Investing Is DIFFERENT In Retirement

Investing in retirement should be different to investing when you’re building wealth. The mechanics are largely the same; we use the same tools.
But the weird thing is that we’re now investing not to build wealth, but so that we can spend down our money in a controlled fashion, over time, while factoring in fluctuating markets and our changing circumstances. That’s a lot to think about!
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Chapters:
00:00 Welcome
01:10 Platforms
02:07 Accounts
02:50 Funds
04:11 Spending
07:08 The Cashflow Ladder
09:55 Resolution
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📫 Leave me a comment below - I read all of them and love hearing from you!

[@MeaningfulMoney]

Make sure to check out the Retirement Planning Investment Cheatsheet, which is a available for free. I have included a link in the description.

[@brownwellson54]

Mapping out retirement feels incredibly perplexing at this point! With SVB, Signature Bank, and now First Republic showing signs reminiscent of the 2008 market crash and a potential recession 2.0, it raises the question: should I continue saving in US dollars or consider investing in stocks? Consequently, I'm left contemplating what 2023 holds for us as investors. Sitting on over $745K in equity from a home sale, I'm uncertain about the next steps forward.

[@Calvertmarian]

Everyone needs a different stream of income , unfortunately having a job doesn't mean security due to the high rate of tax , one needs to move ahead their expectation, I would recommend refraining from investing in stocks for now. Instead, it would be prudent to consider retaining a portion of your assets in gold. Alternatively, seeking advice from a financial advisor could provide valuable guidance in this matter.

[@Calvertmarian]

Do you mind sharing info on the adviser who assisted you? been saving for pension since age 18 - company scheme. along the way I hit higher tax, so I added to my company pension with a SIPP (tax benefits) I'm 46 now and would love to grow my finance more aggressively, there are a few cars I still wish to drive, a few mega holidays

[@Calvertmarian]

I just checked her out and I have sent her an email. I hope she gets back to me soon

[@tadasstrikauskas1205]

Good one. Learned a lot. Thank you

[@AndrewBroadbent-dr8wb]

Good advice and we'll put together vlog, thank you.

[@christines5430]

Thanks Pete. Another very useful video helping me on my journey to retirement. Looking forward to the next one.

[@jonathanwarne3480]

Thanks Pete. Great video, look forward to the next one.

[@MeaningfulMoney]

Cheers, Jonathan!

[@mikejames4540]

Thanks, Pete. Lots in here to think about. Will need to do some thinking…

[@MeaningfulMoney]

Reach out if I can help, Mike!

[@user-qv8lz5ds7m]

Pete yet again another fine video. Love it. It comes at a great time for us and the advice is spot on 👍

[@MeaningfulMoney]

Thanks so much - glad it's helpful!

[@davidn3971]

Another great video Pete. My plans are taking shape nicely and I've covered most of the points up until the cash flow ladder so looking forward to the next video 🙂

[@MeaningfulMoney]

Nice work, David - glad it's helpful stuff!

[@clewis5220]

Thanks Pete, very timely video helps tremendously cheers

[@MeaningfulMoney]

I'm glad, cheers!

[@davidcollier6520]

Many thanks for posting this, definitely understand it a lot better after watching it.

[@MeaningfulMoney]

Glad it was helpful!

[@raniakme]

Thank you very informative

[@andrewcumming7220]

Great video Pete. On the next one about spending would it be possible to cover some tax implications. For example if you have a DB from 60 and state starts at 67. How best to work out which pot to take from 55-67 to later minimise tax later on. Thanks.

[@keiranpinto]

Hey Pete , just bought your book. It’s absolutely fabulous , a treasure trove of financial wisdom. Highly recommended. Thank you for writing this book !❤

[@MeaningfulMoney]

Very kind, thank you! I’m delighted it was useful! 🙏🏻👍🏻

[@mohamedpatel3978]

Thank you for another interesting video. Any chance doing a video on saving/investing/paying into a SIPP after retirement where you have a bit of money left over from your pension.

[@Banthah]

Excellent video, as always. Thanks for posting. Looking forward to the cashflow ladder. I think the basics are pretty well known to cover any downturns in the market, but is there an optimal tax efficient way of using the different wrappers one might have? So for example, someone retiring at 57 with a DC pension with a full state pension coming 10 years later. Should they take more out of the pension pot earlier so they get the £12,570 tax free, and then maybe leave the ISAs until you get state pension which is of course taxable?

[@geo1967tic]

Very useful Pete 👍

[@MeaningfulMoney]

I’m glad, cheers!

[@Aaron-kw4vq]

Great video as always Pete, looking forward to the next one! Just one question, there are a lot of ‘Bucket’ strategies out there for managing spending in retirement but prior to watching this video I was leaning toward a more simple strategy that held a 2-3yr cash buffer from which spending is taken with the rest of my pension being held in a single fund with a predetermined Equity/Bond split (70:30 or 60:40) that would replenish the cash buffer annually or at an appropriate time interval which is also when the equity/bond ratio would be rebalanced depending on their relative performance. I see the spending ladder you recommend has a greater granularity of risk levels built in but I’m unsure how the two strategies differ in reality, isn’t it just a quesiton of the ratio of equity to bond/fixed asset allocation you hold in the feeder bucket? Does that make sense? Appreciate your thoughts...

[@nikki_jp4216]

Hi don't want to speak for Pete but in his monthly catch up with members of the Retirement academy he has mentioned I seem to recall that he is thinking about a simpler approach, more along the lines of what you are saying.

[@Mikael00898]

Amazing video! I currently make £84k/yr. No investment and I work from home. I need to do something quick. What can I do?

[@janenoble6889]

Do enjoy your videos Pete you give the best wisdom on this complex subject that us working class people have to get to grips with. What I don't quite get, is that we're told to carve away from our pension pots in stages so it can still grow and thus allow for bigger 25% tax free withdrawals (crystalisations) later down the line. So why does it matter so much to have a different investment strategy if we use drawdown of we keep a bigger chunk in the pre crytsalisation pot. I'm retiring next year at 56 and plan to use a single UFPLS to get an annual salary, (the well known £16k to avoid tax) and avoid having to set up a drawdown and paying two lots of fees - one for the pot and one for the drawdown - does that make sense?

[@MeaningfulMoney]

Yes, I say it does make sense. The most important thing to remember is *why* you're doing anything. I think that storing up future tax-free lump sums is far less important than fully enjoying life in the present. I don't think it's important to 'grow' your pot at all, though that does depend on the amount you have put away. It's far more important to spend down what you have in a controlled manner - you can't take it with you!

[@curiousjoe395]

Thanks Pete. Given the long term nature of pension investments. I think there is very little info on protection via FSCS and other regulations. It would be great to have some more info on this please. Apparently workplace pensions have 100% protection where as SIPP is capped at £85k

[@MrDuncl]

I was thinking the same. Is that figure correct for a SIPP or investment ISA ? I am using two different platforms to reduce risk. Look at Hargreaves Lansdown and their endorsements of Neil Woodford's funds for a real example of the sort of thing that can go wrong. An even bigger concern would be if the platform was investing all your money in something entirely different like LTCM.

[@rkshergold]

Thanks Pete I’m a new subscriber and these videos are so helpful. With the CashFlow ladder system would I need four separate SIPs - high risk, medium risk, low risk and no risk? And then ever year I would move a set amount of money down the ladder out of the top SIP into the next one and so on?

[@MeaningfulMoney]

Not really - you would probably do it all in one SIPP and establish the ladder with your fund choices. Good shout though, I’ll cover that next time!

[@richardlincoln886]

How do you mitigate the risk of the platform folding? Is it a non-issue.

[@Lizapendleton]

Do you recommend taking the lump sum option of pension instead of yearly trickling of income? I worked out i would need to live for 25 years to get full pension! Not sure if tax on lump sum is prohibitive. Tia

[@sandeeptanjore1253]

Hey Pete - Once again excellent content. Just curious if you gear your content mainly towards prospective clients from UK or all around the world? Does your investing academy be useful for audience based on Canada?

[@MeaningfulMoney]

It’s going to be primarily useful for UK residents, really. And the Voyant planning app we provide is definitely UK focused.

[@Ismael_1998]

Do we have to pay capital gains tax or any other tax apart from the 15% dividend tax on US stocks that's held in an ISA?

[@clivedyer17]

A great video Pete, thank you. carnt wait for the next masterclass. Retiring in a few months and no cash as a safety buffer, its all in a RL governed portfolio. how do i create that buffer? Should i be using the TFLS?

[@thomasmcdonald5542]

I retired just over 6 months ago and I was in a RL governed portfolio as well. The first thing I did was move the company pension I had through RL to interactive investor as a SIPP so that I could take more control. I also found the governed portfolio was badly invested from my perspective. To be fair the ongoing charge was just .29% with RL but I found they were transacting a lot which I suspect was adding a lot more costs that were not obvious. I kept some of the money that was transferred in a single fixed short term government bond TN24 and a similar amount in a SONIA overnight ETF, both these generate just over 5% per annum at the moment equivalent. These are a major part of my 3 years cash buffer if i need to cash to avoid sequencing risk. The rest is invested in individual shares and low cost ETFs like the S&P 500. I also have ISAs and some normal cash in the bank and premium bonds. This is not advice but i basically follow the guidance outset in the video. I can ride out selling my shares for over three years due to having sufficient cash or cash equivalents. Pete gives great advice. I have done a very detailed budget using an app called Moneyhub which tracks all my spending. You need to know what you need and plan to spend to have any chance of success. My plan for the SIPP when I finally access it is to use flexi access draw down. I am only going to take what I need out including part of the TFLS that I will actually be spending each month, and also to be tax efficient. If you don’t need the whole of the TFLS then taking it out just because you can from my perspective makes no sense as it can continue to grow in the SIPP. I would suggest taking advice if you’re uncertain and this is only letting you know what I did. Pete says be intentional with your decision making and this is something I wish I had done earlier with my work place pension but I’ve done it now. Interactive investor is ok for larger pots but it is not ideal for with smaller pots as they charge fixed fees for the platform rather than percentages.

[@MeaningfulMoney]

Thanks for the kind words, Thomas. Clive, the man Thomas talks a lot of sense!

[@thomasmcdonald5542]

@@MeaningfulMoney thanks Pete, keep up the great videos, your videos have really helped me to take action and to be intentional with my planning and the execution of my plan. You also helped me realise I could retire early and be confident in doing so. I’m immensely grateful.

[@clivedyer17]

Who is Thomas Pete?

[@thomasmcdonald5542]

@@clivedyer17 I think Pete was highlighting my response to your question.

[@garrynutter860]

Pete any chance of a video on Finametrica thanks

[@MeaningfulMoney]

Good shout, but I'm working on my own risk profiler!

[@wgj4813]

If you are thirty five and investing the shape of your portfolio would be quite aggressive. If you were 45 it would still be growth driven . If you were 55 perhaps an easing away from risk. Now say you are 60 with a portfolio or cash to invest you retire and realise or hope you will.live 25 more years. Shouldn't at least a 15 year chunk of your money be directed at growth funds as like when you were 35 you still.have time for any market downturn to recover?

[@MeaningfulMoney]

Yep. That’s what the video says!

[@ijharley68]

This is so relevant to me Pete. We’re even buying a new Campervan 😂

[@MeaningfulMoney]

I hope you enjoy it and have many great times in it! 👍🏻

[@martinmorris5562]

Hi Pete. When drawing state pension and part time working. Can you put pension into stocks and shares ISA ? I hope this question helps other working pensioners as well as myself. Cheers. Martin.

[@sassasins031]

Up to 20K per year can be put into an ISA. You can't "put a pension into an ISA" as such.

[@MeaningfulMoney]

Yes, absolutely. Once you’ve drawn your pension (any pension) into your bank account, it’s yours to do with as you wish, and you can certainly pay it into an ISA, up to £20k per year

[@martinmorris5562]

Thanks guys.

[@RoryCormac-tj2yi]

I'm currently pursuing a balance between fat and lean FIRE with the guidance of financial advisor David Marvin Willis. By diligently budgeting and keeping living costs in check, I save a substantial portion of my income. However, I prioritize enjoying life, dining out, going on holidays, and savoring good food at home. With the goal to grow my income in the next 5-10 years (I'm 34), maintaining a savings rate of 30-40%, I aim to potentially reduce working hours around the 45-50 age range. This journey, spanning the next 10-15 years, won't entail a bare minimum lifestyle.

[@janeknight3597]

Take time to assess your tax situation! Both the retiree and HMRC need time to iron out the wrinkles.

[@MeaningfulMoney]

I'd agree with that, for sure...

[@stevestreet7677]

Good point. I'm planning to minimize tax on my pension to zero, by only taking ~£16k / year (=personal allowance + 25% tax free amount via UFPLS), then topping up what's needed from ISA / saving and contribution from my other half! 😃 I understand I may have an emergency tax code to start with, which means I might pay tax, but then I will reclaim it...that's the theory...I've not put it into practice yet!

[@SavvyMoneyShow]

Building wealth is more growth stocks whereas retirement is more dividend stocks

[@MeaningfulMoney]

That's certainly a great strategy - though one of many...

[@vinay4886]

Dividend stocks are a far better strategy than govt bonds or buying annuities and being dependent on the uncertainties of interest rates…

[@henghistbluetooth7882]

@@vinay4886Unless the stock you buy doesn’t exist 10 years later and your dividends equalled 10% of the stock price at the end :(. After 30 years in the tech sector I’ve lost count of ‘dividend stocks’ that no longer exists.

[@maltesetony9030]

I've been retired for 2 yrs now, & the markets haven't really done enough for me to "spend down" any amount. Fortunately, I have a DB pension & have kept a wedge in cash as a "slush fund".

[@MeaningfulMoney]

That's the way, Tony. Very challenging for anyone retiring in the last couple of years. You've given me an idea actually - watch this space...

[@bobdunn3222]

OMG!!! Unfortunately some huge gaping errors here that lost me and this guy’s credibility. Need to be really careful sometimes. Retirement investing IS different for retirement but not in this way! Passive investing doesn’t deliver you income (by definition it cannot) and the goal should be to generate income not concern yourself with markets or indexes, or charges! If a were a property developer I’d want a range of buy to let’s paying me an income. Investing is retirement really is that simple. Focus on a range of companies or funds that pay an income and spend that!

[@MeaningfulMoney]

Income is hugely variable. And most people want certainty. I actually agree that it makes sense to secure your baseline expenditure with an income, either in the form of an annuity or an investment portfolio as you suggest. Your approach is far too simplistic for most people, unfortunately.

[@bobdunn3222]

@@MeaningfulMoney Hi. Depends what you mean by variable? Income is more consistent than growth. By definition Interest, dividends and rental income is far, far more consistent and easier to forecast than share price movements. Share prices are difficult to forecast and are reliant on the sensitivities of market speculation and cycles. Unless by variable you mean individual circumstances? Either way solutions exist that consistently pay a growing 4-7% income so surely these should be a starting point over cheap / basic solutions?

[@stevegeek]

May I ask what funds or companies you suggest for a regular income? I’ve built my SIPP around a mix of growth and income passive index funds, with a view to sell the growth funds when they do well (once I retire) to supplement the income funds. Looking at past performance (and I know this is not a guarantee of future) growth funds tend to outperform income funds all things considered.

[@bobdunn3222]

@@stevegeek Hi Steve. It’s a really good question. Specialist active multi asset portfolios are your best bet and I’d hunt out specialist retirement INCOME financial adviser. One that understands how income portfolios work and one that doesn’t try to shoehorn you into a growth solution. Chancery Lane immediately spring to mind but there are others. Picking individual companies is risky so I’d recommend looking for a specialist income multi asset portfolio that prioritises consistent income generation. It really needs to be active (as the manager switches out companies, debt and properties when there is a risk to the income) and it really needs to be proper multi asset. Ie not just equity and bonds but a more diversified mix that includes property and infrastructure etc. Growth vs income is cyclical. Sometimes growth does better and sometimes income does better. However both produce different outcomes so I’d align your need to the portfolio style vs chasing a style.

[@stevegeek]

@@bobdunn3222 Interesting...thanks for the feedback.