55 with 500k: How Much Can You Spend in Retirement?

[@EyasinArafat-d4r]

This video is amazing! The content is beautifully structured and really informative. I watch it regularly, and for better SEO, consider adding more specific keywords related to retirement planning and financial independence in the description to reach a wider audience.

[@keithplummer8214]

Chris - your content is always top class. Grounded in real-life examples, relevant and presented so clearly and skilfully with plenty of visuals. I really like what you put out there and thank you for doing it.

[@chrisbourne-retirementplanner]

Thank you Keith I really appreciate that 👍🏼

[@AP1112_]

I always find it surprising that people aspire to maintain their lifestyle/income when retired. I'm hoping to retire early but my income will be slashed and my lifestyle will adjust accordingly - 100% worth it to relax after working hard for years 😊

[@chrisbourne-retirementplanner]

@@AP1112_ It certainly makes planning a bit easier if you are happy to reduce your income in retirement.

[@Lovemy911]

Defo.......🙏 I'll take less happily to finish 10 years earlier 😮

[@StanStanman-o3e]

Maintaining lifestyle is easy if you you've always lived beneath your means putting extra into pension.

[@porschecarreras992cabriole8]

@@AP1112_ you shouldn’t really be retiring with £2k mortgage payments! Or at least take the lump sum to clear it and then need less to live and still maintain same level minus the mortgage cost. Before mortgage £75k after £51k and just 20% tax as well

[@farab4391]

Exactly!!! I’m planning on getting a 1/3 of my current income when I retire at 55. I’m able to save enough for early retirement, because I don’t need all of my current income. While other people will keep on increasing their lifestyle with the increase of their income.

[@SuzannePowell-f9f]

I couldn't shift £75K a year if I tried! What are they doing??

[@peterhoughton3589]

They would be better off giving the financial planner fee to a plumber to fix their heating. They’re obviously burning money to keep warm 😂

[@BaileyMxX]

2 grand a month mortgage and 10k a year on holidays eats a fair bit into it

[@andymcnish]

Just stick the mortgage on interest only before they retire. No real reason to pay off the capital if they plan to downsize in a few years, unless the interest rate is higher than portfolio returns

[@davidowen2859]

I couldn't live on 75k a year if I tried.

[@chrisbourne-retirementplanner]

@@andymcnish Possibly, but it can be as long as it is short - continuing to pay off capital means less has to be paid off upon downsize, which means more cash is then available post sale. If growth rates were a definite it would be easier to call, but over a short space of time they’re never certain.

[@LTFC1964]

Retired at 55 with an 850K pot. Took 25% tax free, paid off all my debts which left me with 640K. Kept my drawdown to 4% and as I’ve paid off all my debts I am far more well off than when I was working. Best thing I ever did…..

[@chrisbourne-retirementplanner]

Always good to hear.

[@TheSilvercue]

Pot going into IHT is a blow though, or do you have a plan for that?

[@LTFC1964]

@@TheSilvercueThe balance is in a flexible retirement fund managed by a reputable retirement investment company. I can change the amount I draw monthly at any time but I stay with the 4% rule and in the five years I have been drawing it (I’m now 60) the pot has increased which is amazing.

[@LTFC1964]

@@TheSilvercueIHT I have covered but there is a lot of detail behind it….

[@boombustinvest]

Out of interest, did you do the financial planning to compare how much more tax you would save if you had not taken the TFLS upfront... or were you just set on clearing down debts to be debt free? (Also, what cash buffer in terms of years worth of expenses do you have?)

[@GoneKayaking]

Nice work. Cheers for the illustration.

[@chrisbourne-retirementplanner]

You're welcome!

[@MartinGreen932]

Why do they need £75k a year in the future when the £2k a month mortgage is paid off soon? They are basically caked and if don't fancy working any longer will be fine.

[@chrisbourne-retirementplanner]

@@MartinGreen932 It was in place for another 5 years, so they only needed that level of income initially. You can see on the cashflow chart when their expenditure needs drop after the first five years.

[@theaverageguitarist9036]

If I hated my job and wanted to leave I think I'd cut down on 10 grand a year hols.

[@stevegeek]

Yea! 75k per year…not exactly frugal living!

[@coderider3022]

Yeah wow. And the 200k ish mortgage.

[@chrisbourne-retirementplanner]

Yes being frugal definitely wasn’t on the agenda. That was what made me choose this case to feature though - it allowed me to demonstrate what was potentially possible by pushing the boundaries.

[@stevegeek]

@@chrisbourne-retirementplanner Quite an eye-opener! I recently retired with a similar pension pot and living well on less than half this income, but then I am mortgage free.

[@Mags_Rob_Asia]

another way to to do it is to try and bring your spending down to what you will spend in retirement.at 54 I realized I only spend £15k a year when redundancy. came up this year I realized my pension matched my outlay so was a no brainer for me.

[@chrisbourne-retirementplanner]

Yes it certainly makes things easier if you can do that. I suppose it comes down to what you’re used to, and then what you’re willing to forego. If you can let your lifestyle not grow too big in the first place then there’s less to give up - but I guess that’s easier said than done.

[@Mags_Rob_Asia]

@chrisbourne-retirementplanner thank you for your reply

[@psprog]

I'm sort of close to this in pot and age so found this super interesting! I'm unusual as single and want to burn it down to near zero. For me I'd only need £20k max to live like a king. I struggled to spend that much this year, and that included two 2-week trips to Japan (£5k ish total). We all have our "figure" I guess!

[@chrisbourne-retirementplanner]

Thanks I’m glad you did! Yes, definitely - we all have very different numbers. Sounds like you could live a very good lifestyle with that pot!

[@gordonjames8233]

I'm in the same boat. Single, similar pension size ISAs and debt free. this has come at the exact right time. I'm nearly 55 and seriously considering early retirement very soon. more of the same Chris

[@ryanmarsh4707]

I’m in a very similar situation to you too. Bit more ISA and cash but a little less in Pension. £20k pa is about what I’ve used over last few years. So could survive happily until state pension kicks in. And end up with nothing in the bank when I leave this planet

[@andrewjackson8089]

Why worry about late life care! My grandmother went into a home at £4000 per month….if she hadn’t had any money the state would have paid! Balls to that😮

[@porschecarreras992cabriole8]

Chris please clarify something. The couple needs £75k net not gross. So in voyant do you need to add the gross deductions from the pension savings or not which will be over 90k per year for this amount.

[@chrisbourne-retirementplanner]

Voyant calculates the amount of tax that would be paid in order to arrive at the net target figure. It has all allowances, rates and bands built in, so tax calcs are done for you. The reason the tax comparison showed less tax in the downsize scenario was because less was being drawn from the pension due to there being more cash available.

[@TheSilvercue]

All of my plans have been thrown up in the air. Plan was pump the pension. Live of ~4% drawdown and leave pot to my son. Now IHT on pension pots has changed everything.

[@chrisbourne-retirementplanner]

You can still leave the pot to your son, he would just have to potentially pay tax on what he inherits, and then only if your total estate exceeds the nil rate band threshold. They will probably also introduce legislation where he wouldn’t pay income tax if he’s already paid IHT. In reality therefore, the situation might not be that different… Under current rules, if you died after the age of 75, your son would have to pay income tax on withdrawals from the inherited pension. If he took the whole sum in one go, a good chunk of it would likely be subject to 40% income tax anyway (some possible even at 45% depending on the amount). Tax on pension death benefits is not a new thing; the tax was 55% prior to Freedoms legislation in 2015. When we’re more sure of the landscape there may be some planning that can be done to help mitigate tax, but remember that a pension was designed in the first place to be a retirement income vehicle for the holder, and nothing has really changed in that regard. It’s only been since 2015 that pensions have almost morphed into wealth transfer vehicles. That was never their intended purpose.

[@TheSilvercue]

@@chrisbourne-retirementplanner the problem is I am single. So my IHT allowance is only £500k. I live in South East, so my standard house is already worth well over that. That means my entire pension pot will be taxed at 40% now when I leave it to him, where as it was going to be IHT free. Massive change

[@FoobsTon]

​@@TheSilvercue You're worrying about something that will only happen when you're dead?

[@StoodersFam]

@@TheSilvercuestart gifting him mine now so you can see he enjoy it - you’re a long time dead - put your house in trust

[@mikegolfwhiskey71]

I'll be amazed if people continue to get access to a full state pension in future. The day is likely coming when the Government reduce or means test the state pension. My pension planning assumes that I don't get the state pension because there is no certainty that it will be available when I reach state retirement age.

[@Stuart-f2m]

100% correct so anybody putting money into a private.pension is pretty dumb unless they don't want the state pension.

[@markturner6755]

@@Stuart-f2mor unless they want/need more than the state pension, which won’t go far.

[@Stuart-f2m]

​@@markturner6755 The state pension is worth around 250 k . What sane person would deliberately deprive themselves of that when you can put money in non means tested assets like , crypto, gold , cars , jewelry, watches . If you don't want a state pension then by all means give the Government a reason to take it off you .

[@markturner6755]

@@Stuart-f2m the ones that want/need more than £250K. Crypto is still too volatile, Precious metals yes up to a point ( if you can achieve spot price) watches and jewellery not so much as you will likely lose a shed load on resale.

[@LTFC1964]

@@mikegolfwhiskey71 if they ever did stop state pension, they would only be able to do it from a set point in the future as you cannot stop it for people who have contributed fully with NI contributions as that it one of the reasons you pay it.

[@3thinking]

Very interesting analysis. I've often thought that for many people, instead of downsizing at the start of retirement, if later they become low on capital ,they could use equity release on their home? What are your thoughts on this approach?

[@Lord-Brett-Sinclair]

My thoughts also, equity release on the face of it answers a lot of questions- but it needs to be able to convince people they cant end up in trouble.

[@AgileSnowWeasel]

Equity release eats up all the capital in the house eventually whilst only giving you a fraction up front. Downsizing is far better.

[@JamesKerr-z4o]

@@AgileSnowWeaselit’s just a thought but taking equity release if things were getting tough at 90 might be preferable to moving at that age, but yes planning equity release at the start of retirement would be crazy.

[@chrisbourne-retirementplanner]

@@3thinking Yes, it’s a perfectly viable approach as long as all the implications of equity release are understood. I always say that nothing should be dismissed before its pros and cons have been weighed up. Downsizing isn’t always practical, and some people have very strong attachments to their homes.

[@TaiwoOmotosho-m9v]

@@AgileSnowWeasel Many Old folks regret it and wished they had stayed in the family homes instead of moving to retirement apartments/flats.

[@wakeywarrior]

lol it’s no point retiring for me if I can’t travel. Intend to spend circa 15k a year on holidays maybe when retire. I may as well keep working if I couldn’t travel aboard 4 times a year. Aiming to retire at 58 with 1- 1.2m in a pot, 200k cash, wife will bring in local government pension of 8k. House was paid off at 42 so no mortgage. Not sure if this will be enough but I hope so. I refuse to pay 40% tax on my pension drawings so will keep that to £50k plus I’ll have tax free sum hopefully not sure on strategy on that though yet. Great videos!

[@chrisbourne-retirementplanner]

It’s great to read a comment like this to give some balance to all the others that say the spending in the case study is too high. There is no right and wrong here. Every individual should have the right to choose the way they spend their money and their precious time 🙏

[@thomasbroker69]

How much does it cost to get someone like you to plan it for me?

[@MrKlawUK]

I do like these videos but often the titles are a little misleading. to the point where I’ll go in looking for the gotcha. in this case its £50k in savings and £100k from downsizing and equivalent of £130k ish in a DB scheme. yes thats important for peopel to consider in retirement, but then its a £650k pot not a £500k pot and they wouldn’t be able to retire with 500k at 55. It does give me some positive thoughts as we wouldn’t need £75k a year and perhaps I should talk to someone when I hit 55 soon just to get a ‘lie of the land’ to understand if there are options for retiring sooner than 65

[@chrisbourne-retirementplanner]

I’d say it would be rare for anyone who has a £500k pension pot to have no other assets at all though. The pension pot usually provides the main thrust of income, but many people have it in their minds that they have to cover all of their needs from that single source, so videos like this aim to show what is possible in the the typical situation of a similar individual. The second part of your comment highlights why I chose this particular case study though - the expenditure needs were probably outside of the norm, so the idea is hopefully to get viewers to think ‘If £75k a year is technically possible with these sorts of adjustments, my more modest income needs should definitely be achievable’. Thanks for commenting though and I’m glad the video was somewhat useful.

[@beofile7]

Moving home is a terrible idea. It costs a lot of money to move. Their expenditure is nuts! I live exactly as I did when working on 15k a year all in, all bills paid. If you have no debt and yearn for nothing what can you spend such large sums on?

[@chrisbourne-retirementplanner]

Moving does cost money but it is the most effective way to release equity from property for many people. If you no longer need a property of a certain size, it makes much more sense to downsize and use the capital that is released rather than stay where you are just because there are some costs to moving.

[@paulchadwick5571]

Tax planning in retirement is something I have been thinking about, and an off the wall option came to mind! Within a married couple, if the pension pot is largely with one partner, tax planning is difficult to optimise. My understanding is you can not split a pot between spouses when the pot is in one persons name. Unless you get divorced! So, is a divorce an option for a more tax efficient retirement with this scenario? The cost of a quickie divorce and then getting remarried could be way less than the savings. Would be good to see this worked through in a video if it's valid.

[@chrisbourne-retirementplanner]

@@paulchadwick5571 Crikey that’s not one I’ve ever considered before! Definitely a bit niche 😆 I wouldn’t be sure of all the legalities around that tbh.

[@michaelhaardt5988]

Fair approach: First enumerate all assets and then optimize the allocation for a better ROI. An expensive house is not an investment, but a liability. Go with the cheapest house you could be happy with.

[@chrisbourne-retirementplanner]

Yeah I agree that most people see their house as their biggest asset, when in many cases it's their biggest liability... It sucks money out of their pockets every month and never replaces it until it's sold and traded down.

[@gerardquinn9469]

Good article although the balance of keeping money in your pension longer and the potential of inheritance tax on the pension pot leaves me feeling slightly uneasy with this use-case and might not be practical or wise given the recent changes.

[@chrisbourne-retirementplanner]

The inheritance tax doesn’t affect the clients themselves though; it would be paid by their estate beneficiaries, not them, and only then if their estate exceeds the combined nil rate band threshold in the future, which it may not. Whilst pension assets being included in the scope of IHT isn’t ideal, that’s more from a process perspective; death tax on pension pots is not a new thing… the tax was 55% prior to freedoms legislation in 2015.

[@FlyingFun.]

£75k per year spending seems crazy to me, we get by on less than £30k between 3 of us. Some people spend money like it is going out of fashion lol. But good to see whats possible with planning , obviously the downsize is a big release of cash that for many wont be anywhere near as a big.

[@Shutityou]

Most of the world would see your 30k as crazy. It’s all relative.

[@chrisbourne-retirementplanner]

Yes it really just comes down to what you’re used to and then what you’re willing to forego. As you say above though, this was mainly to demonstrate what is possible with some planning.

[@gb194]

Retired at 46 and 10 months. 1 life, do what you want

[@chrisbourne-retirementplanner]

Agreed.

[@dougm659]

Outgoings of £75,000/year? WTAF? What on earth are they spending that kind of money on, if their mortgage is £24k a year where is the rest going? That’s completely ridiculous!

[@chrisbourne-retirementplanner]

@@dougm659 I have clients who comfortably spend double this without a mortgage. Your lifestyle will generally match your means.

[@steviebooth]

Thanks Chris. Very interesting stuff.

[@chrisbourne-retirementplanner]

@@steviebooth Pleased you liked it Stevie. Thanks for watching.

[@mwscuba]

another great video that's not too far away from what i'm planning doing. keep up the great work

[@chrisbourne-retirementplanner]

Thank you! Glad it’s useful.

[@ultanwoods]

Great video

[@chrisbourne-retirementplanner]

Thank you!

[@jonathanhowson6420]

Another brilliant video Chris. I have no idea why you only have 37K subscribers for the quality you deliver. An equal to James Shack IMO, but I think you have been doing this longer. Keep up the good work. One question, is there any benefit of holding back on pension contributions from 57 to 60 then cycling my lifetime ISA through/into the pension when I hit 60 and backdating 3 full years, to get the benefit of the tax back, or am I actually better off continuing to make those contributions from my company directly into my pension and just keep the LISA as it is. I can't figure this one out in my head. Many thanks, Jonny

[@chrisbourne-retirementplanner]

Thanks Jonny. That’s kind of you to say because James makes excellent videos. I don’t think my content posting schedule has been consistent enough over the years to be honest, which is why I’ve got relatively few videos overall. I will be posting regularly from now on though. I’d say it would be better to keep contributing through your company. You’ll get the corporation tax benefits in the same year, and by delaying making contributions you’ll miss out on important time in the market - this will often outweigh any tax advantages.

[@stuartogden1660]

Thanks for the video - very reassuring

[@chrisbourne-retirementplanner]

@@stuartogden1660 Glad it was Stuart. Thanks for watching.

[@RobertGillontheinterweb]

Someone has listened to the TRAP James Shack episode and decided, quite rightly, to get on board

[@chrisbourne-retirementplanner]

@@RobertGillontheinterweb No I think James Shack had watched James Canole 😉

[@RobertGillontheinterweb]

@@chrisbourne-retirementplannerhadn’t heard of the other James, *searches him up, sees very similar video titles with $ instead of £*. Anyway, very good video 👍

[@cryptobond8650]

Currently £500k in SIPP (£900k+ in total - no house) at 48. Want to retire as soon as possible. Would be curious to find out if it's doable like right now? :)

[@chrisbourne-retirementplanner]

Possibly. You won’t be able to access the pension for a while so you’d need to have enough to bridge the gap for about 9 years. The only way to work it out would be to cashflow model it.

[@Paul-vl2wg]

I assume you mean 19 years and not 9 unless I'm missing something? 67 less 48 = 19

[@chrisbourne-retirementplanner]

@@Paul-vl2wg SIPP will be accessible at 57.

[@jimsully9851]

Take into account accessing pensions is getting later and later. I suspect in 20 years one will have to be nearly 70 to get it.

[@darrendesmond5395]

Fantastic. This is the dream.

[@chrisbourne-retirementplanner]

It's all possible!

[@roblowry9457]

Great video Chris. You say you use 2.5% for inflation. What % do you use for growth on Voyant? Many thanks

[@chrisbourne-retirementplanner]

Hi Rob. I popped the growth assumptions are in the vid description… For pension assets it’s 4.5% net, which is quite conservative historically speaking.

[@bdcash]

@@chrisbourne-retirementplanner Is that 4.5% growth after inflation or 2% net growth, after deducting inflation?

[@chrisbourne-retirementplanner]

@@bdcash The 4.5% growth is applied to assets on an annual basis whereas the 2.5% inflation is applied to expenses annually. They are therefore applied to different elements of the projections.

[@SimonHutson]

Thanks Chris. Very timely case study.

[@chrisbourne-retirementplanner]

No problem Simon glad it was helpful.

[@jeffreyday4004]

so the advice is move to a job that pays less which means you need to move to a cheaper house! Phil, lower paid work will come with its own stress, you'll work harder for less and get paid 20k per year doing menial work and still have a boss, only less skilled. I'd address the issues that causes the stress in the first place. Whilst personal expenses are 20k per year (3 grand a year on clothing and footwear!) that would imply other costs are £55k per year, nearly 5 grand a month. The mortgage is 2k per month where's the other 3k go, 2 cars and household expenses should be no more than 2k? You could take your tax free pension allowance of £125k and finish the mortgage off and stay where you are. The job stress will ease knowing you "could" walk away anytime believe me. Try the stress of moving home and then living somewhere cheaper day in day out. Over the next 7 years save 20k per year (instead of paying a mortgage) into S&P500 ISA and based on last 7 years performance that should amount to £200k+. You retirement pot will now be £575k plus whatever the residual pension accrued, lets say 650k nearly a third of which (the ISAs) is tax free. Retire at 62 with your wife and for 5 years live off 6% of your pot (use the pension money, far less tax) £40k per year. At 67 you'll have your state pensions £24k per year plus you wife's 6k per year, and you can reduce your draw to 4% at £20k per year, that's 50k per year, get rid of one car, and you are still in your nice house which you can leave to your kids one day or help fund care.

[@chrisbourne-retirementplanner]

Thank you. The only problem is, none of what you said is what they wanted to do. You can’t start giving advice when you don’t understand someone’s situation and drivers. As it happens, this client did leave the job he was in, and then started doing something completely different (although much lower paid), which he loved and found very rewarding. Being an adviser does not mean telling someone how to live their lives.

[@Drzee1968]

There are a lot of variables in this case, but the title of £500k retirement is a little misleading given the wife's private pension, plus the state pensions during the retirement period. If it was just £500k for retirement, the picture would be very different?

[@chrisbourne-retirementplanner]

The extra pension was helpful, but it didn’t start for another 10 years and the plan would actually still have been sustainable without it. I’d also argue that pretty much all working people would have accrued something close to a full state pension by the age of 55. I think it’s probably more realistic to assume that most people who have a £500k pot would at least have some other assets, even if the £500k is still the primary driver.

[@garycroft8213]

Interesting, I think a flexible retirement is something I will look at. I have also looked into plans of potentially short term work over 2 tax years e.g. Jan-Jun to get use of multiple years personal allowances. It would then be possible to work on and off every 18 months for just 6 months, doing this 3 times could carry over 5 or 6 years. 18 months work over 6 years doesn't sound very hard.

[@chrisbourne-retirementplanner]

Yeah if you can do it that would be a solid plan Gary 👌

[@blah4306]

I never max my stocks & shares ISA out with Vanguard I usally have about 12k remaining, I have Rolls Royce shares held with Hargreaves Lansdown around 28k profit, could I move them into a stocks & shares ISA at the end of March to avoid CGT then start paying into my Vanguard ISA again in April then repeat again at the end of the next tax year? Amazing to see you back again Chris!!!

[@alrightdave6135]

No

[@chrisbourne-retirementplanner]

Thank you! You can certainly move the shares into an ISA, but you’ll have to wait until after April 6 if you’ve already contributed to the Vanguard ISA this tax year. You can only contribute to one stocks and shares ISA per tax year. There will be some CGT to pay if you do it (but there would be even if you were able to do it now). CGT rates all went up from 30th October.

[@blah4306]

@@chrisbourne-retirementplanner thanks Chris

[@BaileyMxX]

​@@chrisbourne-retirementplanner thought they changed the rules this tax year (back in April)that you can move/pay into more than one stocks and shares ISA per year? Obviously you still only have the 20k per year limit. Vanguard seems to suggest the above on their website "As of 6 April, investors are allowed to open and pay into multiple ISAs of the same type in the same tax year (except for lifetime ISAs). This means you could contribute to two or more stocks and shares ISAs and/or two or more cash ISAs. Previously, it was a case of one ISA of each type, each tax year" Please confirm as I thought the above was true?

[@chrisbourne-retirementplanner]

@ Ah yes you’re right! I forgot about this myself! Thanks for reminding me… On that basis it would be possible to open the other ISA with the remainder 👍🏼

[@derekscott7912]

Another great video Chris!

[@chrisbourne-retirementplanner]

@@derekscott7912 Thanks Derek!

[@robertritchie7464]

I am going to go for withdrawing 5% of my portfolio every year in retirement, so if i wantbto retire with a 50k income i will need roughly a million

[@Bob_too]

Can you do a video based on £1.5m pension (after the full PCLS has been drawn) from a single pension and retiring at 57 ?

[@sopissedoff]

With 1.5 m, you can afford to take up this man planning services,, stop free loading😮

[@69spook]

If you've got that sort of Dosh you can afford to pay for advice😂

[@ianmcneill1079]

Isn’t it a bit bad form to be assuming 2% increase in tax bands when that is off the table until at least 2028 ?

[@chrisbourne-retirementplanner]

@@ianmcneill1079 I think it would be more unrealistic to assume that the bands won’t increase for another 35 years. It will make very little difference in the early years anyway, but the compounding effect over time would become much more significant.

[@Pokerbr4t]

Retired at 55 with 700k in pot, took tax free lump sum, paid off mortgage and any debts i had, bought car cash. Left with basic outgoings, drawing down 20k(4%) from exsisting pot(could prob take more as performing at about 8%. Now have more free cash than when i was working, life is good.

[@mikesweeney651]

Does that 700k pot include your house or is that separate money?

[@liftfan2]

Interesting. So you have a £500k pot left? Where is that invested with 8%? 20k doesn’t go very far in SE England. My council tax alone is £4k per year!

[@Pokerbr4t]

​​@@mikesweeney651 yeah that was pot when turned 55, payed house off with lump sum

[@Pokerbr4t]

​@@liftfan2 Pot self managed, returned 39k last 12months, 30% in Usa equities, 20% global with dividends fund, 10% bonds, rest was in cash getting 5% int, cash int % dropping now so will start putting more into equities but keep prob about 100k in cash. Cost of living not too bad north of border.

[@liftfan2]

@ Thanks! Appreciate the info.

[@slayerrocks2]

I have a DB pension that I can't access until 60 (without large reductions). It will pay, in today's terms, 16k until state pension age, when it drops by 5k. Also 80k pcls. I have 140k DC pot, with 1k per month going in, and I'm aged 55, aiming to go at 60, but wishing I could go sooner. Not keen on downsizing as neighbourhood is good and convenient for hospitals, shops, entertainment etc, and close to our kids. My OH gets state pension when I'm 61. Going earlier reduces the pot a little when compared to the cost of not adding more via salary sacrifice. Am I trapped in work? It is physically demanding for an old fart like me, with medical issues. I set my target at 36k household income. Could scrape by on 25k, but I need to see some good times, after grinding it out for 50 years.

[@chrisbourne-retirementplanner]

It's difficult to know unless you properly model it out. Have you looked at the cash flow modelling options available. I obviously use Voyant and offer that with my course, but there are free tools as well like Honestmath that could be somewhat helpful.

[@slayerrocks2]

@chrisbourne-retirementplanner thanks for the reply. Is Voyant a one-off payment or subscription?

[@chrisbourne-retirementplanner]

@@slayerrocks2 Well it is an annual subscription but you don’t need to retain the subscription if you’re not using the software anymore. Most people keep it because their circumstances change, but there are no contracts or anything like that.

[@slayerrocks2]

@chrisbourne-retirementplanner thanks Chris. 🤜🤛

[@Russtuffenuff]

Chris, in terms of IHT planning since the budget, it seems a no brainer to me being over 55 to withdraw my whole 25% tax free pension lump sum and let it grow outside my pension and then draining my remaining pension tax efficiently. Then living off non pension assets after that allowing me to gift my kids at the appropriate time for me what i can afford to pass on. Am i missing something here re the 25%? Anyone else any thoughts on this?

[@chrisbourne-retirementplanner]

It would seem as long as it is short to me, unless you're specifically planning on gifting that 25% so it exits your estate? Otherwise, it will still be subject to the same treatment on death whether in or out of the pension. You can still draw the lump sum alongside your other pension withdrawals monthly, which would reduce the effective rate of income tax applied to the total withdrawal (i.e. only 75% of the monthly withdrawal would be subject to tax). I do think there'll be changes to the proposed legislation though anyway so it's probably wise to wait until more is known.

[@Russtuffenuff]

@@chrisbourne-retirementplanner Although if you die after 75 and leave your full pension to your spouse they will pay income tax on the full pension and if it has grown from today say by 50% then they will pay a significant amount more. If i were to take that 25% tax free lump sum now and It grew by 50% in my share acc my spouse would pay far less on it in a share account later. If i drain my pension entirely over the next 15 years and put it into my share account and it grows, my spouse will pay less tax on using it later than if it grows in my pension and then she takes it out later. So If i assume it isn’t going to be used for 15 years its better to get it out of the pension than to leave it in! Unless of course iht or tax levels are relaxed, but i cant see that at the moment and can’t gamble on that. R

[@christiansoldier1118]

I bought some magic beans with my life savings - unfortunately the Giant at the end of the Beanstalk was a fugal minimalist and had all his money invested in a Global Index Fund!

[@paulmiller9997]

The frustrating thing about these videos is that they ALWAYS assume that the person owns their own house. There are so many people now who just rent, and are looking for retirement advice. But there are very few videos that cover this additional retirement expense.

[@Shutityou]

Include and index linked amount for the rent then. That’s not that hard and indeed when it comes to care in very old age it makes it simpler.

[@chrisbourne-retirementplanner]

Hi Paul. You’re right, it’s just that this was a real case study. I think the problem is that it is representative of an adviser’s client base in general - I don’t have any clients who don’t own their home. I have one who rents his main residence, but he still owns other property. I think that’s why videos will cater more to that demographic, but I understand it’s not specific to everyone’s situation.

[@DanielJHillary]

They don't assume. They undertake a fact find to determine assets. I suspect you're complaining that their case studies always own a house.... Which would be a fair observation

[@Mallarkey]

I suspect that if someone is approaching retirement but has been paying rent their whole working life, they're far less likely to have had enough spare cash to grow a decent-sized pension pot or consider early retirement. Home-owning has always been the long-term financially sensible approach. Do it early, don't over-reach, and you can be mortgage-free by 55, at which point you are dropping your monthly requirements by a massive amount. It CAN be done.

[@paulmiller9997]

@@Mallarkey That's a pretty reckless statement to make without any knowledge or experience.

[@theoisme]

In the situation summary you should state the equity in the house, a house worth £700k means nothing really, also as you hint later on, this has a lot of equity in it, then the title of the video is wrong as they have over a million. How about a video on the pro’s and con’s of downsize vs interest only remortgage

[@chrisbourne-retirementplanner]

The summary does state that they have a mortgage costing £24k a year with 5 years left to run, so you can approximately work out what the outstanding amount is and resulting equity, but it’s also stated that there would be £100k left over after the existing mortgage is paid off. There isn’t really £1m investable - that would only be the case if they chose to live nowhere… Even when they downsize there is still a lot tied up in the value of the property, which cannot be spent.

[@davebeef2001]

Would have been nice to have the basic scenario without any other income and no further savings, just simply £500k in pension at 55 with mortgage paid off. There’s always other income, DB pensions and savings in the mix in these videos which are unlikely to match anyone else.

[@chrisbourne-retirementplanner]

This was a real scenario so the figures were as they were. To be honest though, this is fairly typical… In many cases even the secondary earner has some form of pension provision, and there are often some savings too. The possibilities would be different if those things didn’t exist, but the beauty of cash flow modelling is being able to test the scenarios out.

[@brummieirish9476]

A better title for the video would have been “Impossible to retire at 55 with £500k unless your missus keeps working and has a DB pension in the future to rely on and you sell your house”

[@gordonjames8233]

that's quite funny. but these vids are always worth viewing to compare against. come on the reds tonight.

[@chrisbourne-retirementplanner]

@ That was actually my first title, but I decided it wasn’t quite catchy enough.

[@brummieirish9476]

Great reply Chris! That made me laugh out loud. Nice one.

[@andymcall1986]

500k is my target number for my stocks and shares portfolio. 4% drawdown being £20k a year. I've also got my DB pension, which will pay out £26k a year at 60. Both together should be enough, with mortgage cleared by 58. With 22 years still to go though, and being in the messy middle... Anything could happen!

[@chrisbourne-retirementplanner]

The only thing I’d say Andy is that you’ll probably need to inflate that £500k figure up. You’ll want it to be £500k in today’s terms, which will be quite a different target.

[@ChrisBird1]

So he's got over £1million NOT £500k AND HES Worried about having enough money 🤡🤡🤡🤡 fancy been willing to work another decade or two because you REFUSE to reduce your expenses .. this is the reason most people work all there life and die . I semi retired at 36 and have no where near that amount . I don't waste money on holidays because I'm on holiday every day 🎉🎉🎉

[@chrisbourne-retirementplanner]

Well, with the equity taken from the house they had some extra, but not over £1m spendable unless they were willing to live in a motor home or something. I suppose it comes down to what you prioritise and need to feel comfortable with your life. That number’s higher for some people than others. It is easier if you can strip everything right back, but that just isn’t what some people choose to do.

[@ChrisBird1]

@ they wouldn't be ina motor home with nearly £1 million invested 😂 more like a 5 star resort somewhere warm . Like you say we all different ,but most are stuck in a cultural norm ,my car's newer than yours and my kitchens better 😶

[@SevenEllen]

Have you bought all your National Insurance Contributions? What about health care later in life? Do you have kids to take care of you? Funeral to pay for? etc

[@ChrisBird1]

@@SevenEllen no kids .. pay national insurance monthly via direct debit .. not worried about who burries me as my parents will be long gone ,I will simply be incinerated . I keep myself fairly healthy , longevity is my Hoby in a light hearted way . I aren't going to worry myself to death about getting cancer or having a stroke .. if it's that bad I will have enough money to get euthanized . Live whilst you can . Soooo many variables out there. My parents never expected me to care for them as they aged ,and I wouldn't burden my kids ,if I had any .

[@digger8180]

55 with 500k, this is not the average person out there .

[@AgileSnowWeasel]

500k + around £130k equivalent DB scheme + £42k savings + £700k house (with £100k mortgage) - yeah, not average. But not untypical of the sector of people who would seek financial advice.

[@chrisbourne-retirementplanner]

@@digger8180 Yes, as mentioned by the commenter above; possibly not the average person out there, but it is my typical client.

[@digger8180]

@@AgileSnowWeasel Tell that to the majority of the populace of the UK, not just the South of England. Think again.

[@Aaron-kw4vq]

@@chrisbourne-retirementplannerMaybe not the average but still relevant to many, me included. Thanks for this Very useful…

[@MarisUlmkalns]

Less than average?

[@simonnicholls3650]

Good luck finding any well paid job at 55 plus...

[@chrisbourne-retirementplanner]

Fortunately in this scenario a highly paid job wasn’t necessary, but it can depend on the career you’ve had… Many of my clients have been tempted back into work and head hunted for their skills at more advanced ages.

[@SlabISO]

Not by the time this government finishes with you…

[@TheSilvercue]

Size of everyone’s pension pots in the comments is making me feel poor!

[@tancreddehauteville764]

I have £720k and nearly 58. Wondering what to do, unwilling to sell the house to get equity. I hate my job.

[@porschecarreras992cabriole8]

I am so similar to you here...but still I don't plan to keep working beyond 59 under any circumstances.

[@boyasaka]

Why on earth u still working

[@Shutityou]

@@porschecarreras992cabriole8change your job to something more fulfilling.

[@chrisbourne-retirementplanner]

@@tancreddehauteville764 Sounds like some sort of change is required though if you really hate your job.

[@tancreddehauteville764]

@@chrisbourne-retirementplanner I know, but the pay is very good. It's just that it's very high pressure and taking a metal toll on me. I also still have £29k left on the mortgage.

[@davidmelrose8051]

Values like 500k are only an advert for the services offered by yourself.

[@sassasins031]

£200 per month into a SIPP for 40 years equals £500K while investing in a global stock tracker.

[@69spook]

​​​@@sassasins031Correct 💯. Yep, that is basically me. Drawing down on my pot now I'm retired. But a lot of people stop paying into their pot when times are tough (like now) & never restart. 😮

[@jjsmallpiece9234]

Sounds like this supposed couple need to take a reality check for outgoings

[@Michael-4]

Middle class problems.

[@simonwinsbury5715]

These videos annoy me as who has those types of values in money pensions etc - be realistic….

[@chrisbourne-retirementplanner]

@@simonwinsbury5715 Well, all of my clients have pension values of around this level and above. If you have a quick read through the other comments you’ll see that lots of people have similar amounts put aside.

[@markhickson9087]

Rubbish video. Simple amswer of the title was not enough for them. Loads of they had to plan to sell their house, work longer etc etc. And then give me your money to use these tools.

[@chrisbourne-retirementplanner]

@@markhickson9087 I think the idea is you can maximise your assets to make the situation work for you. The nuance of the fact that the client was able to drop from a six figure job to (optionally) working after a two year break in order to strengthen their plan must have been lost on you.