My original retirement plan was to retire at 62, work part-time, and save money. However, high prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.

Great video, although I'm not sure I would've used the names Fred and Rosie in the example case....💀

Hi James, as an actuary I find your videos very informative and packed with relatively complicated ALM concepts in a simple way to the general public who are not familiar with the amount of assets they will need to retire. Kudos to you!

I began saving for my pension age 18 - company scheme. Along the way I hit higher tax, so added to my company pension with a SIPP (tax benefits). There are a few new cars I didn’t drive, a few mega holidays I didn’t take, and a 3 bed house was more than big enough for our family of 4 - especially as both kids have now left home. I was able to retire age 56, my choice with no underlying health or other reasons needing to do so. Just pi$$ed off with micro management and lack of trust from my corporate management. They initially replaced me with 2 graduate entrants, then added a 3rd to cover my previous workload. I’ve just turned 60 and feel so much fitter and less stressed, I volunteer and spend my time helping others, plus doing DIY jobs around our home that I was paying others to do when working. If you love what you do, especially if working for yourself, that’s fine. If you can’t see yourself running on the corporate treadmill for years into the future - DON’T!

Honestly these videos are literally of public interest. Great work

People do not know how these options can make such a big difference. Great job getting people to think about options.

Good advice. The main problem is that people leave it so late to start addressing this stuff instead of beginnig to accumulated capital in their 20s onwards. I thank the school teacher that talked about the burden of his mortgage, thanks to him I made sure I had paid off both my mortgages by 40 and meanwhile my whole life has been focused on accumulating wealth whereas for most people it is something they rarely think about and then when they come into a lump sum they spend it on a car or something equally stupid. I’ve also noticed that ironically those in the best position to do this (I worked in the city) often seem least able to step off the gravy train. Retirement is great, I walked away from a massive income and I’ve not regretted it once…. I also calculated that I save £15,000 gross income a year just by not having to go to work. Subscribed.

Thanks, makes me feel better about my personal situation. Fear of running out, unknown health problems, inflation etc. I have been far too conservative, but as I age I am more confident and am spending more, including just paid £15k for a private medical problem to avoid a 2 year NHS waiting list.

Shout out for James’s financial planning spreadsheet, I find it extremely useful for planning my retirement. I only got into this stuff seriously when I hit 40 (42 now) but as I’ve never previously wasted too much money with a bit of focus and tweaking things each year I should be able to retire if I want to at a decent age. Many thanks for the great content

Fred and Rosie won’t need to worry about retirement once the police start digging up their patio 😮

Thank you. Just what I needed to watch. My hubby and I are directors of our farm business and own property, plus small pensions. I am nearly 52, hubby is 55. We have started to save to retire from the farm, and possibly live on rental income, I'd really appreciate you go LIVE and talk about how to earn passive income online and retire comfortably, let’s say $1M.

Excellent strategies James. What I do is use my current projected non-discretionary spend into a lump sum and then the difference between that and my portfolio represents my current max discretionary pot for my lifetime. I then vary what I take out of this each year. This makes it easy to row back one year if things look uncertain (2022 is a good example where my discretionary spend has been very close to zero)

We need to distinguish between "retiring" and financial independence. If you "may" need to go back to work, sell the house or get side gig, you're not FI. If you are still subject to "trading your time for money", you're still not in FI Nirvana. Going back to work full or part is still subject to someone wanting to employ you which brings its own uncertainties. This is why the 4% rule survives as its the "acid test" and I think it's an excellent benchmark to aim for. I use it to stress test my portfolio and it seems to work. Keep in mind the 4% rule means that with that "massive pot" you'll actually die with that pot still intact! So it's a safe, conservative overestimate. Personally, I don't want to leave anything behind so I'll need less than the 4% rule predicts. I'm probably somewhere between 5-6% or more. Good video as always to "keep us on our toes"

How much you need to retire depends on a number of factors, with the most expensive being the roof over your head. If you own your home and have reasonable property taxes, you can retire with a lot less than someone who still has a decade or more on their mortgage, or is renting. Keeping day-to-day expenses reasonable (utilities, etc.) is fairly straight-forward, adjusting expectations for your vehicle(s) also can lower your monthly costs. Retiring with an understanding of the changes in lifestyle and how you'll keep those changes minimal, are the best way to figure out what you will need - there is no specific formula, you need what you need, but if you plan accordingly, you'll enjoy your retirement way more than if you just hope for the best.

If only I had watched this video 10 years ago and you made it 10 years ago ( I would be 46 )...... 10 years on, I've had three team meetings with a wealth and pension advisor about pensions and retirement last week then I found this video. I'm now going to check all your other videos.

Thank you. Just what I needed to watch. Me and hubby are directors of our farm business and own property, plus small pensions. I also earn passive income online. I am nearly 52, hubby is 55. We have started to think about when we could retire from the farm, and could we afford to live on rental income. We want to get private health cover, especially as our plans could include living in Spain for at least part of the year. Will watch more of your videos, get the spreadsheet, and start to think more in detail.

Thanks for another great video. Something that I’ve not seen any videos on, and I think would be useful to a lot of people, is what are the options for drawing down? In particular, taking money from cash vs alternatives, and taking a lump sum annually vs monthly. I’m sure there are loads of other considerations too!

One of the best videos I’ve ever seen on such a topic.

This channel should be considered a public service !! Brilliant

Enjoyed this video, we are on option 2 and looking at option 3 within the next two years. You are so right that nothing is black and white, we might still work a little bit up to state pension as doing nothing would bore us to death 😬.

Thanks for explaining these options, this example is very close to my situation, you are a Star, might be able to Retire same time as my Husband who is 5 yrs older than me. Nice x

Hi James, IFA here, brilliant video as always.

Useful, thanks.

Fred and Rosie.....Good choice there James 😬 Not sure there's much call for a retirement plan behind bars !

Best hning I did was engage a proper financial planner. They pay for themselves as well as reduce risk.

best vid on this I've seen. thanks

Genius content. I want him as my adviser!!

I like your example of Fred and Rose West :-)

I must google this at least x2 a week!😀 Great video and extremely helpful! Thank you

Your videos are SO useful, James! It's fantastic that you're empowering people to help themselves better, as of course, none of this info is taught at school, despite it being so important to help navigate life well. Your videos are helping to educate me on financial planning, as I was burrowing my head in the sand before, and avoiding facing it (am sure you hear this a lot)! Perhaps a different question than you might often get here.... I am intrigued to know which platform/software you use to make your videos? I work as a Dietitian, and am considering making some educational videos for the public too.

It will depend on mortgage one signed up for. One should be conservative on expenses, bring more revenue profit than expenses.

Brilliant video. You missed a scenario though: Fred could go on a spree, Rosie could help out (part-time) and then the government will help with accommodation. I’ll get my coat…

Great video. I think the another big one is to factor inflation in as far as possible as well.

I have always worked on basis that I might want £40k or more per annum whilst I am young and fit so I can play golf and travel. However as I get older then I won't need as much as I am less able to do that. Really useful video. Thank you

Nice to see Fred and Rose getting a mention.

This is my fifth year after retirement. I’ve been following the 4% rule thing, but this isn’t really how hard I expected things to be. I still have about $460k outside funds in my IRA to invest in stocks. Pls how do I take advantage of the market turnaround?

Great video James. Have you considered doing a video on the effect of charges? When I first started to save into a Personal Pension in 1990, I modelled the growth of my pension using spreadhseet software, and was suprised at the effect that charges had on the final portfolio value.

Doesn’t mention flexible drawdown (some years £40k, other years £35k, or £20k). Someone at 80 has different lifestyle preferences than someone newly retired at 55. Health deteriorating means less skiing, less dancing, maybe even less travelling entirely. Factor in 10% reduction in spending for every 10 years in retirement

Great video. Flexibility is the key!

68 and still working in my own business can work as I like generally don't see the point in full retirement and lifestyle change and can be so boring I have noted in others.

I love your videos. Thanks for your content. Amazing work really. I had one request. Would love your take on property investment versus stock market investment over long term including tax implications. Thanks again.

James proving that he is still the GOAT of KZfaq finance

Good video well done!

Spot on, so many options

Good video, but one issue is you saying it's a fault of the 4% rule that it doesn't take in account state pensions, but it's up to you to adjust what data you're inputting instead of the 4% rule being the answer to everything. e.g. instead of a $40K need adjust it down to $25K if you have a $15K pension.

Very cool, great vid, glad i subscribed!

You can also move to a country with a lower cost of living. Although you have to consider whether medical services are as good and if not the cost of private medical care when needed. Which as you get older becomes more and more relevant.

The variance in the initial accumulation phase of the plan is interesting. Would be good to see how much your retirement pot could be through different savings rates. Similar to the how much you need to save video to get “x” amount but this may illustrate the variance you could experience in the wealth building phase

Daft question - I presume that modelling software includes interest/growth on the funds not yet drawn down? If so, what % figure are they using in these examples?

Kind of depends on who you are, where you live, how much you spend, whether or not your home is paid off and what you expect out of retirement. This is kind of like saying, "Here's a pair of size 9 shoes, you should be all set!" Some people wear a 7 or an 8, or a 10 or a 12! Are you retiring in New York City, or Macon Georgia? Will you be spending your summers traveling Europe, and your winters skiing in Aspen? Or will you spend your summers gardening and your winters volunteering?

Great advice. But Fred and Rosie? Didn't they take in tenants to subsidise their pension?

I’m closing in on my retirement and I’d like to move from Minnesota to a warmer climate, but the prices on homes are stupidly ridiculous and Mortgage prices has been skyrocketing on a roll(currently over 7%) do I just invest my spare cash into stock and wait for a housing crash or should I go ahead to buy a home anyways

Great video thanks. I retired two years ago at 60. Im not sure if your chart shows it, however, those retiring also need to consider front loading what they spend. I take £42k per year which I will in no way need to do when (IF!) I reach 75-80. Time is way more precious than money.

You can never be sure , I retired at 60 , 5 years ago. Since then everything has gone up to the extent that my outgoing is twice what it was when I decided to retire. Lucky I can still afford it but you can never plan for everything. I now get my UK state pension, but I would be in a different position if I was not getting it

Alternative: Spain, Vietnam, Malaysia, Chile etc.

Long term care planning is the elephant in the room.

Ideally everyone should look to generate a second income outside of their daily job, these can sometimes be scaled up over time to eventually help you with early retirement.

Do the simulations assume staying with the 80/20 investment strategy post retirement? I’m asking because the prevailing advice I’ve come across (in Australia at least) seems to be to move the investment strategy of a superannuation balance to a more capital stable model in the final years leading up to retirement, fully over to cash, fixed interests and bonds once retired. Then drawing down on a balance you know won’t be as subject to market variations, exhausting it over time. If you run out before you die then the pension is the safety net. I have my issues with this prevailing model to be honest.

The Trinity Studies that modelled the 4% rule assume it ensures an infinitely self-perpetuating safe withdrawal rate where you don’t touch into the principal at all, so you have statistically equal chances of running out of the money in your lifetime as you have it accidentally becoming $9M :) 😢and it’s inflation-adjusted average growth, important to bear in mind, not nominal growth (because that flat white will cost you £60 in some decades’ time. Or way sooner by the current rate of things 😅)

Is it bad that I didn't know who Fred & Rosie were? 🤦🏻‍♂️ before my time!

Great video despite the unfortunate choice of names for the example couple 👫 😁

Hi James, I enjoy your youtube videos and find the information helpful, would like to plug my numbers into your spreadsheet but can't see a link to it? Regards Gary

Can someone tell me how you download this spreadsheet into excel - I’ve tried but can’t get it with the formatting and formulas ?

Excellent video. You are so right about this dilemma. Your plan is well thought out but there are just too many imponderables, the main two being inflation and health. I have an answer to this tortured question. It's a bit extreme and radical but bear with me.. Set an age at which your quality of life will be sub par to the extent life is taking more out of you than you are taking out of it. Statistics will help you to do this. Assuming you want to enjoy your hard earned cash rather than the government or greedy relatives getting their hands on it, you want to die when you've spent your last pound. So, you write down the age at which you are happy to drop off your perch. Then divide up all your your assets to sustain you until that date. When it's all gone, jump off the perch!

Your videos are always excellent. This one was no different.

I wouldn't pay too much money for software that can't find a better abbreviation for Cumulative Withdrawals

Hi James. Thanks for the info, great content. Have a great Christmas 🍻

Don't forget to add the cost of a new patio into the figures...

Hi James, great video as always. I’m going to try out your spreadsheet. But if you speak to your rep at timeline, could you ask them to drop a retail version of their tool? They might listen to you lol!

love your content, but using fred and rosie as examples, my head just immediately thought fred and rose west! doh

Hi James, great video as always.. I have been using your spreadsheet for a year now and think it will be a useful tool in the future to adjust as and when life circumstances change. You have made some default growth assumptions in that model and I was wondering where those sit in relation to those Timeline projections.. are they broadly at the median or have you baked a certain amount of pessimism into those assumptions?

Great video, very relevant as currently in the option exploring process - nice to have options.... 😁

What is the modelling software you're using?

I'm 61 and have my pension pot ready, but I'm still working and driving myself to distraction trying to design a portfolio that gives me the best chance of riding out the future market crisis. Have you done a video on this?

if they start going towards remote part time work. it will both give them something to be busy with and also keep their investment growing while they draw out of it.

I have gone for a different way, I got 2 rental property's outlay total for both with some works 140k but I've re mortgage since then so got back about 40k so now only in for 100k and have about 100k equity. But I rent out for 4200pm both places including bills my bills are about 650 per house 1300 total leaving me with 2900pm I have a few extra expenses per year so about 2500 pm after them profit

Why didn't I know about this 55 years ago? Retiring too late was such a waste of my life!

Before I found your videos in the March 2021 lockdown, I thought I could never retire, as even though I have a large pot, HL Pension Statement estimated only 6k PA at retirement age. I did not realise this was assuming I would get a announity. I now realise I should be able to retire at 57 or later if they Goverment change the age you can access you pot. Keep up the great work.

I consider myself financial independent, but not by the four percent rule. Instead I use another simple rule I invented for myself: Given that the dividends from my assets are exactly the same as the inflation rate, and given that my current expenses will be unchanged except for inflation adjustments, at which age will I run out of money? The calculation is simple: Divide your assets by your yearly expenses, and add this number to your age.

Excellent video as always, food for thought. Fred and Rosie, hey? Does Fred own a patio business...

It all depends what your expenses are

Fred & Rosie!! Think they invested in other things within Cromwell Street didn't they?

People retiring now don’t realise how fortunate they are - they have final salary pensions and council houses they bought for under 30k worth 5 to 10 fold. Money purchase pensions, even the best ones are nowhere near as good. Appreciate it’s a short term view but both my money purchase pensions over the last 11 years are valued at what has been paid into them effectively. A higher rate taxpayer with 17% going into pension and my estimated annual income at retirement wouldn’t afford gas and electric bills alone. Most young people today will need to be left money by their parents to stand a chance of having a decent financial outlook.

With a state pension which is currently almost £10k so to get an ok pension for most single people they only need around £10k per year from their pension pot, so even on an enquiry at current rates you would only need under £300,000 pension pot even if you retire at 58 ish? Or are my calculations incorrect?

The problem is that most people don't have a pension. Only government workers have that these days.

Isn't varying withdrawals based on market returns also a viable strategy? For example, withdrawing the minimum 27k in down years and 40k or even a little more when the portfolio returns well over 4%. I plan to retire early and want to use this strategy to ensure that the money lasts.

I checked one of my pensions and the pot seems very low. If I am investing in stock only, when the stock market 'bounces back, 50% for example, does my pension pot also increase by 50%. I would really appreciate an answer, if anyone can advise please?

you can't be too flexible if inflation is at 10% like it is now in Europe and the US. If you're willing to use Geo Arbitrage then things may work out as housing is the #1 expense of a budget, if you can dramatically reduce your housing costs that would make a massive impact. Unfortunately housing is skyrocketing to the moon in most of the developed world, moving to Southeast Asia or South/Central America are good options but of course there are pros/cons.

Why do you want a constant income? You don't need lots of money at 91. Spend more money when you are fit then just live more frugally when older.

Rosie should register as self-employed, and pay voluntary class 2 NI contribitions at £3.15 per week, in order to get her full state pension. But treat this advice as if you heard it from a bloke down the pub.

Great video. What’s the software you used for modeling?

It can actually be zero. I could run my 2 person, 2 car household on my state pension alone. Add my partners SP, and we can live comfortably. How? By carefully understanding, and minimizing, our costs. I do not mean frugality, I mean avoiding poor value. Plus- do not believe inflation figures! Over the last 15 years, for which I have detailed figures, our cost of living has risen- almost nothing. Yes, I have savings- quite a lot. Which have grown steadily during retirement. Not just investment growth- our income is more than our costs (despite loving luxury holidays). I retired at 52- but should have done it years earlier. People focus on income, when the true source of control is spending.

the wests sound like a lovely couple

it also depends on how extravagant a lifestyle you lead.

What is the most tax efficient way to get paid from abroad? Can it be paid directly into a stocks and shares ISA

I do not understand the 4% rule. If you were to put your investments in the S & P index fund and get back an average of almost 10%, your money would actually grow - yes?

While I appreciate some may feel they "need" £40k pa to "live", I'm not sure that's at all necessary to live a "simple life" once you own your own home. Even at the absurd current prices, energy would "only" come to around £4k a year, plus food, council tax, no car to run (if you love somewhere you love)... These figures people throw around seem to be aimed at those who want to live an extravagant life in retirement, as opposed to a simple one, from experience I very much doubt my grandparents spent more than a few thousand a year to live happily when they retired.

First, what is wrong with work? Second, I am 60 and I have no idea what I would do with myself all day if I did not work. All the things that I can imagine that would keep me active, engaged and mentally busy would cost more money than I will ever have. My idea of retirement would be to stop working on Monday and Fridays so I have enough 'pin money' to play and enough 'work aggravation' to appreciate the long weekends more. I plan to work in some way till I cant any more. I like to work.

Hi James - very interesting video, thank you. Maybe it is me, but at 10:35 when say and point upwards “in this video here I’ve built a cashflow model…” then…where is it? I cannot see any video to click on. Thanks any help.

Hi James, how do you factor in life-extension technologies into retirement planning? You mention there being a 10% chance of one of them reaching 100, but that is based on 2022 odds and not 2070s odds. I follow life-extension news and I would certainly expect the average person to live to 100 by the 2070s. I’m planning accordingly, while also planning for the classic ‘Retire at 65, die at 80’ average.