All good retirement plans start here - Step 1

[@JamesShack]

Again, this is one of those really simple things, that we all know we should do... but never quite get around to it!

[@JamesShack]

@@owenbendavies good idea. To answer that - all investment providers use nominees which means they do not actually own, or can they touch, any of the underlying assets. So it’s like all you shares are kept in a little black box and even if vanguard goes bankrupt, your shares would still be there. Fraud is of course a risk but it’s so small that it still makes sense to keep many millions with the same platform. Spreading them just makes the administration harder from your perspective!

[@alessandrasouth7288]

@@JamesShack hi, can you please explain who are the nominees and also, if the funds are safe what is the purpose of the fund schemes like the FSA? I just want to make sure I understand properly what you mean 🙂

[@bushrakhalid9323]

Can you please advise James where I can get the budgeting sheet. Many thanks for addressing the topics and areas that most people avoid. Love this stay blessed stay energised 🙏

[@gonnahavemesomefun]

I grimace for those that gromis at creating a budget. A budget is a MUST. We have 2 lol! A monthly and yearly. The monthly for regular bills/savings/investments. And a yearly for all those yearly bills/holidays/goals. It takes some time, but once we'd done it for a couple of years it was easy. So for our retirement plan it's pretty easy to know what to remove/add. Another exceptional video James thank you.

[@pauljackson1892]

Hi James, never done this before, but I've jusy sent you a very small token of appreciation for your you tube videos on pensions. The item re how many summers/ years seeing we have left puts it all in a clear perspective. Many thanks. Keep it up. I will forward this to as many people as i can.

[@Clarioner1]

Loving you're style of presenting, and generosity with your knowledge. Thanks

[@nicobass1966]

Downloaded and adapted this spreadsheet a few months ago and it's the best sheet I've used so far. really does give you an idea of what you would like in retirement in several scenarios. I've added today's salary and current spend and added several tabs on what I think is a standard, good and what's a great pension looks like at different retirement ages. From pension calculators working with just a 2.4 % pension return with several stock / bonds etc allocation, it tells me where I need to be - thanks very much. Your channel makes simple sense in retirement focus...5 or less years left until I can put my feet up :)

[@michaelgodfrey3841]

Thanks

[@hypermap]

Very clear thinking clearly articulated - Looking forward to: All good retirement plans start here - Step 2

[@ThatFinanceShow]

One of the best videos I’ve seen on this topic, well done James.

[@JamesShack]

Thanks Tom, means a lot coming from a fellow professional!

[@robb8773]

I find it strange that people don't know how much they need in retirement! Its just a question of adding up your expenses and then adding a cash buffer. Its impossible to calculate for every problem that will come up in the future.

[@mch171]

This is a fantastic overview of how to analyze what I need for retirement. I understand how it’s useful to group expenses by “fixed” and “variable” to see how I can vary spending from year to year. But how does the “maintenance” category fit into this approach? It seems that these expenses are not truly fixed or variable. For instance, deferring maintenance on a home shouldn’t go on forever…

[@guyr7351]

Hi James, I have simple excel spreadsheets, one is all my current fixed costs now and a column is prediction of those costs when retired and if they are still valid eg life insurance premium will end, fuel will reduce. Similar sheets with predicted pension fund values, I’m lucky as have DB, DC schemes x2, state pension full for wife and I, plus rental income. On top of which should we wish we could down size ( not likely for a good few years post retirement). However I look at the matrix once pensions kick in plus tax free amount from DB we’ll be OK the discipline is not to spend too much in The first few years of retirement

[@JamesShack]

It’s an art. You get more enjoyment from spending money when you’re younger but it’s riskier!

[@thepropertyflipper]

I think one of the biggest challenges is going from say £4k salary (net) to £2k if your pension gives you that much. That's a big jump in disposable/income that scares many people. I get that the only way to do it is to create a budget, but trying to think what a desired retirement will look like is tough.

[@marcmeier8247]

That’s why you have to save and invest to stock up on the legal pension.

[@Life_Literacy]

Here he is, look forward to your videos and getting me in to planning for my future. Thank you for the information

[@JamesShack]

Sure thing Sammy!

[@Marcus_PG]

I've just started watching and have found the few videos I've seen so far really useful. Have subscribed. I was looking for the videos for steps two to four. What are their names? Thanks

[@tomwebster8299]

Really helpful stuff you put together. Thanks

[@stanrae]

Good to watch a video which considers those who should probably invest in the time that is left and not just having (more than) enough to retire. I'm 65 and this has been playing on my mind for some time. I enjoy working and have enough to retire but never get round to it.

[@jacc88888]

Very informative video, however isn’t one the crucial things to do is work out the the value of the income you need adjusted for inflation (annual average of very large 5% over the last 50 years!). Therefore to have the spending power of £20k in 15 years time you’d probably need more than £40k in 2038.

[@eddieselley4513]

I’m 19, kinda hard to think what lifestyle I’ll be wanting to live when im 55, so the amount of money I need is just pulled out my arse

[@JamesShack]

When you're young there's nearer term goals you should be focusing on, which should take a place of retirement!

[@50450720]

I'm 55 and I can tell you as a fact, all these financial advisors know jack shit. The reality is that before you get any where near retirement, the rules and hence the goalposts will move. Governments dont want your generation retiring early and living comfortably. Your pensions savings will be hammered for tax in the future to keep you controllable. No matter how much you save, it will never be enough. Your no1 priority should be home ownership

[@gerry2345]

Hopefully it will be one that involves less work and more play.. Keep working and learn a skill that you enjoy and stop playing with your arse.

[@holdencawffle626]

Shocked this channel doesnt have more subs

[@SimonApperley]

Another great video. I wondered what your views are on the PLSA retirement living standards? I've used that to help me with an idea of retirement income for very broad planning. But I like the way you've broken things down in this video to more detailed steps.

[@JamesShack]

I don’t think they’re much use, it’s so variable by individual. You can get a much better estimate if you just sit down and do that spreadsheet!

[@georgekousouris4900]

Great video! Small piece of advice, I find that some of your other videos that are divided into well defined chapters are easier to follow / skip around. I believe it would help retention. (Just how i feel, the metrics should show)

[@JamesShack]

Thanks for the feedback George !

[@alexkrish5832]

Hi James, Recently come across your videos and thank you so much for the videos. Can you please post few videos on how to benefit from and passing on the Buy-to-Let limited companies during retirement? Of course, I would need professional help but at this stage I like to get some info so that I can ask right questions

[@JamesShack]

As in gifting it to your children? You can do that but I would speak with an accountant, as that is their domain.

[@jpturner171]

Thanks for another informative and common sense posting James! Semper Fi 👍🏽🇺🇸

[@JamesShack]

Thanks for watching, and support the channel!

[@molocouk]

Thanks for another excellent and informative video. Love your no-nonsense, straight forward style (which is why I have to admit I found the background music slightly distracting (sorry)).

[@midnightmule2626]

i have no idea why this series came up in recommendations ... but I am glad it has ... subscribed :)

[@JamesShack]

Welcome!

[@ErikaB4]

Hi James, new subscriber here! I just recently started watching your videos and they are great, will watch more for sure. I always struggle to understand if the numbers are net or gross, as how much tax you need to pay from any of the various sources you will be able to draw from in retirement directly effect the quality f life you ca enjoy. or example, if the State Pension now is £185.15 per week, which is £9627.8 per annum, which falls below the £12570 tax free allowance, does that mean you won't have to pay tax on pension? Probably yes, and also you can draw 25% of your private pension tax free, but what happens after you? If you are retired how do you determine what kind of tax payer are you? (assuming you only have income from State Pension and private pension). How do pay tax in retirement? Does the private pension company deducts the taxes when you withdraw or do you get the gross amount and have to pay the tax to HMRC and complete a self-assessment? LifeTime ISA could also be an source of some income, but as that is ISA, it is also tax free, but what happens if you have all 3, and you go over the £12570 limit? I know these are a lot of questions, you might not event get to see this comment, but if you could maybe make a video on this topic, that would be a amazing. Rarely ever anyone talks about the tax implications of drawing pensions from different funds, they just discuss the gross figures, which I think is misleading.

[@ryanmorris3219]

Thanks for the video, I'm definitely going to follow this series. You mentioned that splitting your costs into fixed and variable is so important in order to understand the base cost you can expect to live off. However, the spreadsheet that you provided doesn't clearly distinguish between these, unless I am mistaken. Maybe a suggestion would be to update the layout of the spreadsheet to allow someone to more easily see the difference and understand what the total of the fixed costs are and what the total of the variable costs are?

[@JamesShack]

Thanks for the suggestion Ryan! Yes that probably makes sense .

[@wrldtraveller7]

can't seem to download the budget planner! would love a copy

[@sid35gb]

A simple way to figure out how much you’ll need just calculate your monthly income and then guess how long you’ll live the calculation is 3% compound for that time frame and that will give you a ballpark figure.

[@mrwindsor67]

Hi James, could you do a video on paying into a pension Vs investing (vanguard index fund etc) for long-term investment

[@noahcrafting]

You can buy vanguard index fund inside a pension

[@michaelwulfsohn1931]

Great video to help people estimate their retirement spending. One issue you mention is that people don't have a fixed idea of how much they want to spend. They just want as much retirement income as they can get! Maybe it could help to look at a schedule of annual saving amount vs. the retirement income produced. Then people can see the tradeoff and directly decide. The budgeting still helps by establishing a minimum saving amount that shouldn't be breached.

[@JamesShack]

Thats it, the trade off. Do you what to work another 5 years for an extra 10% income?

[@aidenm1200]

Hey James - really enjoying your videos! It's been good to have financial information in real-world examples and terms. Would you consider doing a video or signposting to any sources about NHS pensions? I hear horror stories of people breaching tax thresholds and ending up out of pocket paying huge tax bills. I've been in NHS service for 3 years and I'm likely to continue in the same profession until retirement- so this is something that I'm starting to worry about! Would I be shooting myself in the foot to start a SIPP when I'm paying into an NHS pension? If I invest money long-term, does the money in that fund count separately to any other savings I might have? I have a lot of questions!

[@ginge7744]

Hi James looking at the sheet and using it what is 'Tax' in the expenses column pls?

[@JamesShack]

It's just there incase there happened to be some other tax you had to pay on a regular basis.

[@goodgie1]

Great video mate looking forward to the next one 👍

[@JamesShack]

Thanks alex!

[@oceanblue1369]

James, really enjoying your content. I have approached my plan with a top down approach as I want my lump sum to pay off my mortgage and then leave me with a sum that I can draw down, although unlike most age predictions - I’m aiming for zero at say 85. My mindset is as follows… maxing out my pension contributions currently, as to avoid being a 40% tax payer … so that’s investing £40k a year before tax - directly into my pension. (Not a bad return before investing) Then on retirement I plan to draw down 25% and spend the rest by 85. so when I’m sat in my care home dribbling away, the government can pick up the bill - as opposed to me self funding. Is this not the most ideal way.. less tax & less liability at 85+? Or have I got it wrong?!

[@JamesShack]

If you want to end up with nothing, and you're happy with state funded care. You can do this, just make sure you don't live longer!

[@guyr7351]

I can fully understand where your coming from, an aunt has recently died at 92 living her last year in a care home. She had a good NHS pension plus a house and approx £100K in investments she had accrued. When in good health she enjoyed life but in her later years was not very mobile at all and could not spend her cash as unable to enjoy it and old habits hard to break regarding spending and saving. I aim to enjoy life and my time once retired, and with a son and grandchildren in the USA I have a good reason to go there a few times a year

[@Pegaroo_]

You should update the link in description with latest version of Budgeting Spreadsheet

[@JamesShack]

Good shout, I will!

[@BenCFord]

Good advice James. You look like Eric Church!

[@BobBob-uv9fq]

Enough so when I get a bill in for my car I’m ok ,

[@rogerallcock3469]

Do you have any advice on cash flow forecast software such as Voyant? Are there any free alternatives that are worth considering?

[@JamesShack]

Try the free trial of Timeline. It’s not as powerful as proper cash flow planning stuff but still good

[@gerry2345]

I like this vid. Good insight.

[@alfieboden8895]

Great video, when are you planning to upload step 2?

[@JamesShack]

In two weeks!

[@seb1000]

Great mate!

[@rajmehta6210]

Great video - thank you . Can you share the spreadsheet you mentioned please?

[@JamesShack]

Hi Raj, the link is in the description. You can make a copy of you’re signed in to G-Drive alternatively you can download a copy.

[@battj1]

Fantastic video! Is there a step 2?

[@JamesShack]

kzbin.info/www/bejne/gnS8eoF_erF7aNk

[@TravellingDT]

Hi James. Just to let you know, the Budgeting Spreadsheet isn't quite right. You state that the blank sheet should be blank, but sadly it isn't. It's full of all the same amounts you've entered into the example sheet. The only thing different is the read me box. But thanks for lots of great advice and thought provoking subject matter.

[@JamesShack]

Ah! I’ll update that - thanks for pointing it out!

[@TravellingDT]

@@JamesShack Sorry, also found out that you cannot change the per month to per annum and vice versa.

[@danielclitheroe1869]

Best advice I got was to work out what income you'll need and double it.

[@JamesShack]

Hi Daniel, why would you do with the other 50% that you don’t need ?

[@danielclitheroe1869]

You don't necessarily "need" it, but prices do rise over time and having more income than you need is a comfort.

[@garywilliams9810]

James firstly thank you. The way you explain everything is simple and straight forward. Well done. Not sure if you can help from here but I’m retiring March next year have a lump sum do you think I should keep 5 years living money and invest in Vanguard 60/40 with the rest?

[@JamesShack]

Hi Gary it may be a bit more complicated than that, please feel free to book a call with me via the link in the description of my videos.

[@garywilliams9810]

@@JamesShack thanks I think I have booked a call for tomorrow can you check I’ve done this correctly please James

[@georgetempleton8901]

Hi James - could you point me to the link for the spreadsheet please? Thanks

[@JamesShack]

It's in the description of the video,

[@seannash6384]

James What would your advice be to someone who sold their home, downgraded and now has all their retirement fund sitting in cash. how do you invest and draw down money every year from that investment

[@JamesShack]

I think this may answer some of your questions. kzbin.info/www/bejne/r4nPXq2Mib-rqJo

[@JamesShack]

You need to get really good at catch flow planning. Understand that different pots of money have different investment time frames. Some money is needed in the short term, and should be in cash or near cash, other segments may remain investing for 20+ years and you should be making sure these parts are invested for growth.

[@peterleese374]

Hi James, I have a very heathly pension pot . I'm looking at taking the 25% at 55 , I understand that my pension contributions can't be anymore that 4% after , but what about my works contributions? With both combined it would be 10% . Would I be paying tax on the 6% ?

[@JamesShack]

As long as you only take the 25% cash free lump sum then you can continue paying into a pension. It’s only when you take the taxable income part that this is triggered.

[@joselacey7283]

Great video content! Could you do a video on the effects of Climate Change on your investments? Be interested to hear your perspective!

[@cardermedia]

Great videos James, new subscriber! I'd love to hear your opinions on drawing down pensions, and what you think (entertainment only!) is your opinion on that Vs annuity.

[@guyr7351]

Do people actually take annuities still? They seem such poor value due to the very low interest rates we have had for years.

[@AlanPeery]

@@guyr7351 With the most recent interest rate changes thru Jan 2023 (painful for mortgage payers) the annuity rates have changed quite significantly, so the balance might have changed.

[@guyr7351]

@@AlanPeery yes indeed, and of course part of the annuity deal is a set amount. I have seen on the meaningful money channel that there are various annuities available ie fixed term but not something I have considered with how my pension plans are set

[@robclough9826]

Love it

[@hannahb6471]

I must admit I haven't sat down and thought about what I'd like my retirement to look like because it causes me too much anxiety when I've got more short term financial issues like a flat with falling value due to COVID and the cladding scandal (mine isn't cladded but still has the stigma). I pay in what my employer matches (8% matched) and the rental profit from the flat goes into a SIPP meaning cash flow wise I'm on the hook for all the mortgage plus I pay rent to live in my boyfriend's house so I can rent my flat out. Am I saving enough? Maybe not. Am I doing my best? Yes. In my opinion there's no point looking any further ahead at the moment and just appreciate what I'm able to do as I'm doing all I can. I find Reddit finance subs quite difficult to stomach when people are panicking on 7 figure pension pots. Like either retire and try to make it work or keep working - it's a total privilege to even have that "stress" when most people will work until they die at this rate.

[@JamesShack]

Hi Hannah, i'm sorry to hear that. When you're young, you probably have closer goals that are more important than retirement. So you're right to focus on those. When i know there's something wrong, like i've got a bad tooth or know I should go and see the doctor about something, I avoid going because i don't want to face into it. But more often than not the unknown creates more uncertainty and worry than the actual thing. Understanding the problem and being able to size it makes it easier to handle, plan for and accept. I know there's probably not much that you can do about it now. But if you did a simple calculation you may find that what you're doing is not as far off as you thought. Saving 16% into a pension is a lot, and you really don't need as much in retirement as you might think, especially as the state pension makes up a large amount when that kicks in. You have a lot more years ahead of you for the power of compounding to really take effect!

[@amyk9813]

I'm 21 and wanting to begin to invest in stocks for my future but everyone tells me not to do it - I'm too young, it's too risky, unpredictable etc. Should I listen to them?

[@ADHDNurse79]

The younger you are the better, more time for compound interest and to ride out any dips. Wish I started that young!

[@natorpen-palmer7192]

If I were 21 again I'd stick a few quid in an ISA each month. No time like the present!!

[@turningpoint4238]

YT can be a good source of information but most isn't. You have plenty of time, learn as much as you can, find an app to buy through and start small. When you get burnt learn the lesson and try again. Rinse and repeat. I'd suggest not only learning about finance/economics (and how bad our theories are, really the experts really don't have the truth just opinions) but also tech (not how to use your phone but how it actually works type of thing). Oh and invest long term, day trading may work for a while but it's a good way to stay poor. If you average 10% per year you are doing dam well.

[@Capture262]

If I had My time again i would have started earlier, but then again I have traveled well in my youth and wouldn’t change that for any amount of money, definitely start to put some away just save some free for fun time now 😊

[@guyr7351]

You can take out a personal pension such as Vanguard and be investing your money spread into shares of numerous companies via their lifestyle products. Earlier you start saving the better your future income will be.

[@paulh1529]

Hi James, love your content and advice. I’m very fortunate to be a high earner and am soon to get to the stage where I’m maxing out my pension contributions each year in order to keep my salary below £100k. Are there other investment options which will have a similar tax advantage as a pension? Thanks for your excellent content 👍🏻

[@Chris-dp2uy]

James may be able to expand more than I can, but Venture Capital Trusts may be handy (tax efficient) for those who have maxed out their pension allowance and S&S ISA allowance. There is plenty online about them but I think seeking professional help is best with regard to which one is best for you.

[@paulh1529]

@@Chris-dp2uy Thanks Chris, the VCT’s do look like something worth exploring. I appreciate your reply.

[@JamesShack]

Hi Paul, broadly speaking maxing pensions and ISAs are things you should be looking at before you look at VCT's. VCT's are much higher risk than a usual investment and have much higher costs. You can read about them here: octopusinvestments.com/resources/guides/venture-capital-trusts/

[@JamesShack]

Let me know if you want to talk about it further.

[@MrJune1964]

I have 324000 pounds in my Db pension pot am 57 want to retire in 5 years or so so do i stick or move it out into a private fund

[@AlanPeery]

If you have a figure like that, it's not a Defined Benefit pension, it's probably a Defined Contribution pension. A defined benefit would be phrased as "30k/year because of N years of service with final salary X, inflation adjusted per CPI (or RPI, or wages)". There are rules where a DB pension can be computed into an equivalent value for cashout or checking against UK pension limits, so maybe that's where the number comes from. Moving out of DB pension is definitely a "ask a financial advisor whose fee isn't dependent on the choice" situation.

[@MrJune1964]

@Alan Peery yes thats my value if i come out of the DB Which is something am thinking about but a few years down the line

[@guyr7351]

@@MrJune1964 one of the major things to consider is what ongoing benefits form per of the DB scheme. Will it grow linked to inflation or will it be capped.? With the DB scheme you can take 25% tax free and be investing that while still having your scheme pension plus the state pension. I was looking at my CETV with a view to taking it out and investing in a personal plan, but it seemed like all eggs in one basket. At the CETV level your saying I would guess the DB is in the £16K a year range or possibly higher. At 57 your state retirement age is 67 so the £10500 state pension from April 23 @ 2.5% growth minimum will be £13,400 in ten years time. So you could be looking at close to £30K before tax plus your tax free sum. With ten years nothing to stop you investing in a SIPP and getting tax relief which gives you a second pot to be accessing when retired

[@Manc-fh5we]

I think a lot of people aim for the same income they’ve been used to whilst in work?

[@JamesShack]

In its simplest form, yes. But it’s better to do some proper thinking about it otherwise you’ll end up with more then you need. Often expenses decrease - no mortgage , less costs for kids , no commuting , downsize . Think about how you want your life to look.

[@guyr7351]

@@JamesShack as long as you have easy access to some funds for extras.

[@ellesoho2615]

Do you advise people from the US?

[@JamesShack]

No, only Uk.

[@louiswarren5343]

I'm a 22 year old student, why am i watching this lol. I dont have property i dont even pay taxes yet

[@quentinkundalini5010]

Can I invest a lump sum from a crypto investment directly into my pension and avoid any capital gains tax?

[@JamesShack]

Nope.

[@JamesShack]

That’s no on the tax.

[@quentinkundalini5010]

Do I have any other options open to me to reduce my tax burden?

[@JamesShack]

@@quentinkundalini5010 your CGT burden? Take a look at EIS schemes. But they have quite complicated products.

[@quentinkundalini5010]

@@JamesShack yes, I have a substantial sum to cash out and I am looking for the best way to manage it, as in pay as little tax as possible, I was even considering moving to the Isle of Man for a period of time.

[@viewfromthehighchairr]

Despite the fact that stock prices fluctuate, what is the best method for capitalizing on the current market? I'm still undecided about investing $400k in my stock portfolio.

[@paulevans2246]

👍

[@turningpoint4238]

In OZ so working in au$. We can live well on $60,000 but also want to help our son (sucks been poor lived most of my life just paying the bills, had loads of fun so can't complain), so looking at $100,000 per year. But don't want to slowly eat into our investments just live off them, means also keeping up with inflation. Then been able to weather a bad recession or if the up coming disruption in many industries is handled badly. So add on another $20,000. This means we need $2.4m. Been working on it for 2.5yrs and now have about $1m investments, with no recession I expect to make this to my goal in 5 to 7 yrs. Only 20% return a year needed, think I've averaged just under 400% per year so far, but the stars aligned for that. After that about 10% for 3 to 5 yrs then 5% is my best guess.

[@LookatBowen]

I was enjoying the video up until you said Index funds. I disagree on investing in Index funds or any fund for the matter. It is the lazy way of investing, and you get to pay a fund manager for this laziness. I can only speak for myself of course, but focusing on a few individual stocks (less than a handful) has given me a better return than any fund out there, but it is not for everyone.

[@JamesShack]

There’s a 50/50 chance that any investor investing in direct stocks will outperform an index fund. But the distribution of returns is enormous so you may end up over performing or underperforming drastically. How much of your performance has come from luck and how much for skill ? And how can you tell?

[@jacobmoney]

€ 400.000,- only (8% interests of stable coins // or yearly 400% returns in $BTC will do the job). People think they need millions, but they forget that money makes money. OR those people are gonna have a lazy ass life: Netflixing the rest of their lives. Smart people are retiring their 9-to-5-'s with a few 100K in their bank account. Not so smart people give up and stay at their job for the rest of their lives because they already know they will never save up millions. But...that's not necessary.