Hi Neil, I like the backdrop and delivery. You are a natural! As a former banker turned finance professor, I would add ego, self esteem, and other emotional factors to the retirement equation. People can budget and try to change their life habits, but it seems to me many have underlying "needs" that are driven by psychology. I will offer the example of the expensive car - in the US the most widely sold vehicle is the F-150 pickup truck (I could pick on BMW owners etc too) $40K to $120K - yet I suspect that many if not most "owners" (renters!) cannot afford them when you factor in their need to save for retirement. The difference in cost between a Toyota Corolla and such a truck is absolutely massive especially when you factor in the increase in insurance cost, maintenance (tires alone cost a fortune), and gas. What people overpay for vehicles (and other consumables) could be invested in an index fund to easily assure early retirement. So if a reader is guilty here, ask why do I need this? Am I trying to impress my neighbors or my drinking pals? And really are they worth impressing? Or am I telling myself I work hard therefore I deserve (even if I can't afford)? Am I trying to replace something that is missing in my life by way of an object - lack of purpose, hatred of my job, bad marriage - psychology is obviously complex. So I would say: confront these "demons" as you go through the budget process. If you feel good about yourself, you won't need the "admiration" of others! And budgeting will become a lot easier... Cheers, Rod from Honolulu
This a useful introduction to retirement planning. I have planned my retirement in detail using Excel. There are some points I would like to expand on, several of which have been mentioned in other comments. 1. Income tax is still payable in retirement, this must be added to the calculated budget; 2. Efficient tax planning is vital to minimise the effects of point 1; 3. The sustainability of your pension fund is dependant on the difference between returns and inflation. Just 1% either way makes a major diference over 30 years; 4. The state pension will provide a portion of your budget when you reach that age; 5. Pension benefits may be available for people with little more than the state pension to live on; 6. The 4% rule aims to maintain your fund at a constant level. Drawing down the value of the fund over 30 years will provide a larger income; 7. If you are fortunate to receive any substantial inheritance this will reduce the stress on your fund. 8. If you have a sizeable fund, consider inheritance tax. You may as well increase your budget to treat yourself and family and friends rather than leave it to the tax man.
There was a new version of the Prisoner, 2009 staring Jim Caviezel and Sir McKellan, originally shown on ITV. I'm also off to Portmerion in August, hoping the campsite is nice!
I’m 25 just bought a 90k 3 bedroom Doer upper house, no savings anymore and trying to start again with a wife that doesn’t work atm, got 2 kids and a job that pays average 2,400 a month and I’m watching this lol
Good luck to you sir. I’ve been there. Work hard, learn to invest and keep learning, earn as much and keep as much as you can but strike a balance and enjoy your family along the way. You can do it 👍
@ Thanks man! Really appreciate it! Just been learning how to do Stocks and shares through Trading 212 since this comment! Journey starts payday Thursday man!! So the investing journey starts now! 💪😃
T212 is good for the ISA (I have one) but make sure you put what you can into your pension too. There are various advantages /pros & cons of each but one thing is that you can't touch the pension until you get to 55 (current rules) so you won't be tempted to withdraw any. Good luck, you're at the right age to be building a pot, but I know there are many demands on a young family that make that difficult.
I never saved or invested for retirement, nor did I own assets like property or a car so I found out exactly how much I would get in Social Security benefits plus a small pension at age 62. Then I created my budget and got busy cutting every expense so I could pay off all my debt. I use the "rule of thirds" - 1/3 goes to rent and utilities, 1/3 to food, transport, insurance, personal care and 1/3 to savings. Fast forward a few years and it's working great! Staying debt-free and having an emergency fund is the solution.
Factor in spending the pot down to zero by a certain date (I for one don't want to die rich). Also spend more in earlier years as spending is almost certain to decline with age.
Exactly, I agree with that. I don’t need to die with all the money for family (do not have children or wife 😂) and beside that there also go a big part to Uncle Sam ( in the Netherlands) So I only need to have enough savings till 67 and after that I got my gouvernement + work built pension.
Not enough people really dig into this, one of your earlier videos from some time back got me into investigating my current pensions, investment etc, i spent quite a bit of time on it, was quite slow at first, but in the end got myself to a point where i am feeling way more comfortable in knowing what i have, knowing what to do if markets go bad, i have made changes in portfolios in order to save costs.
I’m 55 from Southeastern Ohio but worked overseas all my life. I have savings of $1,000,000 and I'm ready for retirement, only concerned about the soaring inflation. Is this enough to retire comfortably, or do I need some sort of money management.
If i was in your shoes i'd consider financial advisory, you’re only 55. I think the average life expectancy in the US is 77.5 years, but many people live well into their 80s so that $1 million has to last you all of that and the unforeseen.
I agree. Based on personal experience working with a financįal advlsor, I currently have $2m a well-diversified portfolìo that has experienced exponential growth from when i started. It's not only about having money to invest in stõcks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
This is mind blowing! As a young adult inheriting about $500k and new to stock investing, I'd greatly appreciate it if you could direct me to your advisor. I can't afford to make costly mistakes.
She goes by "Melissa Elise Robinson" I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Interesting, but not really applicable to the average working person. As a single parent I couldn’t afford big retirement savings, I could hardly afford a cheap caravan for a week off season. I did put a very small amount away every month for retirement though. We cut our cloth to suit our circumstances, I’m five years retired now, I have my state pension, a small work pension, and my savings which I increased over the years as I could afford to. I have more than I need to fund my retirement, but that’s the retirement I planned for which doesn’t include multiple holidays, I would soon get bored of that. My advice would be to just start small and save what you can, increasing as you can, but don’t forget to enjoy life now, not everyone makes it to retirement.
Great video, Neil, but you need to do another video on Portmerion for those who don’t know about it. My husband and I were able to stay there back in 1989 when we were stationed in Germany in the US Army.
One way to accurately estimate variable costs is to write down what you spent on each expense for the last 12 months and then divide by 12. That way, you are accounting for seasonality, inflation, etc...
Boldin software is a VERY beneficial step! It lays it all out there for you. Input budget numbers, assets, ages, expected Social Security takings, pensions, etc and it charts out the Monte Carlo simulations so it becomes very evident where you stand in average, down and up markets. Really cool vids, mate. Thank you from across the pond in New Mexico, USA!
Budgeting is so important. I set myself a budget based on what I will get as pension in a few years time and - as a test - currently try to live on this now for several months. It showed me, that I need more because prices went up and there are always extra costs coming up (like for repairs, big birthdays, …) and then I want to travel, too. Means extra budget for that on top. From there I calculated based on the 4% rule, but with 3-3.5 % instead. Finance experts in Germany recommend this to be on the safer side. The Trinity study calculated only for 30 years, but we have to keep in mind that we are getting older. New calculations showed that 4% is a bit too much, especially if you want to retire early.
O. M. G. !!! I cannot believe the backdrop you chose for this video. And I had no idea it was a place you could visit. Could you please provide particulars about where it is? My ALL TIME favorite program. I have it on DVD. Also, FYI, you can find most of the episodes on TH-cam. Also, so happy you’re back. Another great video.
Good video with sensible advice as usual. We did a detailed record of our spending patterns for a full year and used that as a baseline for retirement planning. I think people also have to be brutally honest on their spending patterns and understand if they are extravagant, frugal or middle of the road. This ability to be honest with yourself is key. Figuring out your location and therefore living costs as you move through the three phases of retirement is important. If you plan on being located in one country for the most part it makes the calculation easier albeit residential care costs can vary/increase a lot regardless of location.
4% rule + basic uk tax 20% use the following number rule: Monthly spend need x 375 = pot size required when paying 20% tax. Great spread sheet tools out there available on youtube: James Shack, Edmund Bailey, Ian Shadrack. Take a look
@@adm58 State pension in the UK is a Benefit , not a right - it is NOT guaranteed in the UK. regardless of how much NI you nave paid in over 35 years. Currently, you do get it - but it isn't necessarily going to be there for folk retiring in 10-15 years. If - big if, but is is being whispered in June 2024 - the UK administration adopts the Australian means-tested system, you may find you are not eligible for the state pension at all if your assets or income exceeds a certain total. It's quite concerning.
@@East_Anglian yes, I understand the rules can change over time. For the present though, the rules are as they are. No one can take into account how the world will be decades in the future. It Looks likely that CBDCs may well be imposed, closely followed by totalitarian control of all our finances and spending. The world could be unrecognisable in 20 or 30 years.
Started a pension 35 yrs ago, scottish provident sold out some years back, and no bonuses added since. So worth very little now. New job 30 yrs ago, accountant said pensions waste of money. Convinced me to get 30 yr bond paying £100 a month. Received £56k, not exactly retirement money. Payed down debt, no mortgage for last 10years, just bought car with cash, will do me a long time. Age 60 still working, put 40% of salary into pension to avoid tax, mainly. Ill health has kicked in, cronic renal disease, on dialysis every other day, so can't really travel anymore, I have done alot of traveling, disapointed can't continue. Anyway working more for my head than money. No chance of transplant, although dr says I could live 25 to 30 years as no other health issues. Numbers; Pensio 400k Savings 200k Wife pension 200k Budget 3 to 3.5k per month. Interested in what others woukd do? Thanks for video Peter
Excellent video, so nice to see you guys back posting videos again. Those numbers worry me though… the overwhelming majority of people won’t get any where near having a £ 1/2 million pension pot… let alone £1m. I’m also not convinced about this “30 years of retirement”thing either… sure when you first retire you’ll be off spending and enjoying yourself but fast forward to when you’re in your mid 70’s your lifestyle is completely different and you’re not spending that much. I don’t know, I’m clearly no expert but it worries me when pension companies start scaremongering about how much you need in retirement .
Totally agree Dave. I just added my post saying something very similar. I have been appreciative of the channel but this and some other videos have felt unrelatable for me. I think this is very hard to relate to and quite unsettling. It even came across as a bit self-congratulatory. The evidence from the office of national statistics shows that the median (middle of range) retirement fund at 64yrs is £107k on top of state pension. There is significant evidence that people with moderate funds such as £250,000 can live a fulfilling retirement. For a lot of the audience the assumptions of the 4 percent rule are totally out of reach. Neil has mentioned the 4% rule in passing before and always said he would come back to it. Well we have it here. But this is flawed financial advice. The fact that you are expressing worry here confirms my evaluation. Well done Neil and Sarah if you actually are millionaires. For most people owning your own home and retiring with that sort of money is totally out of reach. Honestly something about the patronizing style was a source of entertainment but I actually find the mistakes that they have made as more interesting and bring me back..but this one ended with Neil encouraging us to get lost. Welcome back Neil.
but also the average person won’t retire early, they’ll likely retire at state pension age so will get £12k pension, and as you say the average pension pot is £100k so that could give £4K income using the 4% rule. If you’re a couple then you’d be getting £12+4 x2 so £32k, which isn’t massively off the £40k Neil discusses in the video. Ultimately if you want to do extraordinary things like retire early, you need to do extraordinary things like understand your finances and put significantly more than the average into your pension.
@@victoriavicious8815 Ok right. So we are agreed then. It is about doing "extraordinary things". But hold on... much of this Boomer "success" was funded by an era of massive house price rises. The average UK house price has risen from £1,884 in 1953 to a staggering £260,791 in 2024. So if you bought a house, you had a defined benefits pension. And you made it. Well done. But nothing extraordinary about that. How would younger people achieve the same success now if they are less able to even save for a deposit? Quite a lot of Boomer "extraordinary" wealth will be passed on to heirs. And for the rest?
The video was an “example”. It began by saying your number will be different from my number. $4000 per month was an arbitrary number that equals $1M, convenient for calculating.
@@eloisepersson939 the video is entitled "Are you prepared?" and asserted 4% draw down increasing by inflation each year as the way to be prepared with an illustration of 25 x $40,000. These topics generate a lot of debate and controversy. The fact is that most people will never achieve anything like this level of wealth (indeed only around 1 in 10 retirees currently do so). The other controversy associated with this is the source of funds. Most boomers who owned property have enjoyed unprecedented house price inflation. The average house price in UK in 1983 was £27k and in 2023 was £283K; more than a 1000% increase and very much more in the South. The channel frequently states that they sold their house and so as for many this was the main source of wealth to fund the 2GoRoam lifestyle. Is that possible for people now? Absolutely not and many cannot afford to get on the property ladder. So how will they be prepared? Unless they start saving very early and benefit from compounding (probably in late teens and early 20s) they haven't got a hope.
Good video Neil. A very important figure that many people forget about....the Age Pension/Social Security. This goes a VERY long way towards the "$1MM" required. Also in some countries TAX is a big thing to figure in...fortunately for me, in Australia earnings and withdrawals from our Superannuation system attract 0% tax once retired. This makes a huge difference to the "$1MM" figure too.
Luckily I have some knowledge of Excel and have started bringing in the data rom my banking app and categorising it into 6 categories. These allow me to average the categories over a rolling 13 month period and see what I would need over a full year. Most people will have used the same banking app for a few years - so they should have the data available and some apps may already supply categories? I am also using the data to try and reduce spend in some areas (like groceries) as we are looking to retire in a couple of years and I want to slowly transition to a way of living as then trial it for 6 months to make sure the budget works for us.
Everyone has a different comfort level. I tend to be conservative with money. So, I told my husband I would only be comfortable retiring if our living expenses (minus medical care and big purchases like cars, etc) should be lower than our Social Security checks. We’re one year in and have lived on those checks here in Mexico. We’re living a comfortable but not luxury retirement. Of course we didn’t live a luxury lifestyle when we were still working either. If you’re living on your pension or other old timer checks, you have a lot of wiggle room when it comes to the size of your investments. Because you’re not drawing down. We took out only $4000 so far in a year. $3000 for a motorcycle and $1000 for an operation.
There is a remake of the prisoner with Jim Caveizel, Ruth Wilson and Ian McKellen made in 2009. It was shown on ITV from what I remember and was different to the original but good in it's own way.
Great content and thank you. I've been planning hard for the past couple of years with my own spreadsheet - I think I will be ready to retire in 18 months and should be fine - all based on a 3% return and still more than I'm living on now but a nice lump sum to eat at as well - look forward to the next one, thanks Nick
Oh Portmeirion - you lucky things. Such a super place. Have slides taken by late dad of the family visiting there around 1970/1. Have been again since many years later and it is such a beautiful setting.
Hello, Watching from Australia and I'm 26! (not quite 25 :P ) I have subscribed. I'm passionate about helping other people and getting them to think about their financial future and I can see the same genuine passion reflected in yourself! (I wish i had the confidence and experience to help others on a larger scale like yourself) You mentioned the 4% rule is a good place to start when looking at a 30 year retirement, however there is a better place to finish - so I am keen to take your thoughts! Unrelated, but curious; Q1) When looking at a 'FIRE' strategies and after doing some research it seems you can use the 3% rule similarly to the 4% when calculating retirement over a longer period ie. 40-50 years. Do you agree or have any thoughts? If inflation is 4%, we withdraw at 3% and our portfolio grows at 7% then it should in theory always keep up with inflation.. may last 40-50 years rather than 30. Q2), This is assuming its the same in Britain as Aus - you have a superannuation type fund that you as an individual and your employer contribute into as well as a govt backed age pension. Is the goal to utilise all of these on your retirement journey? While the age pension is at 67 currently (in Aus), that could easily change. Does this mean I should I disregard it? It's something I have always pretended is not going to be there... but it could change the trajectory of my retirement. Ensuring I have exhausted surplus assets acquired and am eligible for age pension. (under asset thresholds, therefore planning to be less rich at end of life but spend longer in retirement being able to start retirement earlier) Interested your thoughts? Thanks!
Nice video but £1m is out of reach of 90%+ of people i would imagine. Even £500k is tough to hit for a lot of people. A couple of things you didnt touch on is if you leave your money in the markets (perhaps low yield low risk bonds). That plus the idea of having a rainy day fund to cover you for 2-3 years in case of a market crash, would mean you can take more than 4%. There are other aspects such as i dont have children so i would actually plan to use up (most) of my money by a particular age and not need to protect the principal. Another aspect is that when people hit late 70s/early 80s i would imagine they’re less physically active and less gallivanting around on holidays etc. Obviously there are exceptions to this here and there. Plus if by some miracle you’re still semi healthy in your late 80s (but your pot is running low) couldnt you just sell some equity in your property? Plus you didnt account for the state pension in your figures. So the “500k” lifestyle that may well be perfectly fine for a lot of people can probably be done for a lot less.
Great video and thoughts, thanks for sharing. Having income in retirement is the secret to not running out of money. Of course 'exchanging time for money' (=working in a regular job) ) is out of question so having passive income or working minimally irregular hours, then we can have our cake and eat it. Some ideas: Putting money in government bonds, owning commercial property (on full maintenance and insurance), putting money in dividend growth securities, trading FOREX and short term trading cryptocurrencies
Not accurate to relate expenses with 5 kids; 3 in college and 2 in high school now, to my wife and I living by ourselves later. Big number now! Food alone. Now will not equal later.
Is the figure "25" living 25 years in retirement? Average life expectancy? If one retires early, say 55, 55+25 = age 80. Some people live much longer than that. Can you elaborate on what the "25" is? Thank you.
1:25 there was a remake of The Prisoner in 2009 starring Jim Caviezel and Ian McKellen, set in what looked like a desert, unfortunately it was 100% garbage.
Without sounding like a broken record 😅, its not rocket science. Go where your savings work hardest for you (Geo Arbitrage) . Earn and Save in developed country, retire in developing one. I retired 10 years early, 2.5k a month or less in SE Asia can live like a king..
I follow both of you as I would some far away friends with their imperfect dreams and lives trying to make it all work for the best. I learn and enjoy with your tribulations and it motivates me to follow your path when my time arrives. I am still enjoying how you were going to spend a year in Thailand doing exercise (LOL) or discovering Greece and Turkey the hard way! Your explanations of how you finance it, is a great addition! Keep enjoying and we hope to meet you one day!
@@richiemcb the video is misleading and at points felt like scaremongering. One critical piece of information relates to state pension income. Reviewing this video alone would scare most people into believing they need £1M to retire and if they are not near that, then they are in trouble. However most people are 1/10th of the level he is presenting - and yes sure it was 'only an example' but the example chosen was totally out of the reach of most people (see below). Do we assume they have this much in their fund based on selling their house? It also completely failed to mention state pension. For example with 30 years of NICs you can get just under £10,000 a year of state pension and with a change in Government the triple lock looks safe for the next few years at least. This will reduce the $40,000 a year expense requirement he used to illustrate by 25% Also he says that most people watching will be near or at retirement age so how can they aspire to the level of fund he actually said "you will need to retire". Fewer than 10% of people actually retire with $1M (in USA). The numbers are lower in UK - the median retirement fund is £107,300 at age 64. The evidence shows that where people have a moderate fund plus state pension they can lead a happy and comfortable life. Of far more relevance for most people is how can they earn some extra funds into retirement to supplement the cost of living. It came across as mansplaining - "our goal is world travel - what's yours?". Most people's goal is having some simple pleasures in addition to living their life. Does it all come down to the affordability of Netflix? I think we would be more appreciative of content which was real - for instance they made a huge investment in a RV (often cited as massive money pit for retirees) and how is that going? Are they going to sell it? They are presenting themselves as fairly rich early retirees. They sold their house and are following the 4% rule. But... a lot of narrative is saying 4% is too high a withdrawal rate and could lead to failure (running out of money). Please do not present the 4% rule as a known fact (as doing so constitutes financial advice). It is based on fund performance in the 1990s. Their YT channel is intended to be a source of income. I think a lot of retirees would find this inaccessible and hard to relate to. Really not sure who the target audience here is.
@@daydreamer4902The video was not misleading. He was just using 40K as a round number. Personally if I retire early, I would probably withdraw 3% from my portfolio and keep a 3 year cash emergency fund.
@@daydreamer4902what’s interesting is an ordinary relatable bloke who’s put a lot of effort into researching for himself how to optimise his life. It’s the process not the detail that’s being ‘modelled’ here. Yes some of his ideas are a bit variable regarding application but it’s how he’s demonstrating how to start thinking about it that’s useful.
My hubby taught himself over a period of 5 years prior to retirement how to self manage our SIP investments in shares. He read the Economist and the Financial Times on Thursdays in particular plus the Business and Money sections of the weekend Times newspapers. He leant what to do, and since retiring has beaten many of the top Fund Managers in terms of dividends income. He was an Engineer- and loves spreadsheets. It saves us 1-2% in management fees which makes a huge difference. If you want a 4% share dividend income from your SIP pot you actually really need to earn 6% so you can give your fund manager 1-2%.
Hi Neil, I like the backdrop and delivery. You are a natural! As a former banker turned finance professor, I would add ego, self esteem, and other emotional factors to the retirement equation. People can budget and try to change their life habits, but it seems to me many have underlying "needs" that are driven by psychology. I will offer the example of the expensive car - in the US the most widely sold vehicle is the F-150 pickup truck (I could pick on BMW owners etc too) $40K to $120K - yet I suspect that many if not most "owners" (renters!) cannot afford them when you factor in their need to save for retirement. The difference in cost between a Toyota Corolla and such a truck is absolutely massive especially when you factor in the increase in insurance cost, maintenance (tires alone cost a fortune), and gas. What people overpay for vehicles (and other consumables) could be invested in an index fund to easily assure early retirement. So if a reader is guilty here, ask why do I need this? Am I trying to impress my neighbors or my drinking pals? And really are they worth impressing? Or am I telling myself I work hard therefore I deserve (even if I can't afford)? Am I trying to replace something that is missing in my life by way of an object - lack of purpose, hatred of my job, bad marriage - psychology is obviously complex. So I would say: confront these "demons" as you go through the budget process. If you feel good about yourself, you won't need the "admiration" of others! And budgeting will become a lot easier...
Cheers, Rod from Honolulu
I so agree! Kevin from Canada
Agreed. Jim from UK
100% agree from UK
Totally agree Rod. You nailed it!
Excellent thought process Rod. 👍🏻. My neighbour has 2 porches and I’ve yet to see him drive both at the same time!!
This a useful introduction to retirement planning. I have planned my retirement in detail using Excel. There are some points I would like to expand on, several of which have been mentioned in other comments.
1. Income tax is still payable in retirement, this must be added to the calculated budget;
2. Efficient tax planning is vital to minimise the effects of point 1;
3. The sustainability of your pension fund is dependant on the difference between returns and inflation. Just 1% either way makes a major diference over 30 years;
4. The state pension will provide a portion of your budget when you reach that age;
5. Pension benefits may be available for people with little more than the state pension to live on;
6. The 4% rule aims to maintain your fund at a constant level. Drawing down the value of the fund over 30 years will provide a larger income;
7. If you are fortunate to receive any substantial inheritance this will reduce the stress on your fund.
8. If you have a sizeable fund, consider inheritance tax. You may as well increase your budget to treat yourself and family and friends rather than leave it to the tax man.
There was a new version of the Prisoner, 2009 staring Jim Caviezel and Sir McKellan, originally shown on ITV. I'm also off to Portmerion in August, hoping the campsite is nice!
I’m 25 just bought a 90k 3 bedroom Doer upper house, no savings anymore and trying to start again with a wife that doesn’t work atm, got 2 kids and a job that pays average 2,400 a month and I’m watching this lol
Good luck to you sir. I’ve been there. Work hard, learn to invest and keep learning, earn as much and keep as much as you can but strike a balance and enjoy your family along the way. You can do it 👍
@ Thanks man! Really appreciate it! Just been learning how to do Stocks and shares through Trading 212 since this comment! Journey starts payday Thursday man!! So the investing journey starts now! 💪😃
T212 is good for the ISA (I have one) but make sure you put what you can into your pension too. There are various advantages /pros & cons of each but one thing is that you can't touch the pension until you get to 55 (current rules) so you won't be tempted to withdraw any.
Good luck, you're at the right age to be building a pot, but I know there are many demands on a young family that make that difficult.
I never saved or invested for retirement, nor did I own assets like property or a car so I found out exactly how much I would get in Social Security benefits plus a small pension at age 62. Then I created my budget and got busy cutting every expense so I could pay off all my debt. I use the "rule of thirds" - 1/3 goes to rent and utilities, 1/3 to food, transport, insurance, personal care and 1/3 to savings. Fast forward a few years and it's working great! Staying debt-free and having an emergency fund is the solution.
Smart!!
Feed of the state was your answer by the sounds of it 😢
This 4% rule winds me up. This assumes you never want to touch your million pounds. This keeps people in work much longer than they need to be.
Factor in spending the pot down to zero by a certain date (I for one don't want to die rich). Also spend more in earlier years as spending is almost certain to decline with age.
Exactly, I agree with that. I don’t need to die with all the money for family (do not have children or wife 😂) and beside that there also go a big part to Uncle Sam ( in the Netherlands)
So I only need to have enough savings till 67 and after that I got my gouvernement + work built pension.
Your second sentence is incorrect.
@@jaiden033???
@@jaiden033 yawn
Not enough people really dig into this, one of your earlier videos from some time back got me into investigating my current pensions, investment etc, i spent quite a bit of time on it, was quite slow at first, but in the end got myself to a point where i am feeling way more comfortable in knowing what i have, knowing what to do if markets go bad, i have made changes in portfolios in order to save costs.
I’m 55 from Southeastern Ohio but worked overseas all my life. I have savings of $1,000,000 and I'm ready for retirement, only concerned about the soaring inflation. Is this enough to retire comfortably, or do I need some sort of money management.
Glad to hear from another buckeye! comfortable retirement depends on your lifestyle...
If i was in your shoes i'd consider financial advisory, you’re only 55. I think the average life expectancy in the US is 77.5 years, but many people live well into their 80s so that $1 million has to last you all of that and the unforeseen.
I agree. Based on personal experience working with a financįal advlsor, I currently have $2m a well-diversified portfolìo that has experienced exponential growth from when i started. It's not only about having money to invest in stõcks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
This is mind blowing! As a young adult inheriting about $500k and new to stock investing, I'd greatly appreciate it if you could direct me to your advisor. I can't afford to make costly mistakes.
She goes by "Melissa Elise Robinson" I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Interesting, but not really applicable to the average working person. As a single parent I couldn’t afford big retirement savings, I could hardly afford a cheap caravan for a week off season. I did put a very small amount away every month for retirement though. We cut our cloth to suit our circumstances, I’m five years retired now, I have my state pension, a small work pension, and my savings which I increased over the years as I could afford to. I have more than I need to fund my retirement, but that’s the retirement I planned for which doesn’t include multiple holidays, I would soon get bored of that. My advice would be to just start small and save what you can, increasing as you can, but don’t forget to enjoy life now, not everyone makes it to retirement.
Great video, Neil, but you need to do another video on Portmerion for those who don’t know about it. My husband and I were able to stay there back in 1989 when we were stationed in Germany in the US Army.
One way to accurately estimate variable costs is to write down what you spent on each expense for the last 12 months and then divide by 12. That way, you are accounting for seasonality, inflation, etc...
Boldin software is a VERY beneficial step! It lays it all out there for you. Input budget numbers, assets, ages, expected Social Security takings, pensions, etc and it charts out the Monte Carlo simulations so it becomes very evident where you stand in average, down and up markets. Really cool vids, mate. Thank you from across the pond in New Mexico, USA!
Great info and kept simple. I retired at 54 and using this approach 👍🏻
There was a remake of - The Prisoner in 2009.
Budgeting is so important. I set myself a budget based on what I will get as pension in a few years time and - as a test - currently try to live on this now for several months. It showed me, that I need more because prices went up and there are always extra costs coming up (like for repairs, big birthdays, …) and then I want to travel, too. Means extra budget for that on top. From there I calculated based on the 4% rule, but with 3-3.5 % instead. Finance experts in Germany recommend this to be on the safer side. The Trinity study calculated only for 30 years, but we have to keep in mind that we are getting older. New calculations showed that 4% is a bit too much, especially if you want to retire early.
Great idea 👍🏻
O. M. G. !!! I cannot believe the backdrop you chose for this video. And I had no idea it was a place you could visit.
Could you please provide particulars about where it is? My ALL TIME favorite program. I have it on DVD. Also, FYI, you can find most of the episodes on TH-cam.
Also, so happy you’re back. Another great video.
It’s actually a hotel, The Hotel Portmeirion, near Porthmadog in Gwynedd, North Wales
@@myfyrmadocjones Oh! Thank you. Added to my travel list. How exciting.
There is a hotel there, but it’s a whole village that you can visit for the day
@KevinOLoughlin-ys5ef Ha ha! Be seeing you, as well.
Good video with sensible advice as usual. We did a detailed record of our spending patterns for a full year and used that as a baseline for retirement planning. I think people also have to be brutally honest on their spending patterns and understand if they are extravagant, frugal or middle of the road. This ability to be honest with yourself is key.
Figuring out your location and therefore living costs as you move through the three phases of retirement is important. If you plan on being located in one country for the most part it makes the calculation easier albeit residential care costs can vary/increase a lot regardless of location.
4% rule + basic uk tax 20% use the following number rule: Monthly spend need x 375 = pot size required when paying 20% tax. Great spread sheet tools out there available on youtube: James Shack, Edmund Bailey, Ian Shadrack. Take a look
Take into account a state pension.
@@adm58 State pension in the UK is a Benefit , not a right - it is NOT guaranteed in the UK. regardless of how much NI you nave paid in over 35 years. Currently, you do get it - but it isn't necessarily going to be there for folk retiring in 10-15 years. If - big if, but is is being whispered in June 2024 - the UK administration adopts the Australian means-tested system, you may find you are not eligible for the state pension at all if your assets or income exceeds a certain total. It's quite concerning.
@@East_Anglian yes, I understand the rules can change over time. For the present though, the rules are as they are. No one can take into account how the world will be decades in the future. It Looks likely that CBDCs may well be imposed, closely followed by totalitarian control of all our finances and spending. The world could be unrecognisable in 20 or 30 years.
@@East_Anglianyeah right 😂
Started a pension 35 yrs ago, scottish provident sold out some years back, and no bonuses added since. So worth very little now. New job 30 yrs ago, accountant said pensions waste of money. Convinced me to get 30 yr bond paying £100 a month. Received £56k, not exactly retirement money. Payed down debt, no mortgage for last 10years, just bought car with cash, will do me a long time. Age 60 still working, put 40% of salary into pension to avoid tax, mainly. Ill health has kicked in, cronic renal disease, on dialysis every other day, so can't really travel anymore, I have done alot of traveling, disapointed can't continue. Anyway working more for my head than money. No chance of transplant, although dr says I could live 25 to 30 years as no other health issues. Numbers;
Pensio 400k
Savings 200k
Wife pension 200k
Budget 3 to 3.5k per month.
Interested in what others woukd do?
Thanks for video Peter
Inspiring as always. 2 year countdown for me till retirement! Thanks Neil!
Don’t forget to allow for tax in that budget as well- current expenses are after deductions and so will they be for most in retirement
Very good video, take it easy and post just for fun every now and then, slow is the go !
great video, looking forward to the others, i have subscribed and am binge watching your other videos :D keep up the great work
Excellent video, so nice to see you guys back posting videos again.
Those numbers worry me though… the overwhelming majority of people won’t get any where near having a £ 1/2 million pension pot… let alone £1m.
I’m also not convinced about this “30 years of retirement”thing either… sure when you first retire you’ll be off spending and enjoying yourself but fast forward to when you’re in your mid 70’s your lifestyle is completely different and you’re not spending that much.
I don’t know, I’m clearly no expert but it worries me when pension companies start scaremongering about how much you need in retirement .
Totally agree Dave. I just added my post saying something very similar. I have been appreciative of the channel but this and some other videos have felt unrelatable for me.
I think this is very hard to relate to and quite unsettling. It even came across as a bit self-congratulatory. The evidence from the office of national statistics shows that the median (middle of range) retirement fund at 64yrs is £107k on top of state pension. There is significant evidence that people with moderate funds such as £250,000 can live a fulfilling retirement. For a lot of the audience the assumptions of the 4 percent rule are totally out of reach.
Neil has mentioned the 4% rule in passing before and always said he would come back to it. Well we have it here. But this is flawed financial advice. The fact that you are expressing worry here confirms my evaluation.
Well done Neil and Sarah if you actually are millionaires. For most people owning your own home and retiring with that sort of money is totally out of reach.
Honestly something about the patronizing style was a source of entertainment but I actually find the mistakes that they have made as more interesting and bring me back..but this one ended with Neil encouraging us to get lost. Welcome back Neil.
but also the average person won’t retire early, they’ll likely retire at state pension age so will get £12k pension, and as you say the average pension pot is £100k so that could give £4K income using the 4% rule. If you’re a couple then you’d be getting £12+4 x2 so £32k, which isn’t massively off the £40k Neil discusses in the video.
Ultimately if you want to do extraordinary things like retire early, you need to do extraordinary things like understand your finances and put significantly more than the average into your pension.
@@victoriavicious8815 Ok right. So we are agreed then. It is about doing "extraordinary things". But hold on... much of this Boomer "success" was funded by an era of massive house price rises. The average UK house price has risen from £1,884 in 1953 to a staggering £260,791 in 2024. So if you bought a house, you had a defined benefits pension. And you made it. Well done. But nothing extraordinary about that.
How would younger people achieve the same success now if they are less able to even save for a deposit? Quite a lot of Boomer "extraordinary" wealth will be passed on to heirs. And for the rest?
The video was an “example”. It began by saying your number will be different from my number. $4000 per month was an arbitrary number that equals $1M, convenient for calculating.
@@eloisepersson939 the video is entitled "Are you prepared?" and asserted 4% draw down increasing by inflation each year as the way to be prepared with an illustration of 25 x $40,000. These topics generate a lot of debate and controversy. The fact is that most people will never achieve anything like this level of wealth (indeed only around 1 in 10 retirees currently do so).
The other controversy associated with this is the source of funds. Most boomers who owned property have enjoyed unprecedented house price inflation. The average house price in UK in 1983 was £27k and in 2023 was £283K; more than a 1000% increase and very much more in the South. The channel frequently states that they sold their house and so as for many this was the main source of wealth to fund the 2GoRoam lifestyle. Is that possible for people now? Absolutely not and many cannot afford to get on the property ladder. So how will they be prepared? Unless they start saving very early and benefit from compounding (probably in late teens and early 20s) they haven't got a hope.
Good video Neil.
A very important figure that many people forget about....the Age Pension/Social Security. This goes a VERY long way towards the "$1MM" required.
Also in some countries TAX is a big thing to figure in...fortunately for me, in Australia earnings and withdrawals from our Superannuation system attract 0% tax once retired. This makes a huge difference to the "$1MM" figure too.
Luckily I have some knowledge of Excel and have started bringing in the data rom my banking app and categorising it into 6 categories. These allow me to average the categories over a rolling 13 month period and see what I would need over a full year. Most people will have used the same banking app for a few years - so they should have the data available and some apps may already supply categories? I am also using the data to try and reduce spend in some areas (like groceries) as we are looking to retire in a couple of years and I want to slowly transition to a way of living as then trial it for 6 months to make sure the budget works for us.
Thanks for the thought provoking discussion.
love these videos! thank you for sharing cant wait for the deep details and spreadsheets
Everyone has a different comfort level. I tend to be conservative with money. So, I told my husband I would only be comfortable retiring if our living expenses (minus medical care and big purchases like cars, etc) should be lower than our Social Security checks. We’re one year in and have lived on those checks here in Mexico.
We’re living a comfortable but not luxury retirement. Of course we didn’t live a luxury lifestyle when we were still working either.
If you’re living on your pension or other old timer checks, you have a lot of wiggle room when it comes to the size of your investments. Because you’re not drawing down.
We took out only $4000 so far in a year. $3000 for a motorcycle and $1000 for an operation.
Get out of debt. Life is so much better when you do have payments going out every month. You can enjoy life so much more.
Don't buy, rent! With regards, your landlord
i retired 2 Months after my 49th year .
well done you
@@patoises I was Very Lucky .
Thanks guys!
There is a remake of the prisoner with Jim Caveizel, Ruth Wilson and Ian McKellen made in 2009. It was shown on ITV from what I remember and was different to the original but good in it's own way.
Great content and thank you. I've been planning hard for the past couple of years with my own spreadsheet - I think I will be ready to retire in 18 months and should be fine - all based on a 3% return and still more than I'm living on now but a nice lump sum to eat at as well - look forward to the next one, thanks Nick
FREE FINANCIAL ADVICE! Jackpot
Another option is to buy an annuity for steady income (I'm not planning to).
Great idea if you hate money
Oh Portmeirion - you lucky things. Such a super place. Have slides taken by late dad of the family visiting there around 1970/1. Have been again since many years later and it is such a beautiful setting.
There was a new version of the prisioner, think it was only 10 episodes or something
Hello,
Watching from Australia and I'm 26! (not quite 25 :P )
I have subscribed. I'm passionate about helping other people and getting them to think about their financial future and I can see the same genuine passion reflected in yourself! (I wish i had the confidence and experience to help others on a larger scale like yourself)
You mentioned the 4% rule is a good place to start when looking at a 30 year retirement, however there is a better place to finish - so I am keen to take your thoughts!
Unrelated, but curious;
Q1) When looking at a 'FIRE' strategies and after doing some research it seems you can use the 3% rule similarly to the 4% when calculating retirement over a longer period ie. 40-50 years.
Do you agree or have any thoughts?
If inflation is 4%, we withdraw at 3% and our portfolio grows at 7% then it should in theory always keep up with inflation.. may last 40-50 years rather than 30.
Q2), This is assuming its the same in Britain as Aus - you have a superannuation type fund that you as an individual and your employer contribute into as well as a govt backed age pension.
Is the goal to utilise all of these on your retirement journey?
While the age pension is at 67 currently (in Aus), that could easily change. Does this mean I should I disregard it? It's something I have always pretended is not going to be there... but it could change the trajectory of my retirement. Ensuring I have exhausted surplus assets acquired and am eligible for age pension. (under asset thresholds, therefore planning to be less rich at end of life but spend longer in retirement being able to start retirement earlier)
Interested your thoughts?
Thanks!
Nice video but £1m is out of reach of 90%+ of people i would imagine. Even £500k is tough to hit for a lot of people. A couple of things you didnt touch on is if you leave your money in the markets (perhaps low yield low risk bonds). That plus the idea of having a rainy day fund to cover you for 2-3 years in case of a market crash, would mean you can take more than 4%. There are other aspects such as i dont have children so i would actually plan to use up (most) of my money by a particular age and not need to protect the principal. Another aspect is that when people hit late 70s/early 80s i would imagine they’re less physically active and less gallivanting around on holidays etc. Obviously there are exceptions to this here and there. Plus if by some miracle you’re still semi healthy in your late 80s (but your pot is running low) couldnt you just sell some equity in your property? Plus you didnt account for the state pension in your figures.
So the “500k” lifestyle that may well be perfectly fine for a lot of people can probably be done for a lot less.
Also could get inheritance at point from parents
Great video and thoughts, thanks for sharing.
Having income in retirement is the secret to not running out of money. Of course 'exchanging time for money' (=working in a regular job) ) is out of question so having passive income or working minimally irregular hours, then we can have our cake and eat it. Some ideas:
Putting money in government bonds, owning commercial property (on full maintenance and insurance), putting money in dividend growth securities, trading FOREX and short term trading cryptocurrencies
Not accurate to relate expenses with 5 kids; 3 in college and 2 in high school now, to my wife and I living by ourselves later. Big number now! Food alone. Now will not equal later.
Is the figure "25" living 25 years in retirement? Average life expectancy? If one retires early, say 55, 55+25 = age 80. Some people live much longer than that. Can you elaborate on what the "25" is? Thank you.
multiply your expected required income by 25. 25 is used as in exchange of 4%.
Based on the 30year 4% retirement model.
1:25 there was a remake of The Prisoner in 2009 starring Jim Caviezel and Ian McKellen, set in what looked like a desert, unfortunately it was 100% garbage.
Without sounding like a broken record 😅, its not rocket science. Go where your savings work hardest for you (Geo Arbitrage) . Earn and Save in developed country, retire in developing one. I retired 10 years early, 2.5k a month or less in SE Asia can live like a king..
Anyone can live on £234.56 per week if they are flexible and use novel solutions.
I loved the prisoner and enjoyed the video can’t wait for the next one thankyou 👍
Great vid! Neil, did you see my email on 5/25? Part of it spoke to today’s topic.
I'll check it out Doug, sorry!
You’ve got a great life , eat , drink and be merry.
The expense of TV isn't the main cost - that's the time cost of watching the cr*p!
Well done on 30k dreamers. 🙂
?
@@DavidGray-cx5zh (30,000 subscribers dreaming of slow travel)
Never heard of baby reindeer before.
In my case 2M
I knew this well in advance and planned
£40 on coke is cheap….sniff, sniff. I take it’s just the one line 😂 thanks for doing this video and sharing
I never really thought about it. Just kidding. I'm already happily retired.
I follow both of you as I would some far away friends with their imperfect dreams and lives trying to make it all work for the best. I learn and enjoy with your tribulations and it motivates me to follow your path when my time arrives. I am still enjoying how you were going to spend a year in Thailand doing exercise (LOL) or discovering Greece and Turkey the hard way! Your explanations of how you finance it, is a great addition! Keep enjoying and we hope to meet you one day!
Always love your videos on these types of subjects. You’re very practical and spot on!
Check comments. Looks like some scams
Simple stuff. Funny thing is, you now make money and we are paying for your retirement..
Feels like showing off - pride comes before a fall
He gave out a formula how is it showing off ?
@@richiemcb the video is misleading and at points felt like scaremongering. One critical piece of information relates to state pension income. Reviewing this video alone would scare most people into believing they need £1M to retire and if they are not near that, then they are in trouble. However most people are 1/10th of the level he is presenting - and yes sure it was 'only an example' but the example chosen was totally out of the reach of most people (see below). Do we assume they have this much in their fund based on selling their house?
It also completely failed to mention state pension. For example with 30 years of NICs you can get just under £10,000 a year of state pension and with a change in Government the triple lock looks safe for the next few years at least. This will reduce the $40,000 a year expense requirement he used to illustrate by 25% Also he says that most people watching will be near or at retirement age so how can they aspire to the level of fund he actually said "you will need to retire". Fewer than 10% of people actually retire with $1M (in USA). The numbers are lower in UK - the median retirement fund is £107,300 at age 64. The evidence shows that where people have a moderate fund plus state pension they can lead a happy and comfortable life. Of far more relevance for most people is how can they earn some extra funds into retirement to supplement the cost of living.
It came across as mansplaining - "our goal is world travel - what's yours?". Most people's goal is having some simple pleasures in addition to living their life. Does it all come down to the affordability of Netflix?
I think we would be more appreciative of content which was real - for instance they made a huge investment in a RV (often cited as massive money pit for retirees) and how is that going? Are they going to sell it?
They are presenting themselves as fairly rich early retirees. They sold their house and are following the 4% rule. But... a lot of narrative is saying 4% is too high a withdrawal rate and could lead to failure (running out of money). Please do not present the 4% rule as a known fact (as doing so constitutes financial advice). It is based on fund performance in the 1990s.
Their YT channel is intended to be a source of income.
I think a lot of retirees would find this inaccessible and hard to relate to. Really not sure who the target audience here is.
@@daydreamer4902The video was not misleading. He was just using 40K as a round number. Personally if I retire early, I would probably withdraw 3% from my portfolio and keep a 3 year cash emergency fund.
@@daydreamer4902what’s interesting is an ordinary relatable bloke who’s put a lot of effort into researching for himself how to optimise his life. It’s the process not the detail that’s being ‘modelled’ here. Yes some of his ideas are a bit variable regarding application but it’s how he’s demonstrating how to start thinking about it that’s useful.
My hubby taught himself over a period of 5 years prior to retirement how to self manage our SIP investments in shares. He read the Economist and the Financial Times on Thursdays in particular plus the Business and Money sections of the weekend Times newspapers. He leant what to do, and since retiring has beaten many of the top Fund Managers in terms of dividends income. He was an Engineer- and loves spreadsheets. It saves us 1-2% in management fees which makes a huge difference. If you want a 4% share dividend income from your SIP pot you actually really need to earn 6% so you can give your fund manager 1-2%.