Retirement Planning: Are You On Track?

Whether you are planning to retire or have already retired it is useful to know whether you’re on track to achieve your goals. So in this video, we’ll discuss how to set your goals, quantify them and build a portfolio that is likely to get you there. But also how to ensure that you stay on track once you are in retirement.
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Timestamps
00:00 Introduction
00:18 Clear Goals
01:09 Goal Into Numbers
01:49 Portfolio To Meet Your Goals
10:47 How To Stay On Track
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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.
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[@Pensioncraft]

✔ Become a PensionCraft Premium member and get access to our savings & retirement simulator. To find out what else our membership offers and how you can join our friendly community click here www.pensioncraft.com/investor-education/membership/

[@Darren_Harper]

Saved to watch again in 20 years.

[@MagicNash89]

Once in a year obligatory video to satisfy the channel name decision🤣Not that Im complaining, I think its ironic that a PENSION named channel is better at general investing advice in terms of depth than most other channels

[@davidgarth4285]

Probably wasn't a good name 😂😂😂

[@marissakeynes2532]

Just stumbled on this channel and ur right this is the only video they have on pensions. But it's very good. I'd say the best I've come across so far.

[@sailingtheworldwithgreengh6239]

Sailors! I love the fact that you are hearing from people who want to do that. We did for more than 14 years we travelled the seas covering more than 40,000 miles. If you can save your money and keep it invested you actually make money while you travel. Your costs are much lower once away. I like your content and am a regular viewer. Retired, again and am never going back to work. Plan on sailing all summer long this year. Keep your videos coming.

[@mcconchied]

Almost everything you need to know in 17 minutes. Really excellent video. I would be interested in your thoughts on rebalancing the short, medium and long term buckets during the drawdown phase to minimise pound cost raveging.

[@richard3667]

Great video, thanks Ramin. I hadn't come across guardrails before but they directly address some concerns I had about how to draw down in reality rather than a vague 4% or whatever.

[@jonathangiles4854]

Excellent video as usual!

[@Pensioncraft]

Thanks again! @jonathangiles4854

[@martinsinclair5476]

Really great video, thanks Ramin!

[@Pensioncraft]

My pleasure! @martinsinclair5476

[@polmacdiarmada]

Best video I've seen on this subject. Nice work

[@Pensioncraft]

Thanks @polmacdiarmada

[@dubsdolby9437]

Retired at 53 using dividend blue chip stocks. Isa 480k 34 k income. Sipp 400 k 13k dividends. No tax as I use the £12570 personal allowance. Have around 180k in etfs sp500 nasdaq World tracker for growth. part.

[@RJC10101]

Well done.. what Blue chips are you invested in?

[@brettl1503]

34k income from 480k invested in your ISA is a 7% return. How do you get that sort of return and keep the capital growing with inflation?

[@dubsdolby9437]

@RJC10101 All the big ones legal and general aviva bats, greencoat imperial brands phoenix etc

[@dubsdolby9437]

@brettl1503 The dividend payments are increasing on 90%, so that helps . I brought at good prices. I don't switch or buy often only when there's a bargain and the yield is higher. I don't have to sell stock to produce income, so I prefer that as I get paid regardless. Even if I achieve 2-3 % growth on a stock and they pay 7% dividend, I am in for 10% easily

[@stevegeek]

Sounds good. I recently retired early at 55 and initially had a SIPP / ISA portfolio of dividend stocks and income paying funds, but I've changed to more of a growth / accumulation bias in my portfolio, given that this "should" provide a better overall return, long term. Granted I'll need to sell assets, which I wouldn't if I was living off dividends, but in theory the growth should more than make up for this. Does that make sense?

[@glee4486]

thank you so much for such a carefully crafted lesson of a very complicated issue. i really enjoy your videos

[@Pensioncraft]

You're very welcome! @glee4486

[@battj1]

That was ace...extremely helpful...thanks as always Ramin 👍!

[@Pensioncraft]

Glad it was helpful! @battj1

[@alexm7310]

My 'goal' is to save as much as I possibly can for retirement... and that's what I'm doing. When will I retire, I don't know. How much I'll have by then, I don't know. It's okay to have goals, but you can only save what you can save...

[@sl0w_racer]

The problem with not having explicit goals and rather arbitrary ones, is one often doesn't hit them. You need to know where you are going in order to get there.

[@alexm7310]

@@sl0w_racer my goal (such as it is) is not arbitrary, but is based in reality. I am approaching retirement, but I am fit & healthy and mostly enjoy my work. I don't know when I'll retire - probably when I've had enough & I feel like it. My point is, there is only so much money coming in... saving for retirement has always been a priority, but I can only save from what I get. I imagine in retirement I will cut my coat according to my cloth 🙂

[@davem.4003]

​@@alexm7310I understand your approach but if you don't have goals then there are risks - not only falling short of your minimum income level but also saving more than you really need. If "more than you need" isn't a problem because you will simply leave any surplus to your beneficiaries, then that's fine. On the other hand, maybe you will have lost an opportunity to do something important while you were younger? Your targets can be flexible, so you can review and adjust them whenever you feel the need. If you are still enjoying work, then just keep on working. At age 55 I couldn't imagine retiring (or being able to afford to retire). By the time I reached 63, I was ready and also realised that I had enough to bridge the gap to state pension age. Your attitude changes over time as well as other factors, such as the work environment, or health.

[@alexm7310]

@@davem.4003 Thanks Dave, you make valid points (thought provoking)! 😊

[@barkingdadprofessionaldogw2371]

Great update. Shared with my friends

[@Pensioncraft]

Hi @barkingdadprofessionaldogw2371 Thanks for sharing!! Ramin

[@davidwhiteman4649]

I’m fairly confident I’m on track after making sure I invest bonuses and pay rises over the years. At 53 I have £1.4m in pensions and ISA and no mortgage on either main home worth £800k or holiday home worth £250k. Plan to stop working in 2-3 years time.

[@annamuja1831]

Thank you for a great video.

[@Pensioncraft]

Glad you liked it! @annamuja1831

[@ThomasBoyd-ex5vr]

Yes. Awesome. Brilliant content. Spot on

[@Pensioncraft]

Glad you enjoyed it @ThomasBoyd-ex5vr

[@tariq84]

fantastic, thank you

[@Pensioncraft]

Thank you too! @tariq84

[@DPTrainor1]

Thank You.

[@Pensioncraft]

You're welcome @DPTrainor1

[@mechthildhaeussler5736]

That was great, this topic is so strategic to all retirees. Never had been treated so well by any channel I am following. Evidence based AND practical (as always ... ;-). As a small contribution from the field (considering myself as retired for 5 years now): It turned out that I never spend the amount I had planned for any given month or even year (and wondering who really does). In general I am spending less, so I have come to consider my yearly "allowance" rather as a maximum limit. In my yearly "audit" I then decide whether to leave the difference in my portfolio for more security and comfort in the future, or rather put it into a special high interest savings account for "special treats" in the following years. Might have to put a cap on that, so I don't keep too much money lying around. Also about to apply a "glidepath" (rather than buckets) as developped by Michael Kitces, would you perhaps like to do a video on that?

[@jam99]

Most experts never mention the scenario where you would like to retire early but don't really mind working for an extra, say, 5yrs. This gives an element of flexibility which would not be exploitable if you adopt a strict plan. Many people are a bit flexible and would be fine with this. Under such a scenario, you would not have to de-risk x yrs before a strict retirement goal. Instead you would de-risk x-5yrs before the retirement goal. Under most situations doing this, you would benefit from the high gains from the longer period of higher risk. If you were unlucky and your portfolio plummets then you could work for another 5yrs. Sure, for people who hate their work then it doesn't fly but lots of people don't mind working. It might be particularly applicable to people with higher job security e.g. civil servants, the successful self-employed or skilled experts.

[@ivivivir]

Good video

[@Pensioncraft]

Glad you enjoyed @ivivivir

[@user-ko1xu4ow4w]

I had initially planned to retire at 62, work part-time, and save money, but the impact of high prices on various goods and services has significantly disrupted my retirement plan. I'm worried about whether those who experienced the 2008 financial crisis had it easier than I currently am. The volatility of the stock market is a concern as my income has decreased, and I fear that I won't be able to contribute as much as before, potentially jeopardizing my retirement savings.

[@jdomsmith]

I feel like I have just enough time to be on track for retirement. I've taken the past year to design a retirement portfolio that I'm content with shoveling into: 50% dividend growth ETFs, 30% US market ETFs, 10% international ETFs, and 10% Berkshire...when I reach retirement, I will swap US market for covered call ETFs like JEPI, JEPQ, and SPYI

[@Tbc810]

Great video but I think the description of the vanguard dynamic spending rule is slightly off. My understanding (could be wrong) is that the income you take is the median of a) a set % of the portfolio value, b) the inflation-adjusted value of last year's withdrawal + cap, and c) the inflation-adjusted value of last year's withdrawal - collar. This way you combine both the 'pound plus' and 'fixed percentage' methods. Main drawback of VDS is that it usually reduces expected consumption quite heavily. Guardrails are otherwise usually along the lines of: if return < 0% = no inflation adjustment, if return > 0% and 8% = inflation adjustment +2% (to make up for years where there are no increases).

[@VoiceOfThe]

I’m 50, retired. Left the U.K. Pot approximately £500k. Hoping sequence of returns works favourably for me. If it doesn’t, plan B will be enacted and I will move to south-east Asia.

[@SublimeCS]

Why is the move always South East Asia? Is it the weather? South American countries like Uruguay and Chile could be good options with that amount of money, no? Plus the culture is very similar to UK/USA or the west in general.

[@VoiceOfThe]

@@SublimeCS I’m actually not familiar with Chile or Uruguay. I may look into this. Thank you. I suppose I just think of Brazil or Columbia and my impression is they aren’t that safe. I may be wrong though.

[@barnstar2077]

@@VoiceOfThe - I have heard good things about Panama too recently. Might be another place to add to your list worthy of investigation!

[@person.X.]

@@SublimeCSUruguay and Chile are much more expensive than SE Asian countries. Colombia might be a better option.

[@stebro450]

Also consider, mendoza Argentina, i have no idea if it is cheap to live here, but you will be surrounded by outstanding malbec, which should shorten your retirement if you drink enough.

[@jamesdaw131]

I’ve got an idea for a video! Basically show buying an annuity v creating one yourself with bonds (ie get a Gilt that matures each year with the amount of money you need in that year). I’d be intrigued to see whether the insurers are making loads out of you? I guess inflation is the challenge - as I don’t think we can buy ILS.

[@jamesdaw131]

Oh and I should say, I am interested but don’t have the time to work it out myself!

[@davidsmind]

Why would you assume 9% for stocks? The 50 year average is closer to 4.5%

[@darrenmcdermott6443]

i am interested in the way some commentators tend to complicate this whole process...The average time it takes for the markets to recover is 2.5 years, i am going to be fully invested in equities and have 3 years cash as the buffer. I am happy to accept the volatility (not risk as some people like to call it) for the upturn. the end

[@spartacus4929]

Same here, especially if you have a DB pension covering off non discretionary expenses.

[@Tbc810]

Crashes can (and have (and probably will in the future)) take longer than 3 years to recover from. If you are basing your retirement asset allocation policy on the average drawdown length, then by definition there is a 50% chance of failure. Fine if you are willing to take the risk, but having some allocation to bonds (e.g. another three years' spending) will likely help protect against a wholesale change to your spending plans

[@odourboy]

The longest historical period of S&P500 non-positive returns 15 years. One planner has suggested that you make your 100% growth equity bucket for your 15 years plus retirement expenses based on this observation.

[@MrHotrod79]

Really outstanding video to help people understand basic retirement planning. Thanks 🙏

[@fredatlas4396]

Just look up portfolio charts, sometimes it's taken more than 12 yrs for equities to recover, and that's just back to where they were before they went down, say just before the crash for example

[@richardyates7280]

Ideally, I would like to live off the yield alone (no decumulation)

[@barnstar2077]

I don't understand the idea of rigidly increasing spending by inflation. I plan on only increasing the amount I take out if I notice that I have less money in my pocket, or if my pot grows too excessively. Everyone's personal inflation is different after all.

[@scotchegg6422]

What do you think the split between accounts should be upon retirement? 80% Pension 15% S&S ISA 5% Cash / savings ?

[@cyberslim7955]

I have a sizeable stock portfolio in HK, which has been vandalized by.... Should I clean out, or should I hope that it recovers to before pandemic levels within the next 10 years as you often claim it always will? Is HK the classic example, when the stock market theory might miserably fail?

[@nickseccombe1357]

Hello Ramin, I don't know if you know of this big pensions issue, but there is a long delay with my HL SIPP this year in allowing me to claim my annual UFPLS withdrawal. They sent me a form a few weeks ago ready for the new tax year and then said it was void due to new government regulation changes. Then did the same again last week. I'm still waiting for a valid UFPLS request form and am rapidly running out of last year's cash! Is this a UK-wide phenomenon, and how come it hasn't made national news? Thanks, Nick

[@milkboccle]

Good video as usual, but many people also qualify for state pension later on but I don’t see anyone factoring in that element

[@stevegeek]

Perhaps best not to rely on a state pension, given the state of the UK finances and the growing aging population, if you are a few years off state pension age still. That's what I'm doing. Any state pension is a bonus then.

[@jont96686]

Excellent as always Ramin. I'm using the 3 bucket approach myself as I'm only a couple of years from retiring. Isn't £25k out of £600k in fairly safe investments incredibly low? Based on the 4% rule you want to take out £24k in the first year alone, so not sure how that is protecting you for your first few years income.

[@person.X.]

I think in the example used the person was 20 years from retirement so still working thus they only need an emergency fund.

[@Jalleur14325]

Ramin do you have a video on which actively managed funds to buy? I have invested in Lindsell Train's fund but not sure who else is a good manager?

[@stevegeek]

I don't think Ramin is a fan of actively managed funds, due to their higher costs and (usually) lower returns than passive index trackers.

[@muffemod]

Ramin, what type of plant/tree is behind you in the background? Thank you.

[@Pensioncraft]

Hi @muffemod it's a weeping fig (ficus)

[@muffemod]

@@Pensioncraft Very many thanks!

[@bertbile]

I just transferred a pru pension worth 31k into vanguard sipp, I’m 58. I’m about to buy a house mortgaged over 9 years and would like to use this pot to overpay annually by approx £3600 (physically paying in £300 per month from savings and recoup that from sipp at end of year) I chose vanguard target retirement fund 2025, am I doing the right thing can anyone tell me please? I’m not an experienced investor. I currently work and pay into an nhs pension that I plan to access within the next seven years.

[@ianseward9928]

So which bucket do you draw the income from

[@ianseward9928]

So how would you use this for somebody retired . Which bucket would you drawdown from

[@FPLaddict]

Do you need to complete a self assessment when paying into a private SIPP?

[@robertjones3189]

Depends on your personal tax situation.

[@davem.4003]

As Robert Jones said. If 100% of your income is taxed via PAYE and you are a basic rate tax payer, then the answer is "no". If you are a 40% tax payer then you need to complete the self assessment to obtain the additional tax refund into your SIPP. I am unable to say exactly how this works because I was never in that fortunate position. If you are able to contribute more into your pension, e.g. AVCs, via salary sacrifice (enough to bring you back into the 20% tax bracket), that is ideal and because pension contributions are not taxable, then you won't need to complete the self assessment.

[@johnristheanswer]

Ramin , If you have a defined benefit pension , what would the general advice be re the cash free sum ? Keep it in ` cash ` as a safety net / big expenses or split as ` cash` and index funds ? We don`t want to spend it !

[@JohanTetzel]

Check the commutation factors, you may not want the lump sum

[@johnristheanswer]

@JohanTetzel You've got to take it with NHS , GOVT type pension I believe. Different to private pensions.

[@JohanTetzel]

@@johnristheanswer ah fair enough. Get it in that ISA sharpish!

[@davem.4003]

If you genuinely don't want to spend it, then it could go into a higher-risk investment pot in an ISA. If there is a risk that you may need some of it for an unexpected or unplanned event, then keep some in a low-risk pot.

[@johnristheanswer]

@@davem.4003 Yes, a split seems optimal to me.

[@musheopeaus4125]

I’m surprised to see little difference between uk and USA shares because everyone and his dog say uk is 💩 for returns

[@tancreddehauteville764]

The best solution, ultimately, is an annuity. It eliminates the volatility risk once and for all. The problem though is that if you are below 65 the annuity rates are basically crap.

[@coderider3022]

Think the ladder strategy might be better or fixed length annuity to bridge you to state pension.

[@robertingram9404]

Replaces volatility risk with inflation risk

[@roberthorsford4266]

Loss of value on death is a big issue with an annuity if you intend passing any wealth to beneficiaries.

[@alcanford4495]

Ramin did a video on annuities a couple of months ago . They're good for peace of mind, and certainly better value than they were 2 or 3 years ago, but the hidden costs are typically horrendous.

[@tancreddehauteville764]

@@robertingram9404 Not if you buy an indexed annuity.

[@Jonnyicey]

If you take 4% and your pot continues to make 5% wont it keep going forever?

[@richardyates7280]

Factor in care home fees of, say, £55,000/yr, in the last few years of life....

[@sassasins031]

The average stay in a care home, for the small percentage of people who will need it, is less than a year.

[@patoises]

some people thinks being in a care home is worse than death - my partner says to me he'd rather die than have me pay £4k per month to keep him alive

[@VegasMilgauss]

25 and only a 300k pension pot and a measly 80k isa. Thanks for the kick up the arse!

[@sambailey8378]

Jesus, kick up the arse? I hope this was satire. I'm the same age and only like 1% of this 😂 Trust the internet to humble you in some way. Congrats btw!

[@alcanford4495]

Humble brag?😉 If that's the size of your pot now, you'll be an inflation adjusted millionaire in a couple of decades, even if you never add another cent to the pot. That's an amazing position to be in at the age of 25, so congratulations.

[@sexysilversurfer]

Count yourself fortunate that at 25 you already have the ability to save that much. You could probably retire young if invested properly.

[@dannyboyrobb]

300k in pension pot at 25. Did you start working at 4!

[@rodgerq]

Feel free to share your methods of such success, I'm sure it would help lots of people.

[@Project-Masculinity]

In Mid Fifties and have £400k for retirement…back to work for me

[@VVattonEarth]

How much would be enough?

[@Project-Masculinity]

@@VVattonEarth Going for £1 Million

[@VVattonEarth]

@@Project-Masculinity yikes! What’s the ETA on that!? I’m 50, I was thinking when I get 500 I’ll be able to worry less. I’m at 370ish … but 750 would bring a comfortable retirement… this might sound defeatist but I have a feeling … that’s just not realistic… kids education, health, career … there’s a storm coming

[@Project-Masculinity]

@@VVattonEarth At Best when I’m 62 at worst when I’m 68, but that’s not Including 12% going in each month thru work, got my second mortgage till 69 also, I’d say retirement is a good decade away, time to get my fitness up…

[@MrHotrod79]

That tracker is the final straw.. to much value not to subscribe to Pension Craft.. thank you. Looking forwards to playing with the tracker

[@Pensioncraft]

That's great thank you @MrHotrod79 I'm looking forward to welcoming you to the community! Ramin

[@crimsonpirate1710]

Im not retiring. Wtf is wrong with you all. Keep working. You will live longer.

[@stevegeek]

Fair play, if you enjoy your job. Personally I had a stressful (but well paid) job. Couldn't wait to retire early. Now I have freedom to do what I want, when I want and my physical and mental health is better, since I'm able to go walking, cycling, running etc. instead of sitting on a laptop all day.😃

[@Dan-uf2vh]

There won't be any more retiring 20 years from now. When biotech solves aging, we won't be able to give any such thing and be glad age isn't an issue any more. On the other hand, the need for work will also be drastically reduced and more concerned with creative, high-end work. What is the point of planning 20 years into such a volatile future?

[@christophermortley7687]

You work for a 40yrs to have $1m in your retirement, meanwhile some people are putting just $10k in a bitcion coin for just fe months and now they are multimillionaires thanks to Wendy Patricia Trebat

[@roger4880]

Sounds like an Amsterdam worker

[@aaa-ky5ds]

Nobody should retire. It gets too boring. Everyone should stay in work until 70+.

[@ivivivir]

Everyone should decide what he wants... Based on his/her freedom not according to what you may think... Boring or not is a personal decision. I am happy working but... That is my thought...

[@offthetrail5675]

I'd say get a hobby... I like work sometimes but life is a lot more than just work.

[@user-ws5tu6wu6t]

Oh shush now Rishi....

[@edc1569]

Nice to have options!

[@nickwilliams178]

Who knows what will happen and you may not get to 70. Don’t waste life just working.