Great video, Dianne. But I do wonder where these figures come from. I earn £30k a year and live very well.i invest, eat out, and holiday regularly. These figures make me smile........
@@guitarsandcheesecake1632 yeah I also think you can live a good life on a lot less. I’ve just got back from a weekend in Merthyr Tydfil and you don’t need much to live happily there in that glorious countryside and cheaper housing
The PLSA standards used to be a great guideline. However, in 2024, they shot off the scale. I have no idea why but the current numbers seem, shall we say, not based on reality. Like many people I've done a deep dive analysis of my specific budget and don't need anywhere near the PLSA numbers to achieve comfortable lifestyle. (Keep up the high standard of presentation and information Dianne - good job!).
I retired at 54. I paid my mortgage off and then worked out how much my bill were. You will not believe how little you actually need to retire on. I cook all my own meals and I do not drink alcohol or smoke cigarettes. I know people who cannot retire due to having to pay for their vices which is mainly alcohol.
I assume that £43k is the mean average salary, not the median. I believe the median is around £38k - the median is a better marker of average as the mean is pulled up by very high salaries at the top.
Default insurance comes out to $118 a month. Here in the USA, Navdeep, you have to pay default insurance as soon as your down payment hits 20%. In my situation, that is five years, after which the $118 monthly payment stops.
True, indeed. Better rates are available for insured mortgages because the bank bears relatively little risk in the event of a default because the insurance will cover the mortgage balance.
Buffet serves as an example of how the faulty fiat money system's Cantillon effect operates. It was not until the gold standard was removed in 1971 that his fortune began to grow rapidly.
New subscriber and I am sharing my story. My age is 55 and I have zero debt, 110k in the bank, 35k NVDA shares, 401k $270k, IRA 145K and 2 houses in Bay Area with zero mortgages. Just got a Mercedes SUV as my 3rd car. I started saving after marriage only after marriage but will all this be enough to retire?
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I currently have 75% SCHD and 25% ROTH IRA. Brokerage account is 40% VOO, 35% SCHD, 25% XLK. Combine balance ~$3.3m Less than 3 years until retirement.... I have about 400k in cash. My portfolio has yielded far more than I expected for my retirement. Kudos to my advisor.
@IveirosesRyckmans Certainly, there are a handful of experts in the field. I've experimented with a few over the past years,but I've stuck with *MONICA AYAKO VOS* for about four years now, and her performance has been consistently impressive.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Depends so much on where you live and whether you own your own home. I stopped working and retired over 12 years ago and immediately left the UK at age 49 for SE Asia. Supported by rental income and growing but as yet untouched investments within a SIPP, plus zero debt. I'm a regular human and not rich, you don't need to be, just sensible with money. Living in the UK is not the only option for living out your days. Imagine; no TV license, no council tax, far less of a cost of living crisis in a far better climate. Think about it.
@@TheDavecroft The problem with the UK is that many people (not all, and this is not aimed at you) are so reliant on public services, the NHS and the benefits system in general and just hold out their hand. If they were efficient, then great, but as you are already aware, they are not. Here there are some absolutely world class hospitals and facilities, there are awful ones too, and can be self-funded or obtain health insurance. I do understand your comment, though, and it is fair. Life has choices.
@TheDavecroft I remember back in the 70s my mum called for a doctor in the middle of the night as my grandfather was ill. The doctor was there within 30 mins and then an ambulance 15 mins after being called. This is all gone now. Don't stay in the UK for the NHS.
I fell ill last month in Thailand whilst on holiday. Went to private hospital for 3 days and despite having medical travel insurance I still try to claim back £6k. If you fall ill in south east Asia it is NOT cheap!
Read an adage once "Security is not 'having more', but 'needing less' " The less you need, the earlier you can retire. Retirement is definitely about compromise. AM always surpised that people do not know what their BASIC cost of living is - I do down the last £50. I have then put back on the cost of having the Retirement lifestyle I want for me and my wife.....and I know the figure right now - 5 years off from my retirement. I know I will have that income, too. I am lucky. My advice - buy a Rental, and stop putting spare cash into a Pension.
Well, damn. This is the first video I’ve seen that suggests I’m actually putting enough away for retirement based on where I am in life! (At the moment, on a below-average salary, I put away £339 a month - £189 through salary sacrifice, and a further £150 into other pension funds. I also invest a small monthly amount into a S&S ISA.)
I am 44yo single, have £25K in pension pot and am currently contributing £2500 p/m to boost it. The return on my pot is 20% approx. Thanks for the video.
You talk about average - that's not the median - your average throws the figure way out of line for the average working person - it must scare them to bits - thanks for the video
I like that you’ve put a pot size and related that to a life style illustration. That’s V helpful. I think the average wage is a bit high. I think it’s closer to 30k according to Reddit. The 7% sounds a bit high (recent years being extraordinary) isn’t it supposed to be 6% and anything above that is a bonus. I had down 330 as my target and making good progress on that, do you think you could do a video on employer contributions from a limited company director perspective?
Everyones well is different. I retired 10 years early to go live life. Geo Arbitrage, work and save in the West, retired in SE Asia. Live very well on 2.5k a month
I think the PLSA data is seriously flawed. There's no way a single person needs £43k a year to be comfortable in retirement. That's way over the current average wage.
£43k is not for the average wage person. In fact 43k is the entry to a comfortable retirement and to be comfortable allow 50-80% of your last working salary. So if you retired on 100k salary in last job you should aim to have pension between 50-80k to enjoy same lifestyle
Just as the average, or median salary cannot represent everyone, the PLSA figures are just a stake in the ground that provides a benchmark for the purpose of comparison. We are all different. If, by the time that you retire, you have paid off your mortgage and own your home, then your current expenditure (excluding mortgage) is probably your best estimate of your income needs in retirement. Maybe you'll need more in the early years if you plan to enjoy more holidays and travel but probably less after age 75-80 when life slows down. If you are renting, on the other hand, then you'll need to continue paying that rent. As others have said, if you currently live to a budget, then you are far more likely to be able to manage in retirement.
PLSA figures are massively over estimated, if you compare it against the Which figures, these are much more realistic. The comfortable band has a 10K disparity 😮
The more I watch videos like these, the more I realise how good my company is. I get 10% pension contribution plus I put my own amount in as well through salary sacrifice. Costs me hardly anything really to get such a good amount going in every month
Hi, like yourself the std is 10% made through self and company Co contribution. They will match you for 3 more% and the lucky thing is that this is through salary sacrifice, so no dealing with claiming tax back. I’m 53 now and have upped this in the hope of retiring early, hopefully 60 or 61. Keep up the good work M.
Thanks for your support. Maybe check your investments as 3-4% is on the low side for long term annual average return. But then again if you’re close to retirement, you may prefer to have a lower risk portfolio
@@porschecarreras992cabriole8 I recall you commenting on this in the past. Nice one. I wish more people took more of an active role in choosing their pension investments instead of the default
@@DianneSullivan I wish that the pension providers were more pro-active in providing education and guidance about the suitability of different funds for employees of different age groups. Just developing that awareness would be a big step forwards. I'm afraid the reality is that they have a vested interest in maintaining the status quo and gaining fees from "managed funds" and platform charges, as a proportion of the total sum invested. Also, many people have a very low appetite for risk and have a strong preference for "slow but sure", even over longer timescales.
ONS: "Median gross annual earnings for full-time employees was £34,963 in April 2023, which is a 5.8% increase over the £33,061 in April 2022." I do think this is a more meaningful value, which a larger proportion of the population would be able to relate to. Putting that discussion to one side, I think there is a growing problem that everyone has an expectation of being "above average", which is, by definition, impossible. We use averages (income, house prices, expenditure, etc.) simply to provide a marker that most people should be able to relate to. It seems that many people now have an expectation that they should have an average income and be able to afford an average price home by the time they're thirty something - barely a third of the way through a typical 40+ year working life. This is unrealistic and, recognising that most people's income will reach a peak at the age of fifty+, that is when we should aspire to achieve "average" levels.
The 10 years from retirement section doesn't really make sense. Paying that much in leaves you with just £1180 per month to live on. If you can live on that while working then you can probably live on less when retired and so don't need to be aim for such a large pension pot.
If you have cleared your mortgage by retirement then your annual budget is probably £10 to 12 k a year less than someone who is still paying or are renting. Again whether or not you are funding a child though university could be a similar amount.
Now the buggers will stop this assuming you need £20k on top of the state pension each year. Assuming your private pension is £500k and paid off the house to cover that 20k a year plus inflation then they means test the state pension and say sorry pal you have too much capital your not getting the state pension. It’s very worrying considering planned this and that pot is needed to secure my pension. Hence now considering taking even more in early years so they don’t do that and then they will have to give me a state pension / pension credits as I have no other pension then.
I don't believe the PLSA data, the answer is to know your own numbers. I track mine monthly using AceMoney, simple personal finance software that is very flexible, one could even run a small business on it. One off cost about £45.
median average uk salary is closer to £29k - I think thats a fairer number to use in these "average" comparisons. Hence why only 1 in 5 people manage to achieve the "moderate" income pension. the averages are constantly skewed by the extremely high earners (and wait for the "youre just jealous" comments) Good video though. What sort of pot would be required to achieve "comfortable" lifestyle in pension? Thanks!
PLSA figures are way out, better off using the Which figures which are much nearer reality. The median average wage is closer to £35,000 which is also much nearer reality for a majority of the working population.
I have a pension of 42 years ,I’m 61 , it’s has never been that high ,but a few years ago in 1 year it suddenly grew buy 230 k in 1 year ,I was hit with a 30 k plus tax bill which I could not pay ,my company said I could do what’s called a scheme pays ,when you retire the tax is an extra £3600 a year on top of my normal 20% this extra payment is for life ,I worked out if I live for 20 years I would have paid double that ,I thought a tax bill is until you paid it off , I’ve never been a 40% tax payer until this year due to the tax personal allowance staying the same , ( advice ) if this happens to you don’t pay by the scheme pays ,borrow the money at least it comes to a end , thank you for your talks ,
@@llamudos9809 thank you for your advice ,I have already deferred the pension due to the problem of having to go through the same problem again ,I only mentioned this issue regarding the yearly AA being reached so others may be warned if you have a built up pot then this can happen even to a moderate income ,I now learned that the yearly AA was increased last year ,thank you
Great video, Dianne. But I do wonder where these figures come from. I earn £30k a year and live very well.i invest, eat out, and holiday regularly. These figures make me smile........
@@guitarsandcheesecake1632 yeah I also think you can live a good life on a lot less. I’ve just got back from a weekend in Merthyr Tydfil and you don’t need much to live happily there in that glorious countryside and cheaper housing
The PLSA standards used to be a great guideline. However, in 2024, they shot off the scale. I have no idea why but the current numbers seem, shall we say, not based on reality.
Like many people I've done a deep dive analysis of my specific budget and don't need anywhere near the PLSA numbers to achieve comfortable lifestyle.
(Keep up the high standard of presentation and information Dianne - good job!).
@@JohnBeeblebrox I see that many others agree with you on the PLSA figures. (As I do in fact). Thanks for your supportive comment
I retired at 54.
I paid my mortgage off and then worked out how much my bill were.
You will not believe how little you actually need to retire on.
I cook all my own meals and I do not drink alcohol or smoke cigarettes.
I know people who cannot retire due to having to pay for their vices which is mainly alcohol.
You are great. Hope your channel grows
Thank you 😊
I assume that £43k is the mean average salary, not the median. I believe the median is around £38k - the median is a better marker of average as the mean is pulled up by very high salaries at the top.
Default insurance comes out to $118 a month. Here in the USA, Navdeep, you have to pay default insurance as soon as your down payment hits 20%. In my situation, that is five years, after which the $118 monthly payment stops.
Sadly, not in Canada
I've read that banks will offer you lower mortgage rates if you have mortgage default insurance. Is this accurate?
True, indeed. Better rates are available for insured mortgages because the bank bears relatively little risk in the event of a default because the insurance will cover the mortgage balance.
Buffet serves as an example of how the faulty fiat money system's Cantillon effect operates. It was not until the gold standard was removed in 1971 that his fortune began to grow rapidly.
*Lois* *Jean* *Frueh*
Thank You Dianne. As always, very informative and even a little reassuring 🙂
@@adcatman thank you!
New subscriber and I am sharing my story. My age is 55 and I have zero debt, 110k in the bank, 35k NVDA shares, 401k $270k, IRA 145K and 2 houses in Bay Area with zero mortgages. Just got a Mercedes SUV as my 3rd car. I started saving after marriage only after marriage but will all this be enough to retire?
To achieve a secure retirement, aiming to save at least 15% of your income in a 401(k) is advisable. Online tools can assist in calculating the best savings strategy for you, considering factors like age and income. Consistently saving this percentage can help build your retirement fund effectively, thanks to the benefits of compound interest.
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I currently have 75% SCHD and 25% ROTH IRA. Brokerage account is 40% VOO, 35% SCHD, 25% XLK. Combine balance ~$3.3m Less than 3 years until retirement.... I have about 400k in cash. My portfolio has yielded far more than I expected for my retirement. Kudos to my advisor.
@IveirosesRyckmans Certainly, there are a handful of experts in the field. I've experimented with a few over the past years,but I've stuck with *MONICA AYAKO VOS* for about four years now, and her performance has been consistently impressive.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Depends so much on where you live and whether you own your own home. I stopped working and retired over 12 years ago and immediately left the UK at age 49 for SE Asia. Supported by rental income and growing but as yet untouched investments within a SIPP, plus zero debt. I'm a regular human and not rich, you don't need to be, just sensible with money. Living in the UK is not the only option for living out your days. Imagine; no TV license, no council tax, far less of a cost of living crisis in a far better climate. Think about it.
Yes but what's the health service like? Many people, especially as they get older, want the security of the NHS. Even if the NHS is crumbling!
@@TheDavecroft The problem with the UK is that many people (not all, and this is not aimed at you) are so reliant on public services, the NHS and the benefits system in general and just hold out their hand. If they were efficient, then great, but as you are already aware, they are not. Here there are some absolutely world class hospitals and facilities, there are awful ones too, and can be self-funded or obtain health insurance. I do understand your comment, though, and it is fair. Life has choices.
@TheDavecroft I remember back in the 70s my mum called for a doctor in the middle of the night as my grandfather was ill. The doctor was there within 30 mins and then an ambulance 15 mins after being called. This is all gone now. Don't stay in the UK for the NHS.
I fell ill last month in Thailand whilst on holiday. Went to private hospital for 3 days and despite having medical travel insurance I still try to claim back £6k. If you fall ill in south east Asia it is NOT cheap!
Read an adage once "Security is not 'having more', but 'needing less' " The less you need, the earlier you can retire. Retirement is definitely about compromise. AM always surpised that people do not know what their BASIC cost of living is - I do down the last £50. I have then put back on the cost of having the Retirement lifestyle I want for me and my wife.....and I know the figure right now - 5 years off from my retirement. I know I will have that income, too. I am lucky. My advice - buy a Rental, and stop putting spare cash into a Pension.
Well, damn. This is the first video I’ve seen that suggests I’m actually putting enough away for retirement based on where I am in life! (At the moment, on a below-average salary, I put away £339 a month - £189 through salary sacrifice, and a further £150 into other pension funds. I also invest a small monthly amount into a S&S ISA.)
The lifestyle levels make me laugh.
I’m retired and it’s all about retiring with no debt and then living within your means.
@@Mark.Harrington yes they do assume people need a lot to live well
Just be content with what you have.
Early retirement is not for people who want to "Keep up with the Joneses."
I am 44yo single, have £25K in pension pot and am currently contributing £2500 p/m to boost it. The return on my pot is 20% approx. Thanks for the video.
You talk about average - that's not the median - your average throws the figure way out of line for the average working person - it must scare them to bits - thanks for the video
@@nicobass1966 yeah I used average not medium but hopefully the pensjik contribution figures are still a useful guide
@@DianneSullivan Ok and thanks but it's still not great - best to get the median and not average as sku's the figures some what, thanks
@@nicobass1966 sure but the pension contributions in absolute terms still hold
I like that you’ve put a pot size and related that to a life style illustration. That’s V helpful.
I think the average wage is a bit high. I think it’s closer to 30k according to Reddit.
The 7% sounds a bit high (recent years being extraordinary) isn’t it supposed to be 6% and anything above that is a bonus.
I had down 330 as my target and making good progress on that, do you think you could do a video on employer contributions from a limited company director perspective?
I could retire now but building up pension pot thank you for your videos very helpful.
Well done on being able to retire now if you wanted to - don't wait too long as life is short and time is precious 🙂
I found the video very interesting, thank you.
@@JamesKerr-z4o thank you for watching and taking the time to leave a supportive comment - much appreciated
Everyones well is different. I retired 10 years early to go live life. Geo Arbitrage, work and save in the West, retired in SE Asia. Live very well on 2.5k a month
You can live quite well on £1,000 a month in SE Asia! £2,500 is serious money there (assuming you're not in Singapore).
I think the PLSA data is seriously flawed. There's no way a single person needs £43k a year to be comfortable in retirement. That's way over the current average wage.
£43k is not for the average wage person. In fact 43k is the entry to a comfortable retirement and to be comfortable allow 50-80% of your last working salary. So if you retired on 100k salary in last job you should aim to have pension between 50-80k to enjoy same lifestyle
I suppose that it depends on how you define "comfortable"!
Average salary is around £30,000, the last time that I saw any such figures.
Just as the average, or median salary cannot represent everyone, the PLSA figures are just a stake in the ground that provides a benchmark for the purpose of comparison. We are all different. If, by the time that you retire, you have paid off your mortgage and own your home, then your current expenditure (excluding mortgage) is probably your best estimate of your income needs in retirement. Maybe you'll need more in the early years if you plan to enjoy more holidays and travel but probably less after age 75-80 when life slows down. If you are renting, on the other hand, then you'll need to continue paying that rent. As others have said, if you currently live to a budget, then you are far more likely to be able to manage in retirement.
PLSA figures are massively over estimated, if you compare it against the Which figures, these are much more realistic. The comfortable band has a 10K disparity 😮
I totally agree...plsa is absolute rubbish...
The more I watch videos like these, the more I realise how good my company is. I get 10% pension contribution plus I put my own amount in as well through salary sacrifice.
Costs me hardly anything really to get such a good amount going in every month
Hi, like yourself the std is 10% made through self and company Co contribution. They will match you for 3 more% and the lucky thing is that this is through salary sacrifice, so no dealing with claiming tax back. I’m 53 now and have upped this in the hope of retiring early, hopefully 60 or 61.
Keep up the good work M.
Very useful video. I'd be amazed if any of my pensions have done 7% over the years, 3-4 % more like - but it's good for illustration.
Thanks for your support. Maybe check your investments as 3-4% is on the low side for long term annual average return. But then again if you’re close to retirement, you may prefer to have a lower risk portfolio
@@DianneSullivan the standard workplace lifestyling return so little. I got caught too and went from 3% returns to 30% the last couple years
@@porschecarreras992cabriole8 I recall you commenting on this in the past. Nice one. I wish more people took more of an active role in choosing their pension investments instead of the default
@@DianneSullivan I wish that the pension providers were more pro-active in providing education and guidance about the suitability of different funds for employees of different age groups. Just developing that awareness would be a big step forwards. I'm afraid the reality is that they have a vested interest in maintaining the status quo and gaining fees from "managed funds" and platform charges, as a proportion of the total sum invested. Also, many people have a very low appetite for risk and have a strong preference for "slow but sure", even over longer timescales.
ONS: "Median gross annual earnings for full-time employees was £34,963 in April 2023, which is a 5.8% increase over the £33,061 in April 2022." I do think this is a more meaningful value, which a larger proportion of the population would be able to relate to.
Putting that discussion to one side, I think there is a growing problem that everyone has an expectation of being "above average", which is, by definition, impossible. We use averages (income, house prices, expenditure, etc.) simply to provide a marker that most people should be able to relate to. It seems that many people now have an expectation that they should have an average income and be able to afford an average price home by the time they're thirty something - barely a third of the way through a typical 40+ year working life. This is unrealistic and, recognising that most people's income will reach a peak at the age of fifty+, that is when we should aspire to achieve "average" levels.
The 10 years from retirement section doesn't really make sense. Paying that much in leaves you with just £1180 per month to live on. If you can live on that while working then you can probably live on less when retired and so don't need to be aim for such a large pension pot.
If you have cleared your mortgage by retirement then your annual budget is probably £10 to 12 k a year less than someone who is still paying or are renting. Again whether or not you are funding a child though university could be a similar amount.
I'm clearly falling behind. I thought the UK average annual wage was around £35k 😞
dont have rent
Now the buggers will stop this assuming you need £20k on top of the state pension each year. Assuming your private pension is £500k and paid off the house to cover that 20k a year plus inflation then they means test the state pension and say sorry pal you have too much capital your not getting the state pension. It’s very worrying considering planned this and that pot is needed to secure my pension. Hence now considering taking even more in early years so they don’t do that and then they will have to give me a state pension / pension credits as I have no other pension then.
Eh, Justin? The State Pension in the UK is not and has never been means-tested.
@@johnporcella2375 it’s unsustainable given time and by the time I reach 67/68 in 13 to 14 years time it most likely will be
@johnporcella2375 there is a lot of talk going around at the moment that the new labour government might try introduce it
@@chrisj6321Political suicide, so will not happen
Look at the pushback with making the Winter Fuel Payment means-tested.
I don't believe the PLSA data, the answer is to know your own numbers. I track mine monthly using AceMoney, simple personal finance software that is very flexible, one could even run a small business on it. One off cost about £45.
£43k a year, average person is on half of that.
Interesting…where did you get your data on average salary from?
@@DianneSullivan
No data needed, ask friends, family and work colleagues, most range from £20,000 to £29,000
median average uk salary is closer to £29k - I think thats a fairer number to use in these "average" comparisons. Hence why only 1 in 5 people manage to achieve the "moderate" income pension. the averages are constantly skewed by the extremely high earners (and wait for the "youre just jealous" comments)
Good video though. What sort of pot would be required to achieve "comfortable" lifestyle in pension? Thanks!
@@richsmart321 I used average here rather than median. I take your point.
Averages are skewed by high earners. Better to use median. 🤓
PLSA figures are way out, better off using the Which figures which are much nearer reality.
The median average wage is closer to £35,000 which is also much nearer reality for a majority of the working population.
7% return you must be joking.
She's lovely
this is depressing
I have a pension of 42 years ,I’m 61 , it’s has never been that high ,but a few years ago in 1 year it suddenly grew buy 230 k in 1 year ,I was hit with a 30 k plus tax bill which I could not pay ,my company said I could do what’s called a scheme pays ,when you retire the tax is an extra £3600 a year on top of my normal 20% this extra payment is for life ,I worked out if I live for 20 years I would have paid double that ,I thought a tax bill is until you paid it off , I’ve never been a 40% tax payer until this year due to the tax personal allowance staying the same , ( advice ) if this happens to you don’t pay by the scheme pays ,borrow the money at least it comes to a end , thank you for your talks ,
Pay more of your salary into your pension to reduce your tax bill below 40%.
@@llamudos9809 thank you for your advice ,I have already deferred the pension due to the problem of having to go through the same problem again ,I only mentioned this issue regarding the yearly AA being reached so others may be warned if you have a built up pot then this can happen even to a moderate income ,I now learned that the yearly AA was increased last year ,thank you
How did this tax bill arise?