite rare. With inflation some raises have been higher than that, but it takes more of that to buy things that are needed such as utilities, medical care, insurance, and of course food. My home is paid off and is of humble size, has been for years, i have a 401K and IRA, I invest in through Robinhood. I am 50. I feel behind and i do not want to sell my home to retire if i am so blessed to live to that age.
This is a really great video. Thanks James!
Imitation is the greatest form of flattery!
I started investing in stocks in the mid 90’s. I have Google, Amazon and Apple stock from then. I retired at 39 and am currently in my mid 50s. Besides my net worth of 2.2m, I have 2 pensions paying around 4K a month another 1,800 a month in 10 years from social security. Zero debt. My kids college is already paid for (529 plans in the U.S.). $1m life insurance for my spouse and I. Despite all of that, I still wonder at times if it’s enough for many of the reasons outlined here. I know I should be fine but still…
The audio is reverberating. I guess it's the room. 👍
I don't have what you would call traditional wealth, but I am heavily invested in body art and have spent most of my discretionary income adding ink. It's sort of like a 401K, but with some of the leading tattoo artists not some Wall Street hedge fund manager.
This reminds me of the quote from Pete Mathews book ‘you should have some sort of insurance to protect against disaster’
Are you going to be writing a book anytime soon James? Because I’d sure buy it
Haha I don't have one in the pipelines, but who knows in the future! Yes, Pete, as a fellow financial planner, will always put insurance before all else!
Can't wait to have my over priced house taken off me by the state to pay for care costs 😅. But fair play making a positive video. Very much needed for many and a nice change to the usual doom and gloom (even if it is a little rose tinted!).
Went and paid up my pension, I had 34 full years and 2011-2012 I owed £230 or there abouts. I rang the pensions people and ended up having to pay more than £3000, so payed about 38 full years 🤷🏽♀️I was already feeling ripped off, when I started work I was told that it’s good that I was paying for University education for others because when I have children they will have free education too……nope, my son is now in debt. I was told I would get my pension at age 60, wrong, hit 60 a few years ago…..still waiting. I’m going to make sure I live to me 380yrs old to get my moneys worth 😂😎👍🏽
Comparison is the thief of joy!
Needed to hear this today. Thanks James 🙂
Really helpful video. I needed to see this right now
I'm glad this has come at a good time for you!
The motion graphics are top notch!
James! Loving all the content, definitely a highlight when a new video comes up.
Can you consider doing a video on cashflow planning whilst in retirement? I.e., strategies to top up cash buffer after a market down turn?
Thank you for all this information.
James thak you. This is a really positive video.
After being employed in the private sector all my life I know I am way behind because we are so easily disposed of!
This is exactly what I needed to know
I'm gald to hear this has helped.
Like many at 50 my employer didn't want me anymore and neither did prospective employers which left my previously good financial habits in tatters.
#1 doesnt feel so good when your pension has -10% growth but im still in there
One thing i’d advise younger viewers to be careful about is to keep an eye on the pension funds, especially ones run by companies themselves. Over the last twenty five years i’ve seen two such pension funds (i’ve been involved in ) fold , and have nothing to show for those funds. As a result my overall pension fund at 55 is only about a third of its possible value.
Thanks for sharing. Were those defined benefit or defined contribution schemes?
Great video man! Always love how you break stuff down.
There's lots of things people don't realise, because most people don't think very far ahead.
On the mortgage front, your payments become cheaper over time due to inflation, your debt devalues as well in addition to capital growth and compounding down payments.
When your house is fully paid off, you can also set up income equity release. So you can fix an agreed total drawdown at a fixed rate, but instead of taking a lump sum and paying a ton of interest whether you spend the money or not, you can take a small monthly payment. And you are only charged interest on those payments as they acrue.
You could have a private pension in addition to state pension, plus a monthly income from your property.
ᴛʜᴀɴᴋs ғᴏʀ ʏᴏᴜʀ sᴜᴘᴘᴏʀᴛ ғᴏʀ ʙᴇɴᴇғɪᴛᴀʙʟᴇ ᴅᴇᴛᴀɪʟs ᴏɴ sᴏᴍᴇᴛʜɪɴɢ ʙɪɢ ᴀɴᴅ ᴘʀᴏғɪᴛᴀʙʟᴇ. ᴡʜᴀᴛsᴀᴘ admin above 👆
You are right, the equity release market now has many more solutions that are at more competitive rates. They're still higher than a normal mortgage but much better than they used to be.
@@JamesShack Someone know got a lifetime fixed rate at 2% last summer. Not sure what they are now but they were not far off typical rates.
Another great video, James, with some important messages that all investors should take note of. One minor observation - you used growth rate of 7% in your example - seems a little ambitious going forward?
Average growth rate of the S&P 500 since the 1950s is over 10%. Some would say 7% is pessimistic.
Hi James, your videos are great, so informative and I'm certainly finding them helpful. I was wondering if you could do one on people that have final salary pensions, and how they could find a way to retire early given the pension penalties for doing so. There are around 10 million of us in final salary schemes but very little advice, other than to stay in the scheme. Cheers. Happy to share my circumstances as a test case if that would help. Marc
AVC's ???
Hi Marc, defined benefit schemes are a bit of a regulatory minefield. Even general information about transfers is highly regulated. The FCA thinks that most people should stay in them, but lots of people want out. I’m not regulated to give DB transfer advice, but even if I was I probably would not be allowed to talk about it on TH-cam. It’s difficult because the FCA insists you need advice, but no one wants to give it because of the regulatory risks.
@James Shack are AVC's a good idea with a DB pension to help boost it to retire earlier?
fantastic i thought i would feel richer, now i feel even more like a peasant. i have debt and little assets...
How do you add pension to net worth? I think the 4% rule works good for this, so a $40,000/year pension is equivalent to $1,000,000 in retirement savings. Am I thinking correctly?
Hi James, many thanks for this. Do you recommend equity release for those of us without children? We have been frugal with the house (in terms of size) but its worth 3x what we paid. However, also heard the horror stories! Thinking this might help as we are moving into later retirement (currently 50). Many thanks.
That or lifetime mortgages can be effective tools in the right situations.
Going off on a tangent here. Can you suggest a company that can provide various trusts, i.e. like a living trust, to protect various assets?
Most solicitors can set them up for you.
I'm always confused about Pensions and how they work/advantages. Do you have a video explaining how they can work for the self employed at all?
What if you're not able to downsize due to the shortage in affordable housing. These are also the houses that are most in demand by young families.
I genuinely thought someone was outside your window behind the camera when talking about looking ahead hahahahhahah
I actually feel like I'm further ahead then I should be, no way I should be making as much as I do. Yeah I'm never going to be able to retire.
The fifties can be a time for accumulating but can also be a bit of a snipers alley when it comes to redundancy (happened to my wife at 56, she found work but was never happy and took her small works pension this year at 60) or disability (happened to me, issue undiagnosed for years., Still working but not for much longer , 54).
Great video James
So much truth in what you say. I retired early at 56 after a 38 year career and am fortunate to have a very good pension. My main issue is when the stock market takes a beating. That's when I begin to feel I'm not doing well. Its then that I begin to feel I can't do the things I want to do as I have to save money and forgetting how investments work. this a common and what advise would you have please?
Hi James. As always a great video. I have a quick question...I'm about 5 years from retirement and spend quite a bit of my time planning for this event. I love watching your videos and enjoy managing my own pension/ISA investments. However, I would like to pay a professional to look at what I have in place and offer advice on any improvements to what I have. What I'm not interested in, is paying a financial advisor/planner to manage my portfolio going forward and paying them a % of it's value - I'm looking for a (mobile phone analogy) PAYG rather than a monthly contract. Do you offer such a service or do all advisors/planners look to manage for a portfolio % contract? Hope that makes sense 😁👍
I don’t. But try looking on Vouchedfor.co.Uk for an adviser that works on an hourly basis.
I’ve paid off my mortgage. I have a deferred pension from a local authority which I paid from 21 for 30 years. I’m now 58 years old and my pension is worthless. My children visit we require the 2 extra bedrooms. I can’t even think about retirement for another 10 years. I even paid into an AVC. So I’m definitely not doing Great.
Hi Adrian. I imagine that's a final salary pension, what's income is it set to pay out? It seems strange that it would be worthless?
@@JamesShack I think he meant from 21 YO for 30 years to 51 YO
@@JamesShack I paid from 21 to 51 30 years and at the moment I will receive around £10000
@@CrabappleKing we’ll spotted. Ty.
@@JamesShack these are the amazing Gold Plated pensions everyone keeps going on about and when I took Redundancy I was on 30K a year
Another great video James, thanks! However, for many of us whom couldn't enter into the house property club, and have only a very limited capital saved, what are the chances to retire with enough? There must be another way that is not the typical house property one... Thanks!
I think it’s fascinating that a national retirement program in the UK, like a pension is invested in the stock market because in America, we have Social Security, which is essentially the same thing however, people are very anti-investing those funds in the stock market, so I guess they’re in treasury bonds or something
He’s talking about private pension schemes being invested, not the national state pension which is much the same as your social security pension.
Thanks to the obsession with social media, we are made to feel that we are behind on everything, everyone has better cars, vacations, kids, lives, Blah blah blah. When I grew up in the 1960s we were doing about as well as everyone else in our community. Stop trying to impress people you don’t even like!
james what about someone who’s already retired without a pension? thank you
ᴛʜᴀɴᴋs ғᴏʀ ʏᴏᴜʀ sᴜᴘᴘᴏʀᴛ ғᴏʀ ʙᴇɴᴇғɪᴛᴀʙʟᴇ ᴅᴇᴛᴀɪʟs ᴏɴ sᴏᴍᴇᴛʜɪɴɢ ʙɪɢ ᴀɴᴅ ᴘʀᴏғɪᴛᴀʙʟᴇ. ᴡʜᴀᴛsᴀᴘ admin above 👆
I have a pension thank God. It is going to be very important.
Great real world advice