How much do I need to retire with £20k/£30k/£40k/£50k per year? (100-year backtest results)

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How Much Do I Need To Save Tool
james-shack.co.uk/savings-cal...
Software & Data
www.timeline.co is the backtesting software I used in this video. It includes over 100 years of stock market adn inflation data. To get such a large data set, they have spliced together different indices to cover different periods, but the modern version of the indices used in this video are:
Global Equities - Morningstar Global All Cap Target Market Exposure
Global Bonds - Morningstar Global Core Bond
RISK WARNINGS AND DISCLAIMERS
Capital at risk. This video does not constitute personal advice. Past performance is used as a guide only. It is no guarantee of future returns. Prevailing tax rates and reliefs are dependent on individual circumstances and are subject to change. We do not provide tax advice.
Issued on behalf of Nova Wealth. Nova Wealth is a trading name of Octopus Wealth Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 778951) and is a limited company registered in England & Wales (10739796).
James Shack™ property of James Shackell
Copyright © James Shackell 2024. All rights reserved.
The author asserts their moral right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this channel and any video published on it.
00:00 Intro
01:15 How much do I need to retire?
13:02 How much do I need to save?

[@JamesShack]

To be super clear, we're talking about sustainable expenditure here. The software takes care of taxes. It's assuming you have no other income or capital gains coming in from other sources other than the state pension, as indicated.

[@ZelenoJabko]

Why do you assume everyone will get state pension? I won't because I will have worked less than 10 years by the time I retire.

[@alcanford4495]

​@@ZelenoJabkobecause I imagine the vast majority of people watching this video will get some state pension, and a large percentage will get the full amount.

[@OMGxILoveNo0bx]

I presume this does not work on phones? I input email and it just says download should begin shortly. Thanks!

[@JamesShack]

@@OMGxILoveNo0bx Perhaps not, you can make a copy from here: docs.google.com/spreadsheets/d/19C7lE25wEbcDbODnWIH7WK9B2UBTszlolItBJFwK78o/edit#gid=1103659851

[@jimboyuk1]

@@JamesShack it doesn't work on web browser either.

[@Jaymilnere]

Loved every second of my watch to the very end. I could really use your help James, I’m 52 and disabled since 2007, still own a small business with $80K in savings. But I'd still love to grow my investments ahead of my retirement.

[@hullbruce]

Before making any investing decisions, it is advisable that you consult with a qualified financial counsellor. Just my two cents.

[@Aurierserge50]

@@hullbruce Exactly, why I stopped taking financial advise from KZbinrs, because in reality I end up with a collection of confusing stocks. Whereas, all I needed was a real market expert to have made over $350k in less than 2 years.

[@Aurierserge50]

Exactly, why I stopped taking financial advise from KZbinrs, because in reality I end up with a collection of confusing stocks. Whereas, all I needed was a real market expert to have made over $350k in less than 2 years.

[@Jaymilnere]

@@Aurierserge50 I've been getting suggestions to use one, but where and how to find one has been challenging, Can i reach out to the one you use?

[@Aurierserge50]

@@Jaymilnere Alicia Estela Cabouli is a hot topic among financial elitist in Manhattan. She's gained some reputation especially during covid. All the info. you need to set up an appointment is on her web page.

[@JamesShack]

CORRECTION: At 10:00, I said NI for the basic rate tax band is 10%, but as of April 6th 2024, it has been reduced to 8%. I should really stop filming videos at 10pm at night...apologies for the mistake.

[@BaileyMxX]

Probably won't be far wrong by the time Labour get back in later in the year 🙈😂

[@adamp6320]

@@BaileyMxX true, I was going to post that - don't worry Labour will fix your mistake posthumously

[@Shorty140291]

​@@BaileyMxXI agree with you. Saying that I think it's needed and that the government reduced it without thinking about the welfare of our country.

[@kykslr]

Also, in Scotland the higher tax starts at £42k so the earnings band band between 42 and 50k in Scotland has 42+8=50% deductions a huge mark up for salary sacrifice

[@KelticStingray]

​@@kykslrthis to me is unconscionable. That's a huge chunk in low middle earners take home pay and many Dont realise it. I try to salary sacrafice below this into pension for now until weans or life events come along. I don't have faith state pension will be anything remotely meaningful if at all by the time we ever retire so better let it grow a bit now for longer.

[@Carry64]

Thank you for for bring up this video! Recessions are an unavoidable part of the economic cycle; all you can do is prepare for them and plan accordingly. I graduated into a slump (2009). My first job after graduating from college was as an aerial acrobat on cruise ships. Today, I work as a VP for a global corporation, own three rental properties, invest in stocks and businesses, run my own company, and have increased my net worth in the last four years.

[@Gabriel01842]

It is true, inflation has taught people the important of multiplying income.

[@Donald266]

It is true my dear, investing is the best idea currently and without it, human struggles are worthless.

[@Murphy-lu8jr]

I have really been looking into mentors lately, the news I have been seeing in the market has not been so encouraging

[@BenScott-kn7nv]

I would like advice you work with a financial advisor...because in this current volatile market, it is advisable to diversify while maintaining in safe investments, given your budget, you should consider a financial advisor

[@StevenCharles-rk4yi]

No doubt!! Maya Wooldridge is highly responsive and always follows up to make sure my needs and questions were met. We were saving for a deposit to allow us to move into a new home, and it was successful.

[@markw6309]

I've been watching for a couple of years now and this is the best video yet.

[@rob3rt891]

Another great video James. I'm sure I've told you this before, but you really need to get your videos into schools so that the age group 16/17/18 especially get to see this stuff. (appreciate it's accessible to them through here, but I think giving them a nudge to come look would be highly beneficial) I'm 34 now and really wish I had this sort of advice when I was 18 and just started working. My pension got fairly neglected into my mid 20's, a large influence on this was poor (nonsense) advice from older relatives stating things like "pensions are a scam" etc. Videos like this help to illustrate just how easy it actually is to save for a comfortable retirement if you start early. Thanks Rob

[@shellyperera2010]

Completely agree. And you're still young, we only properly looked at our finances in our early 50s. Luckily we'd been paying into pensions for years through work but had no idea which funds we were in. We've got ourselves on the right track with the help of KZbin but the best thing is that I've talked about it with my children and started JISAs and JSIPPs and they now understand investing and compounding as teenagers. They're paying small amounts into their ISAs themselves and I see that as a big parenting success!

[@esmeecampbell7396]

Pensions COULD be a scam. The government could change their mind tomorrow and "poof" your pension doesn't exist anymore or you can't access it until 80 or whatever.

[@Backtoreality1873]

The answer to everything cannot be the government.

[@shellyperera2010]

@@esmeecampbell7396 You can't do/not do something now based on what you think "might" happen at some unknown time in the future.

[@rjScubaSki]

@@esmeecampbell7396private pensions. Also, pensioners are an incredibly unlikely group to fuck over in a democracy - they vote at the highest rate and generally for the most status quo policies with a bit of selfishness built in

[@jonno27]

I have spoken to a couple of financial planners to try and work this out. I dont have the data to work out the numbers, but i thought the concepts were pretty straightforward. Neither of them could answer these questions. Thanks for putting it here.

[@GWJUK]

My father told me that your desire to do things changes and to that of a lower spend level! He is 80 this year.

[@adm58]

Yes. I've noticed that to some extent already just between 55 and 65. The other consideration is that spending will reduce if one has nobody (partner or friends) to share experiences with. Holidays, meals out, etc alone aren't as attractive as shared ones. Do things while you can.

[@ChrisBird1]

70 year olds mostly spend nothing ,their Zest for Sex ,Food ,Beer and fast cars has long gone ,as has the desire to travel ..Comfort is the Norm .. I semi retired at 36 and have seen em all .. They all regret not doing sooner . I saw my dad slowly Die of Dementia at 90 ..Crack on whilst you can is what I see on an almost daily basis . Most people dont actually live that long ,so bare that in mind ,as well as the potential for WW3 and UFO ,s that are coming /here ,Not to mention Covid episode TWO ,lol. .. Lots of variables out there other than $$$$$$$$$$$$

[@Lookup2Wakeup]

​​​​@@adm58So true! I'm 67 & that sums me up pretty well. I have a coffee with various walking & social groups about 3 times a week. I go to Weatherspoons for a 550 calorie breakfast about twice a month. I watch my diet & cycle & walk. Not much else to blow my £2k per month pension on.....😮

[@darrenholden7447]

@@Lookup2Wakeup £2k/mnth before or after tax? I ask as I’m 51 and want to retire at 57. Collect part of my DB pension at 60 and trying to see how much people live on. I know everyone is different. Wife says I should as I have ailments and enjoy it while I can!

[@wl660]

@@darrenholden7447Do a few budgets and see how they look. Basic, comfortable, Best Living… Big question. Have you proven to ALWAYS live within your means? If it’s proven you have always lived in debt, take car PCP deals, expensive holidays…then these traits are likely to continue. Old Dog and new tricks….

[@leemactavish3104]

The problem is most of us leave it too long before thinking of a pension, then you have a mortgage and other bills so saving for a pension is hard.

[@ryanjames2962]

Would be interesting to see required amounts based on ages 57/59/61/63/65 as an alternative too

[@hailey0675]

Great video James, excellent information! I am state-side and sat down last week and did a year by year retirement analysis to age 95, looking at annual inflation, social security income, personal investment returns, along with reducing annual spending as I progress through my 80’s and 90’s with my spouse. I landed exactly where you did with your approach. Thank you for sharing your insights and analysis, much appreciated!

[@iainh]

Using this video and the provided tool, I feel that I am "on track", at least for now. Thank you James for another great relatable video.

[@pataleno]

Time becomes more valuable than money as you get older. So if you’re still Working at 60 and don’t enjoy it. It’s time to make plans.

[@cavandavidson1185]

This is great stuff, clear, balanced and realistic...thanks.

[@lemmybongo8611]

Only after my dear mother passed away and I acted as executor on her estate did I realise how brilliantly she did as a professional woman and the way she looked after her finances over decades. She could easily have afforded to have retired earlier and avoided doing a couple of jobs she did not enjoy, as well as spent some of her money to make her life easier and more enjoyable. The message here is, if we are going to put all this effort into looking after our future finances we should also make plans on how to enjoy that money when we are older. The goal should be to retire around 55-58 years of age and enjoy our lives, whilst making provisions for our legacy. Be great now and your future you will be grateful!

[@annawong1305]

This is the video I've been waiting for! Relatable and concise. Also, thanks so much for the templates, James! Will be sharing this video.

[@JamesShack]

Glad it was helpful!

[@bruceknight3720]

Yes, I agree. I'm 51, and I'm imagining retiring at 65. This vid is excellent, and the handy tool should get me focused. Thanks very much

[@veramentestanco]

Linear and super easy to digest! Simply brilliant!

[@294loo]

One of your best videos! Thanks again 👍

[@willmiller1460]

Great video James! Retirement planning is the real gap since pension freedom. I work in investments and took some free advice from our IFA division recently, all they wanted to do was 'move me onto the platform (with a "staff discount")....all I wanted to know about was tax efficiency, retirement planning and paying into my partners pension as a more efficient way of drawdown in retirement....we spent most of the hour talking at crossed purposes!! I have been looking at 75% (global) equity with 25% spot price gold as a buffer....I know it's not traditional equity bond, but after the truss budget I have less faith in bonds being a buffer any more......have you ever thought of doing backtesting on equities and gold? would be interesting to see........

[@paulmckayart3824]

Excellent explanation. Thank you!

[@samyeoski]

Hi James, I really like how you show your workings and assumptions. Thanks for the video!

[@markfi123]

Brilliant, thank you!

[@King_Law1]

Great video, thanks James.

[@rmedh]

Thanks for doing this it's very informative. Do you have a model that allows us to work out our own numbers?

[@mvp_kryptonite]

Excellent! Fingers crossed the other half can start to build assets soon too.

[@johnwhogan1610]

Great video! Well done! 👍🏻

[@F0ssil]

Hi James, I recently found your channel off of some other financial channels I watch. I am someone (possibly) quite typical in that I am just realising that although I’ve paid into pensions (workplace and private) for some time I may not have been giving it the attention it deserved and at 58 (this year) need to pull the finger out, it’s good to put figures (even if they are ballpark and dependant on returns) to the amounts needed to sustain (in my case) 20 to 30k a year once retirement comes.

[@JamesShack]

I’m glad you found the video useful and best of luck for the future!

[@Claudia-yd3dd]

Great Video, thank you from Germany!

[@russellekins2799]

This is really useful, thank you

[@jwracingteam]

Well look at that, it would appear i have enough, cheers James!

[@stevecollman2435]

Another superb video James, thank you.

[@JamesShack]

Glad you found it useful!

[@DKNW62]

Hi James great video as usual, a spread sheet of the first part would be good. I have a few comments, if you have a cascade of pots the net effect would surely mean you need less, as per your other vids you could dynamically draw down? Re pension, if you lucky your company will add their NI savings, for anyone worried I believe salary sacrifice pension is the best vehicle to get to the big numbers, but important is to check for yourself how you pension is invested. A theme you keep touching on are care home costs which could be relatively biblical, how should one think about this, a bit cliche but it’s a concern a long term frugality might be swallowed up by care fees, what are these scenarios likely to look like?

[@alexm7310]

Ooo, this was good! So pleased you considered retiring @60 y as a singleton... am slightly concerned about fees levied on pots when moving to retirement 'drawdown products' (meant generally). Do your calcs take account of these? Thank you so much for these videos 😊❤

[@eoinm0nvk110]

Hi James, TY. I handed my notice in. I retire at 55. Done all your spreadsheets, taken expert advice. I can do it.

[@jasonohare3557]

Fab video James, as always! How you cram in so much detailed analysis and advice is admirable…and I thank you very much sir!

[@danguee1]

Don't forget: the government has shown they're capable of messing with or raiding your pension. So far they haven't touched the ISAs - I'm guessing having paid full income tax on it, it's harder to justified scalping it. For that reason, I'm trying to make sure my ISA has close to half of my retirement fund assets in it.

[@Hasan10-oh7vl]

Love it !! Do you need a video editor? I can do a sample video ;)

[@yellowvurt]

Great vid. Love Voyant.

[@Mikcdi]

Thanks for this video! Have you considered inflation in your analysis?

[@gerry2345]

I like this vid. Good insight and interesting.

[@harry7890]

That spreadsheet isn't downloading for me. I've tried two different browsers too

[@Haines9032]

Thanks James. I wish it was easy to understand how much is required when you've got both DB and AVC pensions - any tips on this? I try to follow Martin Lewis' general rule but it's hard to work out!

[@Yrie27]

Great video! Id love to check if I'm on track, but the download didn't work for me.

[@marks7471]

I don't think I will ever retire as such, I have 2 businesses and have taken a few months off in the past but being in contact with people and just doing stuff is really rewarding. Gotta keep moving 👍

[@christopherjhall]

You can still be in contact with ppl and very much have a rewarding life without work. Life, for some people, is so much freer and expansive without the construct of work. Taking regular breaks from work has allowed me to appreciate the opportunities for life. I have a wonderful job, don’t get me wrong, but there is a world out there that needs to be enjoyed.

[@pataleno]

Same here I’m in a well Paid Easy stress free job but they still have my time for 8 hours a day and I hope to get rid of that at 60 and do what I want to do each day.

[@LoveLearningInDorset]

Thank you James, could you do a similar video wth property assets rather than shares? 😊

[@lkyuvsad]

This video is absolutely excellent James. I can't believe how clearly you managed to explain what is a very complex topic. Edward Tufte would not be especially disapproving of your charts, I think, and that's really helping.

[@Richard-fm1cx]

I have Tufte’s book “The visual display of quantitative information” on my bookshelf - not many people quote him 😂😂

[@denisedeakins4828]

Another great video James :) When I looked at the downloadable tool it has a starting saving target of £800 K, i know you mention a target of a lot less than this, say 300-500K how does someone on a lower income work out their monthly savings needed for this sort of amount? Thank you

[@Lovemy911]

Another quality video 😊 Its a shame we cant cover every eventuality! As nobody's guaranteed govt pensions now as the age is getting further & further out of reach ...im mid 50s ' not the best health now and to expect to live into my 70s and receive a state pension @70 now is pretty unrealistic. My grandparents & parents never made it to 70 😮 Genetics & luck is needed ! Whilst iv saved €200 k for when im 60plus its a pipe dream for many to reach thus age ! 🙏

[@doingthingsdifferently]

Really useful thank you James

[@JamesShack]

Very welcome

[@MikesGlitch]

Another excelent video. 😊 7:05 - Care/Assisted living - would be interesting to see how that would impact the plan 🤔

[@AidanJeavons]

It destroys it which is why it was not included. The reality is that you can only hope you run out of time before you run out of money. Those on the higher end, with 50k per year can just about support one individual requiring care. But if you are a couple, then your significant other has no income for retirement, or worse they also require care and you need to sell off your assets either way. You would require an income of 100k per annum matched with care home inflation fees to avoid this scenario. This is not feasible for many. *To clarify, this is for care home assisted living. For private carers to visit your home it is somewhat more manageable, but it would still require a great amount extra, although not double. It’s made somewhat easier with Disability Allowance etc.

[@narttamash7863]

What tool do you use to work out all these scenarios and backtests? Looks like an online service of some sort?

[@robkgilchrist]

Great video, but am I doing something wrong as I can't get the 'How Much Do I Need To Save Tool' to download

[@ottonellomattia]

Great video!

[@snubbii9276]

I know that ISAs are not as tax efficient but I have been contemplating having an ISA for income top-ups and to delay drawdown. Essentially buffer plus a big excess. ISA just in case I need money before retirement. Seems like a sound plan in my head

[@lawLess-fs1qx]

Gloriously simple. Well done James. That tool looks like fun. I'd love to know what the spending of pensioners who own their own home is by year. At 65 you need £blah. at 75 , etc. I always imagine I'll spend very Little but “assumption is the mother of all mistakes” .

[@aconlin]

Hi James, the final retirement figure. It’s based on today’s prices. So doesn’t the final figure need to be adjusted for inflation?

[@gav2302]

Love your videos James. So much so that they’ve educated and influenced me to change direction in my career and get into financial planning. Start a new job in financial services in 3 weeks, can’t wait to get going. Thanks for everything

[@ThomasMcConaghie]

James this resource is fantasic. You mentioned thinking for couples in your video but I' wondering if this spreadsheet can show this as well? My wife and I process all our income and expenditure jointly, so jointly planning our needs would be helpful.

[@robkewley]

Excellent video. Would love to see a follow up of this based on retiring at 60 as I'm going to need to start saving.

[@rajmehta6210]

Great video James. Can you post the equivalent figures at higher levels of expenditure, eg 100/125k please?

[@alexcannon-microdot]

Is it worth considering what the purchasing power of £20-50k would be if you're reaching retirement age in 10-30 years?

[@MattSwain1]

Thank you. Retiring at 55 would be a bit of a dream as I’m only a couple of years away but I can at least see that the value of my pension pot which currently feels like way too little isn’t so far away from being enough. Hopefully I can quit before I’m 60 😊

[@kraigschess1772]

A good addition to something like this is - how much money would you need, and need to be investing per month at 20, 30, 40 years old to reach this. I know how to work this out myself but it’s mind blowing when you see it spelled out - the power of compound growth and how little you need if you start early vs late. I still have colleagues in their 20s who have OPTED OUT of our employer pension!

[@Paul-vl2wg]

Great video James, thanks

[@JamesShack]

Glad you enjoyed it

[@L0000NEY]

Could you do a video like this for those of us looking to retire in our mid-late 40's ? as the calculations seem far more risky when there are many years before we can access any pension benefits.

[@mkdons22]

Fantastic informative video thanks james

[@JamesShack]

Glad you enjoyed it

[@pukkanig1]

Found your videos while off work sick the other day. It felt like i was a couple symptoms away from a trip to dignitas, so the latter years of my life was clearly on my mind 🤣. Anyway super videos - really accessible, informative and thought provoking! So thx. I'm 10 years from retirement and going to move from a 33:33:33 stocks:balanced:cautious approach to something more like 80:20 stocks:balanced. Is it worth waiting for the bonds/cautious part of my portfolio to recover from a pretty dismal last 3 years or just bite the bullet and shift the propotions now? (I have a v. good defined benefit safety net in place, so this is regarding a modest extra DC portfolio i've built up worth about 60k).

[@soggymoggytravels]

Very useful!

[@FoobsTon]

None of this is rocket science, however if you're not financially savvy, it can really appear so. James has a real strength in being able to break it down and explain it simply. The psychology of investment and the ability to sleep at night, which he touches on are super important and these can prevent the "mistakes" he mentions. Good work James.

[@JamesShack]

Thank you very much for saving so, I appreciate it!

[@00kennedyp]

Also your asuming that there will be a state pension and triple lock will continue, which lets be honest the country can't afford, with a reverse pyramid of population and age groups and lower birth rate. I think anyone retiring after 2050 should start to question if UK state pension will be as generous or at least become means tested.

[@chrischarman8707]

Yes but I would say people were saying the same in the 1990s when I was in my 20s, so I planned accordingly. So agreeing with your point is helpful regardless if it comes true or not. There are other issues you are ignoring, like the voting patterns of retirees.

[@pincermovement72]

They always seem to find money for gimmigrants , net zero and Ukraine

[@jjsmallpiece9234]

The UK pension isn't very generous now when compared with other countries. It should match the minimum wage equivalent

[@uncleskies8163]

Hi James, Great video again. I can't seem to get the How much to save tool to either download or send to an email address. Perhaps it's just me. Keep up the good work.

[@windemilla]

same here

[@AG-so4gl]

Go where your savings work hardest for you. Expenses 30%+ less in SE Asia, great quality of life and private medical care, particularly Thailand, Malaysia.

[@jami7772]

Agreed. My plan is to go to Malaysia but they've just suspended the MM2H program and are looking at revising the qualifications to apply.

[@FlorinVZaharia]

That's a bit sad unless U really want to live there. U gonna leave your grandkids behind and move to Uruguay because U didn't save enough to live a decent life in the UK?

[@David-od4bq]

James. How do you buy gold n silver through a SIPP that has not been rehypothecated?

[@RealStAndrews]

Fantastic video James, I wish the youth of today could see it in schools

[@YivvaMedia]

What’s the software being used with the simulations over 100 years where we can see the failures where the market dropped in the first few years?

[@arhodes2866]

Thank you for such succinct description. As an NHS employee is there any chance you could do an in-depth look at the old pension they had and new one CARE and how it maybe feasible to reduce it to 65 retirement instead of Gov retirement age? How it maybe possible to boost it. I know a vast amount of people who would be interested as the calculators on the sppa website aren’t always working and the statements are not clear or continued when old portion of pension taken but CARE left in to take later. Many thanks though for all the videos you do. Very much appreciated

[@drln1ghthaunter]

Nice tool it validates my own assumptions of where I'll end up on a conservative 4% interest (My SIPPS rate is 12.42% so defintly on the conservative side). I know what I'm contributing and timescales, it's the goal which is a little fuzzy. I finangled the target in steps to fit in my plan. £257 for 1 year, £357 for 19yrs then up to £530 for the last 14 once my mortgage is paid off. £380K at 68 seems pretty positive when my take home after tax is only 21k. Looks like I'll end up with a choice between more income then when I was working or retiring earlier. Probably a bit of both.

[@christopherjhall]

Great analysis, but I would have thought in later life you will be in a position to contribute much large sums and consider retirement much earlier

[@drln1ghthaunter]

@@christopherjhall It would be nice, unfortunatly I'm not particularly career driven and easily get complacent. My goals have generally been to afford a house & make enough that I don't have to go days without electric or food like I did as a child. It's part of why it's taken 11yrs to get to 26K as I've already got that. Unfortunatly there is also not much in the way of job opportunities locally and my natural skills would have me do well in areas like social care or working with special needs. Areas not particularly known to be a lucritive career path.

[@medievalfolkdancer]

Fantasticnvideo. I So need you to review my position as I'm 50 and really want to retire at 60/62. Would love to have a go at that excel calculator from this video.

[@bobdobalina276]

Here's a question I've not seen asked. I'm not a million miles from 55 so starting to think about the tax free 25% draw down. I have an ISA, I have SIPPs all pretty much identical (invested into the same global index funds on platforms with low/zero fees). Is there any benefit in not taking the 25% tax free (or at least 20K chunks) and funnel it into the ISA's? Does the pension wrapper offer anything on static cash (ie not money coming in, or money leaving) that an ISA doesn't? The main downside I see is I'd burn through ISA allowances every year until the 25% is reached.

[@richcarless7740]

That spread sheet it pretty damn good, I had a similar one for calculating how long it would take me to pay off my mortage if overpaid.

[@davedunn2225]

My wife and I will take our 25% lump sums and invest in our Isa’s (over several years) for accumulation & income. For the remaining 75% left over am I correct in thinking that if we only withdraw our annual personal tax allowance amount (currently £12,570pa) each year we will not have to pay tax on that, or is all of the 75% subject to tax ? Thank you

[@BoulderDash24]

Hi James. I think it's time for a video on the new lifetime allowance rules. First, there's a limit of £268,275 'lump sum allowance' equal to 25% of the new 'lump sum and death benefit allowance' Now unless you are desperate to pay off a mortgage, most people will not take 25% of their pot at retirement. If you have a £500k pot at retirement, for example, hopefully it will grow over the years and you will be able to take more than £125,000 tax free. So two questions arise. Who is supposed to keep tabs on the actual amount of tax free cash you withdraw? And what will happen if you breach the limit? And a question that I've always had, which may now be moot unless the lifetime allowance is reintroduced by a different government, if your pot continues to grow and looks like it will breach the £1,073,100 limit, at what point should you start to take large amounts out so you don't end up paying huge amounts of tax?

[@EZ1111]

Great video tbh this will now be my reference for pensions lol

[@matthewking1492]

Hi, I’m worried about my parents running out of money during their retirement. They are both retired and drawing their pensions. They are divorced and single. Is there any way they can save on tax. I know they have a private and government pension. Both are 72 years of age. Thank you in advance.

[@tomra01]

Super video. Thank you!

[@mbronti]

It would be great if you took a look of the effects on pension pots depended upon where you live e.g. I have a uk pension pot of XXX, but plan to retire in a South Asia country where cost of living is 0.5 or whatever, that of UK...

[@paulchilvers5032]

Hi James, if you hold a cash buffer of say 2-3 years expenditure , wouldn’t that enable you to avoid draw down during at least some, hopefully the worst, market downturns and hence increase the overall average returns achieved over the life of the retirement?

[@JamesShack]

I would not go so far as to say that it will be return-enhancing. The goal of the cash buffer is to reduce stress, moderate behaviours, and prevent mistakes rather than to "enhance" returns.

[@skpowerz]

Thanks for all the info! Is there any way to use these backtesters/simulators myself? Can I access Timeline as a private person? Or do you know any free/cheap alternatives to Timeline? I'm interested in running a simulation for myself where I can also take into account possible future pensions/inheritances.

[@shellyperera2010]

firecalc is quite good. Should be able to find it if you Google.

[@elephantandcastle838]

There's a free app called FI Calc, but this uses US data. So even if you invested only in US equities and bonds, you would be modelling on US inflation data (generally lower than UK) and ignoring USD to GBP conversion. So yes with a big caveat

[@skpowerz]

@@elephantandcastle838 Thanks! I'm actually from EU so I was hoping the tools had international settings 😅

[@russdavey1919]

Excellent video! I'm curious that after the cash buffer is the assumption that the remaining amount is invested in 100% stocks?

[@JamesShack]

60% stocks and 40% bonds is the base case, but there is one set of examples where I look at the effect of increasing/decreasing risk.

[@Popeye147]

A great video with a lot of insights. For me there is this challenge of save, save save and you end up dying 3 years into retirement (all too common story) The balance of living a life you want to live NOW enjoying the things you appreciate more NOW is key. Obviously I am not advocating splurging all of your cash and having nothing for when you finish work I just think each case is different. You don't want to have nice cars, foreign holidays and expensive things when you are 75 so therefore don't need a large amount of wealth at that age

[@funkyfragrancelover2979]

I assume the figures mentioned are in today’s money? If I assume I will be retiring in 10yrs time the total pot will need to account for inflation over that decade?

[@RealStAndrews]

Unfortunately, I'm not able to download the savings calculator. I enter my email and it says "Your download should start shortly" . I have tried different devices and browsers. I was already signed up for your newsletter James, will that make a difference? Saying that I tried another email and still no downloaded document on my phone or computer. Please advise. Thanks for a great video.

[@jimboyuk1]

it doesn't work

[@JamesShack]

It should work now - james-shack.co.uk/savings-calculator

[@RealStAndrews]

@@JamesShack thanks James, works great

[@timburgess1528]

thanks James, very informative as usual and much appreciated. You mentioned briefly about the potential very high costs of funding healthcare in later years. I presume that this would have massive and dominant impact on the calculations, is there a reason why you don't take it into account? Many thanks!

[@JamesShack]

Originally, I thought that there are too many additional assumptions related to end of life care that it would be hard for people to relate to. Length of care? Both going into care? What types of care? Are you happy to sell your home? Where do you live (affects costs a lot)? We have default assumptions for our clients, £80k per year for 5 years before they die. But I think I would have to spend 5 mins justifying those assumptions! However, on reflection I should probably have just showed one scenario and then rolled it back and continued on without it.

[@Shorty140291]

​@@JamesShackyour reasoning is sound. I would have liked one scenario showing the effect of care on the cost but I still loved the video

[@misterbeach8826]

I wouldn't worry about when to retire. Your goal should be to get as quickly into the stock market as possible. The median US income has grown by x1.62 since 1980, while the US GDP has grown 10x, the same as the S&P 500. You have an extreme disadvantage living from a salary, on average; therefore, do not ask when you can retire but instead, how early can you start investing in ETFs, stocks, and bonds as early as possible to escape the median income trap--in order to have a few million USD left at the age of 65.

[@EcomCarl]

It’s important to have a flexible retirement plan that can adapt to changing market conditions and personal circumstances. 📈

[@pataleno]

Great video James. Always a concern in the future they start means testing state pensions… Punishing the ones who saved for their retirement. 😢

[@andywoollard]

I watched your 4% rule video and if my understanding is correct the numbers don't tally - for 50K you'd need 1.5m at 55 - even including a second state pension it doesn't seem to come close to the figures in your 4% video, be great if you could explain the difference in the models.

[@SootheSound]

Great in-depth and honest video as usual. Does the 0.5% factor in the Financial Advisors fees, or is it based on the money being in a SIPP or ISA, with fees similar to Hargreaves Lansdown at ~0.45%?

[@JamesShack]

It assumes fees are related to the investment platform and underlying fund costs. No adviser charges. Hargreaves is one of the more expensive platforms!

[@jocar-1735]

HL platform fees for holding ETFs and investment trusts are capped at an annual fairly low amount in both SIPP and ISA accounts.

[@c40uk98]

I worked at a company years ago, just for a few month , just got a letter from there pension(the pension people), I have a massive 175 quid in it , should I cash it in now ive just gone 55

[@voodo0983]

An increasing number of people are now renting in their later years. I don't think think you have covered this base? Excellent presentation btw.

[@titolovely8237]

This is my plan for early retirement. It’s so much cheaper now to simply rent that you really only need a few hundred thousand in your portfolio to be able to live in perpetuity IF you rent. I know a lot of people believe home ownership is part of the American dream but homes are just unnecessary now if you’re an empty nester.

[@pincermovement72]

Yes my house will probably be half my pension fund.

[@voodo0983]

@@titolovely8237 Yes. I like the flexibility and freedom to move post divorce and not owning a large asset, though renting is not particular secure either as you approach retirement in particular in the UK although Europe is probably better.