I’m 55 and running every day with one day rest. I do body exercises. Push ups lunges etc 3 times a week. Body weights are just a good. Health is wealth.
I was conscious that at age 55 and having reached, if not, exceeded my retirement number (huge thanks to your videos Chris) i was falling into the one more year trap.....my mitigation was that i was 99% sure that within that one more year my role was going to be made redundant and i would receive a very generous enhanced redundancy package. 6 months into that one final year= bingo and the redundancy was announced. Ironically my first bout of sickness in 40 years then meant i needed 6 months of full pay and benefits sick leave which my company gracefully paid me. They then restarted the redundancy consultation....i sailed off into sunset with the one extra year salary pension and 20% bonus, plus the equivalent of 2 years salary and employer's pension contributions at 12% of my gross salary plus 6 months pay in lieu of notice which my company had increased from 3 months after covid. So for me the one extra year was somewhat calculated knowing that redundancy was round the corner. Thank god ive got a poker face and never gave any clue that i wanted to retire 😅😅😅
I'm 38 and well on my to retire at 50. I love watching videos like this as it helps me maintain perspective and identify my weaknesses. Thanks for an excellent video Chris.
As always brilliant content. Thank you Chris I'm 53 tomorrow and like to think I'm better equipped for my future from the advice you have given for many years.
I'm 53 and retired in April. I have also learned a lot from Chris and his little snap cubes over the past few years. th-cam.com/video/AMJ8Ya3CPj4/w-d-xo.html
I struggle with annuities. You are playing against the underwriter, and the odds, and no different to going in a casino. And generally, the casino always wins. I’ve just started watching your videos, but clearly some excellent advice given.
They’re not attractive to everyone, and less so under the current rules that allow for flexible benefits to be passed on tax free. Depending on circumstances though, they can be useful to create a base income, and often if bought a little later in retirement they can appeal more. A 7-8% guaranteed income for life is quite attractive to some people, but it really does depend on what you want/need. I have a feeling that if a pension death tax is introduced in this Budget, annuities will increase in popularity again.
The earlier you retire, the lower the expected income. With the right cash flow modelling though you can plan to take more by accepting a managed reduction in the value of your pot over time.
Super content, Chris, as always. Thank you. I’ve watched all your videos. Stumbled across them a few years ago, thankfully. Nearly time to reach out to someone like you for some guidance. Keep the advice flowing, please!
Great video Chris...lots to consider. Interesting what you say about exercise and the importance of resistance training versus cardio. I'm in my mid-fifties and consider myself quite fit from daily running / cycling, but I don't do any weights. In the past I've tried and always ended up with bad joints (I've suffered from tennis elbow, which was very painful). I'd be interested to know more about why doing only cardio exercise is not enough to stay fit in old age.
Hi Steve. Cardio fitness is good, but too much of it, and not enough resistance training can actually have a negative effect. If you do a lot of heavy cardio your body can actually lose muscle mass because you’ll burn it to meet your energy requirements (look at long distance runners vs sprinters). It can also raise cortisol levels (the stress hormone), which if increased for prolonged periods can lead to chronic conditions. Essentially, cardio on its own though just isn’t an efficient way to boost muscle growth, which is what you’re aiming for to counteract the effects of muscle loss. Remember that diet is equally as important as exercise; you won’t get any muscle gains if you’re not in a slight calorie surplus and have the right amount (and right type) of protein. I suffer with tendonitis too. It’s not pleasant but it comes and goes - I get it more when I enter real periods of intense training with a lot of heavy deadlifts, so I try to work around it. You can do a lot of good stuff just using your own body weight as resistance. If I could recommend a good book on the subject it’s 1% Fitness by Mike Sheridan.
What a great bird’s eye view summary, love that. You are spot on when saying it’s easy to fall into the trap of focusing in on getting enough money for retirement! Plenty to think about, so a big thanks Chris, cheers Mike 🇬🇧
Hi Chris - great video, as always. You offer very thought-provoking insights. I have a question for you about pension contributions. I read that, as an employee, I can contribute up to 100% of my earnings or £60k per annum, whichever is the lower (putting aside carry-over for the time being). As an employee, the most straightforward way for me to make contributions is through salary-sacrifice into my workplace pension. And then I read that I cannot salary-sacrifice to such an extent that my salary falls below the National Minimum Wage. So it seems odd that, on one hand, I'm told I can contribute 100% of my salary to my pension and then, on the other hand, I need to select a % below 100% in order to avoid falling below the National Minimum Wage! Please can you clarify? Finally, must the National Minimum Wage threshold apply to any singular month in the year or can it be applied just at an overall level annually? What I mean by this is that, for this tax year, I have already earned well in excess of the National Minimum Wage - and so, for the rest of this tax year, am I permitted to salary-sacrifice 100% of my salary to maximise my contributions without worrying about falling below the National Minimum Wage threshold? Thanks so much for clearing this up!
I believe your employer can’t allow you to fall below NLW but you can pay up to 100% in (max of £60k) via a SIPP. So make the highest percentage you can through salary sacrifice and just pay the rest into a SIPP.
Hi Keith. It's an interesting question and I must admit, not one I know the answer to because it's more about pay roll rules than financial planning. My instinct would be that as long as your National Minimum Wage has already been met for the 12 month period, you can probably sacrifice whatever amount you want, but I think you'd need to check that with your HR guys. This is something that I think needs to be looked at more closely though - I came across something recently where an employer would only pay someone's pension contributions out of their net pay, because if they paid from gross, it would mean they were paying them less than National Minimum. The problem was, the pension scheme was set up on a net pay basis rather than a relief at source basis, so he was basically receiving no tax relief! Clearly that system is ridiculous. If you run into problems, you can always take the pay rather than salary sacrificing, and pay what you want into a separate personal pension. It is less than optimal because you although you'd get your income tax back on the contribution, you'd lose the National Insurance. It is an option though if you can't do what you want through your employer's scheme.
@@chrisbourne-retirementplanner Thanks so much, Chris. You're fantastic at providing well thought-through and considered points. I agree that the system seems a bit prone to weakness on this point. And given that salary sacrifice is the main way employees make contributions to their pensions (with many people not even having additional private pensions), I suspect there will be more to come on this issue. I'm very surprised this issue hasn't come to light more widely, as many older workers, especially, very close to retirement age may use their salary sacrifice to the max, given it almost represents an instant savings account into their pension. I'll check with HR and do some digging. As you say, worst case, I'll channel any residual amount into my SIPP that can't be accommodated via salary sacrifice (and forgo the 2% NI saving). All the best and keep up the great work!
Love the content, love the channel, avid subscriber. Not a fan of the new format though. Mic seems too far away so harder to hear, especially given the music. And the lighting casts a shadow on your face so looks weird. Might just be me but find the new style videos harder to follow! Obviously I will still try as I always find the content useful!
Thanks for your comment Neil. I am using a different mic now as used to use a lavalier mic clipped onto my shirt, but now have a shotgun mic boomed above my head. I have tested the sound levels, but perhaps there’s room to move the volume up a couple of notches. The lighting is more intentional, but I realise it’s not everyone’s preference.
I've also seen a lot of people keep holding on for one more year which leads to another year and can't understand as I know they can afford to retire. What's strange is they don't seem to love work. I'm 51 and another 4 years I'm hopeful with my planning I can make the retirement jump.
Yeah, it’s quite a common thing I see. Hard to put your finger on sometimes but I think it’s just the lack of an alternative. Some people just don’t know what they’d do with their time if they stopped working.
Two vids in quick succession. Love it! I have a quick question if you don’t mind. I want to max out my pension for previous tax years. Do I have to inform HMRC that it is for previous tax years, or can I just put it in and they work that out?
Chris, I keep seeing videos on global population collapse and the 2040 MIT study ‘limits to growth’. At 37 years old it all sounds like everything is going to go wrong just as I start considering retirement. Is your industry looking at this and do you have any thoughts on this matter? Many thanks, Jonny
Hi Jonny. Strangely enough, I attended a webinar last week with Vanguard, where they were discussing megatrends like this. There are a lot of assumptions that have gone unchallenged, but based on Vanguard's modelling and data, they don't actually stand up to scrutiny. I can't go into full detail here, but they don't believe population reduction will be all that negative. A lot of economists have suggested that it will be hyper-inflationary because a reduction in working age population means there will be fewer people to produce required output to meet consumption and thus, prices will rise. Vanguard don't see it like this though... Very simplistically; if population reduces by 1, consumption also reduces by 1.
As a landlord I don’t recommend buying rental properties in retirement. I’m looking to sell mine before retirement. This government legislation is gonna be very hard on landlords trying to regain possession of property. No fault evictions are coming.
I have more than a few clients coming away from property now. It’s not what it once was, but as mentioned above if you want to make it more of a business it can still work.
Yes. Buying now in a limited company is the only way. I bought mine personally due to difficulties getting mortgage through limited company. My tenants are decent and the additional cash flow helps. However unless you are happy to accept what’s coming from Labour on Renters rights and capital gains then yeh go for it.
Hi Chris pls can you do a video on how to choose a sensible bond fund from a pension provider…. Still burnt by uk gilts, so how can you find something that will do what it says on the tin and provide real low risk ? Thank you
@@chrisbourne-retirementplanner thanks a lot for taking time to reply Chris for sure will take a look, I’d be looking at an existing fund with Aviva, but what to look for in such a fund. Will check out your link big thanks.
@@stuartogden1660 High credit quality bonds will always be lower risk than shares, both in terms of expected volatility and security of the underlying asset. The maximum drawdown (fall in value) on a 100% equity portfolio will always be far greater than that of a basket of AAA rated fixed income securities.
This Labour government are giving me more of a scare than an economic crash would. The average time it takes for a fund to regrow its losses after a crash is 9.5 months. If you have 1 year of spending cash in an instant access savings account (earning about 4%) and another in a higher interest 1 year bond (or similar) you're pretty much sorted for any 2 year doom period. Any crash bigger than that you will be able to observe during that 2 year period and slow your spending to stretch that reserve of cash out longer. Even if the reserve still doesn't last the whole period, your invested fund will have recovered say 90%+ of its value by this point. This is a worst case scenario, unless we are considering WW3, in which case money is pointless, and therefore a fund strategy is equally pointless. Either way, having more money than this as bonds means slower growth throughout, so you would only be fooling yourself to go that route. ie You might feel like you've lost less, but in reality, you will just be living off less throughout retirement.
This is the danger of averages though; they mean diddly squat in the context of a one off event. For example, it took A LOT longer to recover losses after the Wall Street crash and Great Depression that followed. To say your invested fund 'will have' recovered 90%+ of its value is dangerous. As well as that, the above is based on theory, but human beings don't invest based on theory they invest based on emotion. The power of our own cognitive biases are what will ultimately drive decisions. In my 20+ years of dealing with individual financial situations on a daily basis, I can tell you that there are many otherwise highly intelligent and rational people who make irrational decisions when their preconceptions are challenged. The only thing that is surprising is the speed at which they abandon their own convictions.
@@chrisbourne-retirementplanner The only solution to a depression would be to invest solely in bonds just before it happens, so that you have 25 years worth of money in bonds to cover the recovery period. That hindsight is not realistic, and even then, you are getting very small returns compared to the average equity return throughout the last 125 years, which obviously includes the depression. Partially investing in bonds just maintains a drag on your fund growth in the meantime. It is now 95 years since the Wall Street crash and that came about with such a rampant investment hype, which just exacerbated the size of the issue. I don't think anyone should go through their life worrying to that extent. It falls back into the category of WW3 turning up. If the worst happens to the stock market, people can always downsize and add even more years to their fund recovery period before touching their equities again.
@@Dunk1970 Well WW2 wasn’t negative for markets, so there isn’t necessarily reason to think WW3 would be. That underlines the point though - markets are unpredictable, so theory can only go so far. People are predictable though, and it is the behavioural psychology aspect of investing that makes diversification important. I tend to trust the data research of companies like Vanguard - they’re the second largest investment house on the planet for a reason after all. They believe in the value of holding bonds in retirement (and have no reason for bias either way) because they know that investing at that stage of life is no longer about getting the best return possible; it is about getting the required return with the least amount of risk. Reducing the severity of a downturn is likely to stop an investor from making a bad decision (such as selling out at the bottom). The truth is that most people’s limits have never been tested, so they don’t know how they’d act.
@@chrisbourne-retirementplanner My view on advice from financial advisors and institutions is that following the court cases relating to misselling of financial products (eg PPI), the industry has retreated to over protect itself by keeping too much of people's money in risk averse areas. This way, they are well protected if people do get upset at a drop in the market. I fully get why advisors would be cautious, but I don't believe it is for the right reasons. It also appears to be habit, dating from the period where more money went into bonds to protect a pension fund from a drop in the final few years prior to when bought an annuity. We're 9 years on from those days now. I think the advisors need to catch up with the times. With draw down, anyone retiring at 55 has on average 30 years of fund growth to consider. My mother inheritated a good sum of money 7 years ago. She invested it all in cash ISAs and other no risk, low return products from banks she had heard of. That fund, which she doesn't spend from (in case she needs care at home) is now worth less in real terms than when she received it. Back when she was getting a fraction of one percent interest, one of my brothers and I offered to help her invest it (eg in a Globally diversified fund), but she said she wouldn't be able to cope if it 'ever' dropped even for short periods. That was the end of those conversations. If she'd achieved 8% per year, that fund would now be 71% bigger than when it started, beating inflation by far. It would be about 40% bigger in real terms. That's in a 7 year period with an inflation spike. The point is that while downturns happen, and will hit your fund, your fund will be so much bigger when the hit happens, that you'll still have more at the end of it. A diverse fund will always bounce back. They always have. The selling after a drop human nature you refer to isn't something that would affect me. I watched as 33% of my work pension fund vanished in the first day or two of Covid. Other people I knew stopped paying into their pensions (or reduced to the lowest allowed without defaulting). As a mathematician, I recognised them not buying as the equivalent of selling stocks. My reaction was to throw an extra lump sum in. 3 weeks later that fund had recovered two thirds of what it had lost. That's ignoring the extra lump the sum that I'd put in, which obviously benefited from the bounce back as well. While I expected the recovery, it was faster than I thought it would be. I've been watching the markets for 3 decades. It gives you a different perspective to just analysing data with hindsight. I know you can't predict when the bottom has arrived and that the best strategy is to ride it out. The only time I'd be selling is if I have run out of reserve fund and need to sell in order to live. If that happens before the fund has fully recovered then so be it. I will have lost out for that period of time, but the model of having more in stocks and shares will have gained me more for the vast majority of years based on the last 125 years of data. So the bit I'd lose on that occasion, would be offset many many times over by keeping everything in the best long term return vehicle for the pre-crash years.
@@Dunk1970 Some very good points made in your comment and as a recent early retiree I agree with a lot of what you have stated. Similarly, I reached the conclusions you outline after investing in markets for over 30yrs observing markets go up and down for a whole host of reasons and getting used to the fact that this is how they have been and will continue to be. I also hold 3 to 5yrs of cash alongside diversified equity funds. And no bonds due to their interest rate risk given high inflation which has happened before and is likely to happen again with energy prices possibly being the trigger as this affects the price of most manufactured goods.
I’m personally not a fan. It’s still just another asset at the end of the day, and only worth what someone else is willing to pay for it. It also produces no yield, and has little practical use in this day and age. I think it is a small holding in any portfolio for diversification only, not a primary component. That is only my opinion though, others differ.
It has an obvious security risk so take appropriate precautions. It’s great to be able to pass on without suffering any loss through IHT. I hold enough gold for one years income if sold. It helps my gold is worth twice what I paid for it but I don’t see that losing value long term as more and more people look to secure their wealth in items outside of needy government controls! Too risky to keep too much though of course!!!
I have 6% (~£40k) of my SIPP in a physical gold ETC, ticker SGLP. I added it for diversification in my portfolio but the value has grown more than any equities in the same period. Wish I bought more than 6%, but hindsight is a wonderful thing!
@@chrisriddell2800 I’ve known others say the same thing, but after two years of solid travelling, it kind of becomes like everything else. Too much of anything is never a good thing. The reason most people love holidays is because they work hard and the contrast makes them appreciate the break; that’s the payoff. When you’re just taking a break from taking a break, I guess it doesn’t feel the same.
@@chrisbourne-retirementplanner there’s 195 countries to visit. Enough new travelling experiences to last a lifetime without getting bored or the novelty wearing off. The world is a big place! I bet the people you are referring to who got bored just went to Spain/Portugal/France/italy every year. Very predictable
@@chrisriddell2800 Nope. They were fulfilling their bucket lists going to all the far flung destinations they’d always dreamed of. It’s not that they didn’t enjoy seeing the places, but the novelty did wear off and they stopped wanting to do it constantly. You can only learn through experience though.
Can you please stop trying to flex in front of the camera.... You're 50 years old, not 16; I'd expect more maturity from someone I subscribed too. If it happens again, I'll unsubscribe.
Has to be one of the most bizarre comments I have seen in a while. Just Google “financial content completely devoid of any hint of flexing” and I’m sure you’ll find what you’re looking for…
Bonds suck as a diversifier - gold works much better. A simple 75/25 stock/gold portfolio is superior to any stock/bond combination for retirement purposes. Please stop pushing bonds as the natural alternative - the data doesn't support it, even if the dogma does.
There is plenty of evidence that supports high quality bonds as a good diversifier, and I’ve presented that data in various videos on this very channel. 2022 was an exception, but also an extremely rare event. Gold is not optimal; it produces no yield and its price is often highly volatile. For an asset to be considered useful for income generation, common sense dictates that it should at least produce an income. Some small exposure in a portfolio is fine, but to suggest it as a primary retirement income asset is potentially harmful to people.
Hi Chris, great video as always. I’m 60 and have 1.5 yrs before I retire and start my sideline for a small income and enjoyment. With my pot, I’m thinking of moving a large part of it to a multi asset fund ie for wide diversification. Are you are up for doing a video of how we select & buy the funds ? These seem harder to with no obvious etf that I can find, just OICS. Many thanks@@chrisbourne-retirementplanner
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Health is wealth we ALL need to remember that xx
Spot on 👌
So true
I’m 55 and running every day with one day rest. I do body exercises. Push ups lunges etc 3 times a week. Body weights are just a good. Health is wealth.
I agree. A lot can be done with your own body weight. The main mistake people make is just overdoing the cardio.
I was conscious that at age 55 and having reached, if not, exceeded my retirement number (huge thanks to your videos Chris) i was falling into the one more year trap.....my mitigation was that i was 99% sure that within that one more year my role was going to be made redundant and i would receive a very generous enhanced redundancy package. 6 months into that one final year= bingo and the redundancy was announced. Ironically my first bout of sickness in 40 years then meant i needed 6 months of full pay and benefits sick leave which my company gracefully paid me. They then restarted the redundancy consultation....i sailed off into sunset with the one extra year salary pension and 20% bonus, plus the equivalent of 2 years salary and employer's pension contributions at 12% of my gross salary plus 6 months pay in lieu of notice which my company had increased from 3 months after covid. So for me the one extra year was somewhat calculated knowing that redundancy was round the corner. Thank god ive got a poker face and never gave any clue that i wanted to retire 😅😅😅
Very sensible... No point jumping if you think you're going to be gently pushed with a nice little package in the near future!
I'm 38 and well on my to retire at 50. I love watching videos like this as it helps me maintain perspective and identify my weaknesses. Thanks for an excellent video Chris.
You’re welcome, and great to hear you’re on track for retiring at a good age 😎
Emotional, physical and financial, nicely holistical. Well rounded information.
Thank you. I’m glad you enjoyed it!
As always brilliant content. Thank you Chris I'm 53 tomorrow and like to think I'm better equipped for my future from the advice you have given for many years.
I'm 53 and retired in April. I have also learned a lot from Chris and his little snap cubes over the past few years.
th-cam.com/video/AMJ8Ya3CPj4/w-d-xo.html
That’s a nice thing to hear Phil! Thank you for the comment 👍🏼
I struggle with annuities. You are playing against the underwriter, and the odds, and no different to going in a casino. And generally, the casino always wins.
I’ve just started watching your videos, but clearly some excellent advice given.
They’re not attractive to everyone, and less so under the current rules that allow for flexible benefits to be passed on tax free. Depending on circumstances though, they can be useful to create a base income, and often if bought a little later in retirement they can appeal more. A 7-8% guaranteed income for life is quite attractive to some people, but it really does depend on what you want/need. I have a feeling that if a pension death tax is introduced in this Budget, annuities will increase in popularity again.
Great video Chris, loved the bit about health - seen so many family members decline in fitness in their later years, leading to further health issues.
Thank you. I’ve seen over time that looking after your health stretches the early retirement years and adds some ‘good’ years to the end.
This is one of the very best. Well explained Chris.
The earlier you retire, the lower the expected income. With the right cash flow modelling though you can plan to take more by accepting a managed reduction in the value of your pot over time.
Great video as always
Thank you I’m glad you enjoyed it 👍🏼
Super content, Chris, as always. Thank you.
I’ve watched all your videos. Stumbled across them a few years ago, thankfully.
Nearly time to reach out to someone like you for some guidance.
Keep the advice flowing, please!
Will do Stephen. Thanks for being a supporter.
Great video Chris...lots to consider.
Interesting what you say about exercise and the importance of resistance training versus cardio. I'm in my mid-fifties and consider myself quite fit from daily running / cycling, but I don't do any weights. In the past I've tried and always ended up with bad joints (I've suffered from tennis elbow, which was very painful). I'd be interested to know more about why doing only cardio exercise is not enough to stay fit in old age.
Hi Steve. Cardio fitness is good, but too much of it, and not enough resistance training can actually have a negative effect. If you do a lot of heavy cardio your body can actually lose muscle mass because you’ll burn it to meet your energy requirements (look at long distance runners vs sprinters). It can also raise cortisol levels (the stress hormone), which if increased for prolonged periods can lead to chronic conditions. Essentially, cardio on its own though just isn’t an efficient way to boost muscle growth, which is what you’re aiming for to counteract the effects of muscle loss.
Remember that diet is equally as important as exercise; you won’t get any muscle gains if you’re not in a slight calorie surplus and have the right amount (and right type) of protein.
I suffer with tendonitis too. It’s not pleasant but it comes and goes - I get it more when I enter real periods of intense training with a lot of heavy deadlifts, so I try to work around it.
You can do a lot of good stuff just using your own body weight as resistance. If I could recommend a good book on the subject it’s 1% Fitness by Mike Sheridan.
@@chrisbourne-retirementplanner Thanks Chris. I’ll have a look for that book. 👍
Missed you buddy .. another great video
Thanks man it’s good to be back at it 👍🏼
What a great bird’s eye view summary, love that. You are spot on when saying it’s easy to fall into the trap of focusing in on getting enough money for retirement! Plenty to think about, so a big thanks Chris, cheers Mike 🇬🇧
No worries Mike. Glad you liked it. These are all observations I’ve made over the years working with lots of people.
Hi Chris - great video, as always. You offer very thought-provoking insights. I have a question for you about pension contributions. I read that, as an employee, I can contribute up to 100% of my earnings or £60k per annum, whichever is the lower (putting aside carry-over for the time being). As an employee, the most straightforward way for me to make contributions is through salary-sacrifice into my workplace pension. And then I read that I cannot salary-sacrifice to such an extent that my salary falls below the National Minimum Wage. So it seems odd that, on one hand, I'm told I can contribute 100% of my salary to my pension and then, on the other hand, I need to select a % below 100% in order to avoid falling below the National Minimum Wage! Please can you clarify? Finally, must the National Minimum Wage threshold apply to any singular month in the year or can it be applied just at an overall level annually? What I mean by this is that, for this tax year, I have already earned well in excess of the National Minimum Wage - and so, for the rest of this tax year, am I permitted to salary-sacrifice 100% of my salary to maximise my contributions without worrying about falling below the National Minimum Wage threshold? Thanks so much for clearing this up!
I believe your employer can’t allow you to fall below NLW but you can pay up to 100% in (max of £60k) via a SIPP. So make the highest percentage you can through salary sacrifice and just pay the rest into a SIPP.
Hi Keith. It's an interesting question and I must admit, not one I know the answer to because it's more about pay roll rules than financial planning. My instinct would be that as long as your National Minimum Wage has already been met for the 12 month period, you can probably sacrifice whatever amount you want, but I think you'd need to check that with your HR guys. This is something that I think needs to be looked at more closely though - I came across something recently where an employer would only pay someone's pension contributions out of their net pay, because if they paid from gross, it would mean they were paying them less than National Minimum. The problem was, the pension scheme was set up on a net pay basis rather than a relief at source basis, so he was basically receiving no tax relief! Clearly that system is ridiculous.
If you run into problems, you can always take the pay rather than salary sacrificing, and pay what you want into a separate personal pension. It is less than optimal because you although you'd get your income tax back on the contribution, you'd lose the National Insurance. It is an option though if you can't do what you want through your employer's scheme.
@@chrisbourne-retirementplanner Thanks so much, Chris. You're fantastic at providing well thought-through and considered points. I agree that the system seems a bit prone to weakness on this point. And given that salary sacrifice is the main way employees make contributions to their pensions (with many people not even having additional private pensions), I suspect there will be more to come on this issue. I'm very surprised this issue hasn't come to light more widely, as many older workers, especially, very close to retirement age may use their salary sacrifice to the max, given it almost represents an instant savings account into their pension. I'll check with HR and do some digging. As you say, worst case, I'll channel any residual amount into my SIPP that can't be accommodated via salary sacrifice (and forgo the 2% NI saving). All the best and keep up the great work!
Love the content, love the channel, avid subscriber.
Not a fan of the new format though. Mic seems too far away so harder to hear, especially given the music. And the lighting casts a shadow on your face so looks weird.
Might just be me but find the new style videos harder to follow!
Obviously I will still try as I always find the content useful!
Thanks for your comment Neil. I am using a different mic now as used to use a lavalier mic clipped onto my shirt, but now have a shotgun mic boomed above my head. I have tested the sound levels, but perhaps there’s room to move the volume up a couple of notches. The lighting is more intentional, but I realise it’s not everyone’s preference.
Excellent video, great guidance
Thank you I’m glad you enjoyed!
First purchase after I retired was a set of dumbbells 😊
You should have bought them about 50 years ago though...
@@ron5378 Fortunately my office building had a gym in the basement 😊
Glad to hear it! 💪🏼
I've also seen a lot of people keep holding on for one more year which leads to another year and can't understand as I know they can afford to retire. What's strange is they don't seem to love work. I'm 51 and another 4 years I'm hopeful with my planning I can make the retirement jump.
Yeah, it’s quite a common thing I see. Hard to put your finger on sometimes but I think it’s just the lack of an alternative. Some people just don’t know what they’d do with their time if they stopped working.
I’ll remember the sunglasses/umbrellas example 👍
Glad you liked it Chris 👍🏼
Two vids in quick succession. Love it!
I have a quick question if you don’t mind. I want to max out my pension for previous tax years. Do I have to inform HMRC that it is for previous tax years, or can I just put it in and they work that out?
You can just put it in 👍🏼
@@chrisbourne-retirementplanner Thanks Chris 👍
Chris, I keep seeing videos on global population collapse and the 2040 MIT study ‘limits to growth’. At 37 years old it all sounds like everything is going to go wrong just as I start considering retirement. Is your industry looking at this and do you have any thoughts on this matter?
Many thanks,
Jonny
Hi Jonny. Strangely enough, I attended a webinar last week with Vanguard, where they were discussing megatrends like this. There are a lot of assumptions that have gone unchallenged, but based on Vanguard's modelling and data, they don't actually stand up to scrutiny. I can't go into full detail here, but they don't believe population reduction will be all that negative. A lot of economists have suggested that it will be hyper-inflationary because a reduction in working age population means there will be fewer people to produce required output to meet consumption and thus, prices will rise. Vanguard don't see it like this though... Very simplistically; if population reduces by 1, consumption also reduces by 1.
Hopefully when I retire the market is good, as Im cashing it in and buying a few rental properties.
This isn’t really retiring. You’re “retiring” to then run a small business. Nothing wrong with that of course, but property is not passive income.
As a landlord I don’t recommend buying rental properties in retirement. I’m looking to sell mine before retirement. This government legislation is gonna be very hard on landlords trying to regain possession of property. No fault evictions are coming.
I have more than a few clients coming away from property now. It’s not what it once was, but as mentioned above if you want to make it more of a business it can still work.
Yes. Buying now in a limited company is the only way. I bought mine personally due to difficulties getting mortgage through limited company. My tenants are decent and the additional cash flow helps. However unless you are happy to accept what’s coming from Labour on Renters rights and capital gains then yeh go for it.
I'm at that stage Chris,thanks for this, an eye opener.👍
No worries at all, good to know it’s useful!
Thanks, always good to have some common sense thrown at us …..
Thanks Neil 😊
Can we see more on the tax efficiency levers or pull when drawing down retirement income….please
There will definitely be more of that type of content to come.
Hi Chris pls can you do a video on how to choose a sensible bond fund from a pension provider…. Still burnt by uk gilts, so how can you find something that will do what it says on the tin and provide real low risk ? Thank you
Surely buying individual bonds and holding to maturity means you can not make a loss?
Black rock 15 yr gilt - 40% sorry this is a. Bond fund I guess
Have you watched my old video called How to Create Income Using Bond ETFs? It's a couple of years old, but the theory holds.
@@chrisbourne-retirementplanner thanks a lot for taking time to reply Chris for sure will take a look, I’d be looking at an existing fund with Aviva, but what to look for in such a fund. Will check out your link big thanks.
Bonds can be just as risky as shares - unless you hold the bonds to maturity
@@stuartogden1660 High credit quality bonds will always be lower risk than shares, both in terms of expected volatility and security of the underlying asset. The maximum drawdown (fall in value) on a 100% equity portfolio will always be far greater than that of a basket of AAA rated fixed income securities.
This Labour government are giving me more of a scare than an economic crash would. The average time it takes for a fund to regrow its losses after a crash is 9.5 months. If you have 1 year of spending cash in an instant access savings account (earning about 4%) and another in a higher interest 1 year bond (or similar) you're pretty much sorted for any 2 year doom period. Any crash bigger than that you will be able to observe during that 2 year period and slow your spending to stretch that reserve of cash out longer. Even if the reserve still doesn't last the whole period, your invested fund will have recovered say 90%+ of its value by this point. This is a worst case scenario, unless we are considering WW3, in which case money is pointless, and therefore a fund strategy is equally pointless.
Either way, having more money than this as bonds means slower growth throughout, so you would only be fooling yourself to go that route. ie You might feel like you've lost less, but in reality, you will just be living off less throughout retirement.
This is the danger of averages though; they mean diddly squat in the context of a one off event. For example, it took A LOT longer to recover losses after the Wall Street crash and Great Depression that followed. To say your invested fund 'will have' recovered 90%+ of its value is dangerous. As well as that, the above is based on theory, but human beings don't invest based on theory they invest based on emotion. The power of our own cognitive biases are what will ultimately drive decisions. In my 20+ years of dealing with individual financial situations on a daily basis, I can tell you that there are many otherwise highly intelligent and rational people who make irrational decisions when their preconceptions are challenged. The only thing that is surprising is the speed at which they abandon their own convictions.
@@chrisbourne-retirementplanner The only solution to a depression would be to invest solely in bonds just before it happens, so that you have 25 years worth of money in bonds to cover the recovery period. That hindsight is not realistic, and even then, you are getting very small returns compared to the average equity return throughout the last 125 years, which obviously includes the depression.
Partially investing in bonds just maintains a drag on your fund growth in the meantime. It is now 95 years since the Wall Street crash and that came about with such a rampant investment hype, which just exacerbated the size of the issue. I don't think anyone should go through their life worrying to that extent. It falls back into the category of WW3 turning up.
If the worst happens to the stock market, people can always downsize and add even more years to their fund recovery period before touching their equities again.
@@Dunk1970 Well WW2 wasn’t negative for markets, so there isn’t necessarily reason to think WW3 would be. That underlines the point though - markets are unpredictable, so theory can only go so far. People are predictable though, and it is the behavioural psychology aspect of investing that makes diversification important. I tend to trust the data research of companies like Vanguard - they’re the second largest investment house on the planet for a reason after all. They believe in the value of holding bonds in retirement (and have no reason for bias either way) because they know that investing at that stage of life is no longer about getting the best return possible; it is about getting the required return with the least amount of risk. Reducing the severity of a downturn is likely to stop an investor from making a bad decision (such as selling out at the bottom). The truth is that most people’s limits have never been tested, so they don’t know how they’d act.
@@chrisbourne-retirementplanner
My view on advice from financial advisors and institutions is that following the court cases relating to misselling of financial products (eg PPI), the industry has retreated to over protect itself by keeping too much of people's money in risk averse areas. This way, they are well protected if people do get upset at a drop in the market. I fully get why advisors would be cautious, but I don't believe it is for the right reasons. It also appears to be habit, dating from the period where more money went into bonds to protect a pension fund from a drop in the final few years prior to when bought an annuity. We're 9 years on from those days now. I think the advisors need to catch up with the times. With draw down, anyone retiring at 55 has on average 30 years of fund growth to consider.
My mother inheritated a good sum of money 7 years ago. She invested it all in cash ISAs and other no risk, low return products from banks she had heard of. That fund, which she doesn't spend from (in case she needs care at home) is now worth less in real terms than when she received it. Back when she was getting a fraction of one percent interest, one of my brothers and I offered to help her invest it (eg in a Globally diversified fund), but she said she wouldn't be able to cope if it 'ever' dropped even for short periods. That was the end of those conversations. If she'd achieved 8% per year, that fund would now be 71% bigger than when it started, beating inflation by far. It would be about 40% bigger in real terms. That's in a 7 year period with an inflation spike.
The point is that while downturns happen, and will hit your fund, your fund will be so much bigger when the hit happens, that you'll still have more at the end of it. A diverse fund will always bounce back. They always have.
The selling after a drop human nature you refer to isn't something that would affect me. I watched as 33% of my work pension fund vanished in the first day or two of Covid. Other people I knew stopped paying into their pensions (or reduced to the lowest allowed without defaulting). As a mathematician, I recognised them not buying as the equivalent of selling stocks. My reaction was to throw an extra lump sum in. 3 weeks later that fund had recovered two thirds of what it had lost. That's ignoring the extra lump the sum that I'd put in, which obviously benefited from the bounce back as well. While I expected the recovery, it was faster than I thought it would be.
I've been watching the markets for 3 decades. It gives you a different perspective to just analysing data with hindsight. I know you can't predict when the bottom has arrived and that the best strategy is to ride it out. The only time I'd be selling is if I have run out of reserve fund and need to sell in order to live. If that happens before the fund has fully recovered then so be it. I will have lost out for that period of time, but the model of having more in stocks and shares will have gained me more for the vast majority of years based on the last 125 years of data. So the bit I'd lose on that occasion, would be offset many many times over by keeping everything in the best long term return vehicle for the pre-crash years.
@@Dunk1970
Some very good points made in your comment and as a recent early retiree I agree with a lot of what you have stated.
Similarly, I reached the conclusions you outline after investing in markets for over 30yrs observing markets go up and down for a whole host of reasons and getting used to the fact that this is how they have been and will continue to be.
I also hold 3 to 5yrs of cash alongside diversified equity funds. And no bonds due to their interest rate risk given high inflation which has happened before and is likely to happen again with energy prices possibly being the trigger as this affects the price of most manufactured goods.
What do you think or holding physical gold in retirement safer than cash ?
I’m personally not a fan. It’s still just another asset at the end of the day, and only worth what someone else is willing to pay for it. It also produces no yield, and has little practical use in this day and age. I think it is a small holding in any portfolio for diversification only, not a primary component. That is only my opinion though, others differ.
It has an obvious security risk so take appropriate precautions. It’s great to be able to pass on without suffering any loss through IHT. I hold enough gold for one years income if sold. It helps my gold is worth twice what I paid for it but I don’t see that losing value long term as more and more people look to secure their wealth in items outside of needy government controls! Too risky to keep too much though of course!!!
I have 6% (~£40k) of my SIPP in a physical gold ETC, ticker SGLP. I added it for diversification in my portfolio but the value has grown more than any equities in the same period. Wish I bought more than 6%, but hindsight is a wonderful thing!
Not gonna lie, there's absolutely no way I'd ever get bored of being able to travel the world in early retirement
@@chrisriddell2800 I’ve known others say the same thing, but after two years of solid travelling, it kind of becomes like everything else. Too much of anything is never a good thing. The reason most people love holidays is because they work hard and the contrast makes them appreciate the break; that’s the payoff. When you’re just taking a break from taking a break, I guess it doesn’t feel the same.
@@chrisbourne-retirementplanner there’s 195 countries to visit. Enough new travelling experiences to last a lifetime without getting bored or the novelty wearing off. The world is a big place! I bet the people you are referring to who got bored just went to Spain/Portugal/France/italy every year. Very predictable
@@chrisriddell2800 Nope. They were fulfilling their bucket lists going to all the far flung destinations they’d always dreamed of. It’s not that they didn’t enjoy seeing the places, but the novelty did wear off and they stopped wanting to do it constantly. You can only learn through experience though.
I know I will struggle spending my retirement pot 😂😂😂xxx
Just shout if I can assist 😂
@@jocar-1735 😆 same here!
There is no point being the richest person in the grave yard. Spend spend spend. 🤓
You definitely need to enjoy what you’ve worked for.
Can you please stop trying to flex in front of the camera.... You're 50 years old, not 16; I'd expect more maturity from someone I subscribed too. If it happens again, I'll unsubscribe.
😂😂😂 When am I flexing?!
Has to be one of the most bizarre comments I have seen in a while. Just Google “financial content completely devoid of any hint of flexing” and I’m sure you’ll find what you’re looking for…
If your purpose or identity is currently your job, invest in yourself, get yourself some therapy because you have a problem!
Yeah unfortunately a lot of people do find it difficult. They think their work is what defines them.
Bonds suck as a diversifier - gold works much better. A simple 75/25 stock/gold portfolio is superior to any stock/bond combination for retirement purposes. Please stop pushing bonds as the natural alternative - the data doesn't support it, even if the dogma does.
There is plenty of evidence that supports high quality bonds as a good diversifier, and I’ve presented that data in various videos on this very channel. 2022 was an exception, but also an extremely rare event. Gold is not optimal; it produces no yield and its price is often highly volatile. For an asset to be considered useful for income generation, common sense dictates that it should at least produce an income. Some small exposure in a portfolio is fine, but to suggest it as a primary retirement income asset is potentially harmful to people.
When you say bonds, do you refer to individual bonds or investing in bond funds?
@@chrisbourne-retirementplanner High quality corporate bonds, perhaps. Western governments' bonds are junk now.
Hi Chris, great video as always. I’m 60 and have 1.5 yrs before I retire and start my sideline for a small income and enjoyment. With my pot, I’m thinking of moving a large part of it to a multi asset fund ie for wide diversification. Are you are up for doing a video of how we select & buy the funds ? These seem harder to with no obvious etf that I can find, just OICS.
Many thanks@@chrisbourne-retirementplanner
This was my question as well@@ubernard3000