Yep, I used to be the same and was just focused on saving enough money for a decent retirement, then I met my partner who's dad was diagnosed with early onset Alzheimer's when he was 50 and had to give up work. It's completely changed my outlook now. I'm still making provisions for old age, but almost everyone I know my age (30's) have gone down the route of buying the biggest house they can possibly get with massive mortgages with the intention of downsizing when they're older and having a nice retirement. Instead we live in a small cheaper house that's perfectly adequate for our needs and have more disposable income to enjoy life with. You never know what is round the corner so enjoy life as much as you can before it's too late.

This. I’m grafting now (well, actually 4.5 days a week 🎉) at 42. Worked hard, put money into pensions (DB) and mortgages all my life. Spent relatively low %, on things I value only. Had some lovely holidays etc, and a biking hobby. I’m still finding fun! Zero credit debt aside from where tactical (0% credit stooze into 5% savers etc!) and no other debts. Good LTV, good rates (1.28% fixed) etc, helping no end. Long story…. 3rd home (sold 2 en route) to be paid off by 52 (give or take 2), then my 30 years service gives me enough pension per year from 60. I’ll either sacrifice up to 1/3 of it and claim from 50, or work 2 days a week to maintain a cash flow until 60. Aware life might deal me a bad one and if so I’ll replan, in the meanwhile I’m having enough fun and can see the winning line. Life May deal me inheritances or things like a downsize could also fund that 50-60 gap. Or I’ll indulge in 50k of debt knowing my state pension at 68-75 can pay that off later, if I get that far. The state cash is just a bonus. Daughter can have my house when the reaper comes. Whatever house that may be. Finally, I think about the value of my time like the OP. Eg I wont drop to 3 days now, as the extra 1.5 days a week gives good income to keep the plan on track. But I WONT go to 5 days for a bit more cash which after tax etc isn’t worth it. Little things like earning 2 days worth at 52, when daughter might be uni inclined, would exempt me from uni fees too. So earning now, not then, seems a better approach. I’m grateful for my DB pension and ability to know with sone confidence my income in retirement… and what that means if I get to 55, 75 or 105. I’m grateful my approach gives me time with the daughter before she’s grown up too. Lastly, I’ll never stop working. As in “putting in effort”. But all the effort will be things I enjoy doing, whatever that job may be. Might learn pottery! Be nice to never have to do work ‘for the money’.

@@MrTaffynoel Sounds like a life without regrets to me! GL!

This is the way

Great reading these comments. Modest home here with mortgage paid off by age 44. I figure that will then give me options. How much do I need and what do I want to do with the time. The vast majority of people make it to 50 (hopefully I get there) healthy so that should bank me 6 healthy years of less work. I plan for everything over 50 as bonus time (but am still paying into a pension and LISA)!

Thanks for the feedback. I’m glad you find it useful!

👍🏻

Good luck pal, good stuff

Labour will be in charge soon and tax pensions and stop the 25 per cent to fund the public wastrels

Your mortgage is interest only. What will you do about housing when you retire?

I retired at 52. If you are a higher rate income tax payer you should certainly put all of your income above the higher rate into your pension. You'll save the higher rate and likely only pay the lower rate when you collect if from your pension (and 25% of it will be tax free)

That's great to hear Scott. I'm glad you're confident in your plan.

Not to mention that if you were really hard up, you could always borrow from your property in the future, which you wouldn't pay any tax on as it's a debt. Debt free is the way to go.

Glad you found it useful, Neil!

You're welcome. (ps it's not advice, just a demonstration of what worked for someone else!)

You’re welcome, best of luck with it.

@@JamesShack Hi, any chance you've created an online calculator since this video? Would be amazing! Also, with very uncertain times ahead, and the chances of a stock market crash looking likely, pensions invested in such could actually lose, not gain. That'd be a HUGE issue.

@@carlos777uk Just as the video suggests, the pattern is that after a crash the economy comes back. These corpos now are so big that they're more than just national companies really, so it will take them a while to pivot but rest assured they have the money to adapt to whatever happens. So TL;DR, if a crash happens, just ride it out. Might take 5 years but your money will be back to where it was or go up. And if it doesn't... well, take solace in knowing that everyone else is screwed too and so a mass solution would have to be found and it will include you somehow too. It's not like there'll be anything you can do pre-emptively about it anyway unless you want to just sleep on a cash mattress out of fear.

yes but two issues to consider: Divorce ( hopefully won't happen but women change a LOT in their 50s) and if either of you are out of work for a long period, your debt will be higher as you stopped paying off the capital. I have been mortgage free since my 30s now in my early 50s and divorced. Despite that due to the amount I was able to save ( she saved 00) I had to pay her off but still mortgage free.

Nice Andrew, 38 would be mega!

Great points Zach. Reasons why it may be best to hold onto the mortgage for longer or find other means to pay it off like downsizing.

There is a link in the description of the video 👍🏻

Yes government cannot be trusted. Tax rates and rules should be contractually guaranteed.

@@rocketpig1914 couldn't agree more. Contract law seems to apply in every aspect of life except for when you sign up for a pension on the basis of drawdown at 50 then after you've committed to the deal the government changes the terms with zero rights for you to pull out

Indeed. Good points to consider also.

Its sounds like you have a lot of diversity which is no bad thing. Within a few years you may be financial secure enough to be confident not needing to repay the mortgage. When you know you could pay it off, via other means, if really needed.

You also didn't say which a mortgage company will ask is what happens if pass away. There are so many complications of having a mortgage using a pension as a tool. How do a mortgage company deal with a bereaved spouse left with that pension to live on and that full mortgage needing to be grabbed by that mortgage company. There are bigger issues and risks that mortgage companies look at and your advice dosnt look at the 'What if' scenario and does your pay back tool really think about this as not everyone go down the life insurance route to cover these situations!!

@@Ste6ve1 If I was giving you advice, yes I would consider all of these acute angles. As I said in the video multiple times I cannot speak to your individual circumstances and you needed to decide for yourself if this is appropriate for you. Anyway, if you died with a DC pension your spouse would inherit it as a tax free lump sum, and because you have got tax relief paying into it, the spouse would likely be in a better position than having overpayed on the mortgage. Of course depending on market fluctuations.

@@JamesShack totally get what you are saying and love all your stuff but you are wrong in giving this as a pay back tool only through my experience. Main Stream Media and the government will not mention to people how bad pensions are doing. For every £100 My son and daughter are putting into their pensions every month it shows a 20% loss every month after and this is happening every year. A FA will tell you to leave it there so they won't stop paying through fear of the pot being emptied. Pensions are rubbish at the moment and I would say this is not going to get any better in a recession and a war that we are paying for, well the excuse I'm given so I'm not alone. What advice would you really give in this time of turmoil with wars and as they say a long recession. There is also the scenario of divorce for a couple that is, the risk is to high to never pay any of your mortgage off as the nightmare of pensions and divorce do not go well. I had a final salary pension I wanted transferring , I had to nearly beg a FA to take it on. Third time lucky but I had to make out that my health was not good to get this transferd. I divorced and guess what, the government get that final salary pension if you die being single, the reason they make it so hard to get at. I was desperate to pay my mortgage off as I was in shit street becoming single. Again, for anyone using a pension these days is a no go tool to paying it off. A mortgage company will also say, ok, you paid off your mortgage, what will you live on for 30 years after. You can't use a tool that has been losing money for three years and don't believe a FA that says you need to look at a five year investment before you get anything out of it, can you imagine using that as a tool in Dragons Den lol. Listened to alot of your advice and thank you but you need to look at where we are with markets. Some of your advices over time have been don't pay your mortgage off and then a month later why it is best to pay your mortgage off. Looking at lots of mortgage companies you will also find an interest only fixed mortgage is higher %rate than a repayment fixed term, mortgage companies are a rip off that only look at their profits. Any mortgage company that allows this as a tool is really breaking FCA rules because of any future circumstances that could arise.

You are a young guy James. Us older generation remember the interest only mortgage crisis, great idea at time and Financial Advisers said the same but they didn't come to the rescue of millions that had to go into rented accommodation because mortgage companies insisted on repayment mortgages after 10 years down the line and then it was to late as the affordability was way to high each month. The FSA now known as the FCA now we're to blame for not keeping an eye on lenders and FA,s more. I should know, I worked for AXA within the Agency Team in keeping an eye on financial advisers selling AXA pensions and Investments. GUYS, STAY AWAY FROM LARGE INTEREST ONLY MORTGAGES. I remember the lots of people coming unstuck. If you want to do one, put ya money in bank for a rainy day each month, that way you have that support at getting at it in bad times.

@@Ste6ve1 this is an excellent point Steve. I think the longer you live and pay attention to what is going on the economy and financial industry, more sceptical you become towards the ideas of using a debt (interest only mortgage) as a vehicle of building wealth. It all looks great on paper (and as they say paper will take anything) but as history showed us people often gets stung/burnt by the debt. As they say there is no such thing as free lunch and if start gambling with bank, putting your home at stake sure thing is you will lose your home sooner or later. I have made a similar comment myself too under this video but showing the problem from a different angle: using your pension as a savings tool. I have been working in pensions for quite some time and I have seen how legislation has been changing for decades making pension less and less reliable tool for building wealth. Don't get me wrong..i have a private pension, i invest in it every month but wouldn't I start chucking all my savings at it in a vein hope of redirecting my money to pay off mortgage in 10-20-30 yrs? NO WAY! When DC pensions were first introduced it was a great investment tool. Now, they've become so complex, with annuity rates and Lifetime Allowance being so low and going lower in the future I bet, it would be insane to use this as a wealth planning tool. But hey, what do I know..i only invest my own money and I don't have any IFA qualifications so i must be stupid ;)

Yes that might be right. It’s often better to do a bit of both, and have investments spread across different tax wrappers, especially if your a long way off retirement and tax rules could change.

Yup, this has NOT aged well and if people did follow this advice, may find themselves in a very poor position indeed.

I was thinking the same thing but it might be a good idea to use this as a base and see what else can be done. ​@@Madmas27

Well they've held at 5.25% interest so it's still £80k better off. With the BoE saying they will cut next year if things go to plan then that is going to be back to 120k. The LTA could change year to year within the UK now as the tories or labour flip flop endlessly.

@@ivermektin6874 Agreed - spiraling interest rates are good for pensions too.

@@Madmas27are you able to briefly summarise why? I might be being dim

Not to be underestimated a property is yours! A pension is under the control of trustees and government meddling!

Though I agree, don’t think for a minute that the government couldn’t find ways to tax you for owning a house if they needed to. I could easily see variations of the council tax being produced if things start to get really bad in the economy over the next few years.

You’ve got this pension thing wrong… it’s not tax-free. It’s tax deferral. Excepting the small portion which can be extracted tax-free, you’ll pay full tax on income derived from your pension. Only later in life.

​@@gregmcgarry1 Ok so you're only half right. You will pay tax when you take the income but you get to 1 invest the whole amount including the tax meaning that you get the interest on those funds in addition as income. Second your pensionable income is generally lower than your income during your working life meaning if you're a higher rate tax payer now you will pay that income tax at a lower rate when you take it later. Additionally a lot of companies will match your pension contributions meaning you can effectively increase your income tax free.

@@ThePirateParrot Higher rate of tax kicks in at €40k in my country. State pension is €12k. That means one only requires private retirement funding of 28k to be taxed at higher rate meaning the tax, as I said, is only deferred. Outliers relating to some people’s situations including matched-funding by companies are just that, outliers, and cannot be applied across the board. So, not relevant for generic commentary on a complex subject matter such as pensions. My point holds though, the client’s stated objectives were being debt-free and s/he was already taking risk with their investment exposure. Placing their home in interest-only is diametrically opposed to their stated objective by putting the capital on ice and adding further risk by gambling whether they’ll generate the funds to paydown the mortgage later. This is a so-called ‘Endowment Mortgage’ supercharged, Vegas-style. Very high risk. And that client’s losing at the moment given sky-high interest rates in Brexit UK.

Thanks for Watching..Write me To participate in our current investment offer’s📊🤙🏻.

Indeed, they're only available for < 60% LTV and higher incomes. Not for everyone.

Well done

There's a risk the cash lump sum won't exist when you retire.

Thanks for Watching..Write me To participate in our current investment offer’s📊🤙🏻.

I did a video on it here. Hopefully it's useful : kzfaq.info/get/bejne/nteWpsmhsJ67iok.html

@@JamesShack top man, thanks

Hybrid approach: Reduce pension contributions if getting close to LTA and then split between ISA and repayment mortgage. Don't get too worried about the LTA though, and certainly don't start the hybrid pivot until you really are close, like within 100k close.

There is no need to worry about the LTA limit as now as good as abolished.

The NHS pension scheme is a complicated one and split into two main parts. I'm not an expert on these schemes, but i believe you can get the option of a tax free lump sum but it may reduce the ongoing income you receive. So you need to do a calculation to work out if it's worth the cost.

@@JamesShack Thanks for the response mate.

Thanks for Watching..Write me To participate in our current investment offer’s📊🤙🏻.

Would have been better off keeping the interest free mortgage

Retire at 48! So what are you doing for the next 40 years?

@@polomint46 having a life?

How did you use this strategy when you can't claim a pension before 55 years old?

@@Huwberts_Emporium I had savings too. I didn't say it was easy but it is possible.

Hi David. If you can access the pension in 4 years too, you could even put the cash into a pension, invest in something v low risk, or even cash, then take it out of the pension in 4 years. You’d then still get all the benefits of tax relief but without the risk. Although you might trigger the MPAA of you need to withdraw the taxable part. Not advise, just a potential avenue.

@@JamesShack Thank you,that is also an interesting idea. These are not either/or strategies - it is quite possible to do both - but currently as a risk free way of paying off my mortgage, using a savings account seems like a no brainer. I already have 10% of my II SIPP in Capital Gearing so adding more to that would be a possibility. My current thinking is against using the 25% for paying off the mortgage because once the mortgage is paid off I intend to travel/rent for several years (i.e. effectively be 'homeless') so at that point I could max out my SIPP contributions that way over several years as well as fund that lifestyle which should achieve a larger lump sum (because it will have more years to grow) that could be used to purchase a property later on outside the UK. I am paying substantial sums into my SIPP and workplace pension too.

You’ll be capped at £40k but you may be able to make use of unused allowances from the last 3 tax years.

I cover that here : kzfaq.info/get/bejne/iLNpnLOjt72rmWQ.html

@@JamesShack Amazing thanks. 🙂

It’s not relevant earnings. But you could max salary sacrifice and then live off your ISAs. Or use them to make one off conts so long as you have the relevant earnings to cover it.

If you die before the age of 75 your spouse, or whoever you chose, inherits your pension as a tax free lump sum. So they would be in a better position then had you paid off the mortgage. A loss of income at any points affects each scenario in the same way. After 55 both scenarios would simply have less going into the pension. If you experienced a loss of income prior to 55 you are arguably in a better position with the pension because you can stop contributing whenever you want. But with a mortgage you can’t stop paying it.

I was thinking of making a sheet but modifying it from one that I understand to one that anyone could understand was going to take longer than I had!

Yes, assumes good health and employment at least at the same levels. Shit happens.

That won't affect it much, unless the 20% crash is right before retirement but you could always delay.

@@JamesShack Oh yeah, just the minor detail of delaying your long awaited retirement and all the implications this has. Great idea.

Stress testing at the worst times is the right way to go - ask how they would react and feel even it is feels unlikely or bad luck now. Even 20% sell off can be conservative depending on where the assets are invested. Other downsides: - you’ve said it already but in a slightly different way - with the LTA you will have less to save in your pension for your actual retirement needs. - this strategy will also need to be reviewed and ensure that the client does not get a false sense of security for their retirement. They still need to save for it!

@@cubeh8331 I meant delay paying off the mortgage, you would not necessarily have to delay retirement so long as you have saved independently for that - which is what this plan suggests.

Thanks Mark!

This has the same objective as an Endowment mortgage, but is executed entirely differently. Total control, transparency and the benefits of tax relief.

The endowment mortgage boom in the 1990s didn't end well, with a misselling issue caused by investments falling short.

Did putting the rental profits into your pension mean you didn’t pay tax on the rental profits?

@@anthonymclaren1332 no

Thanks Kevin, your points are valid. - IO mortgages normally need £100k household income. - The risk is that pension rules change (again) which is why doing a bit of both doesn't hurt. - Agreed on the cashflow point. - 60% tax relief and 45% (for £125k+ now) is a much bigger benefit.

Indeed, there are ways you can mange the LTA anyway. And for those receiving >45% tax relief it can still be a viable option.

The FCA don't make money out of you. The Financial Advisers, fund managers and pension companies are the ones that do even when you lose money, they always get their fees. The FCA require every financial adviser/company that is part of their organisation to look at every scenario going forward and how wrong it can go. What happens in job loss, death, health etc situations going down the line. Your money is stuck in that pension till say 57 and you are 45-50 years of age. You are in shit street for those 7 years and you havnt paid a penny off that mortgage. The FCA are there to protect us hopefully on false promises. Always remember the government will not let you get out of any sticky situation until 55-57 and there is threats of raising it even higher to get your pension money out early. James is wrong with this one, he is not looking at every scenario of your money being stuck. It is a fantastic plan if everything goes 100% I agree with that but there is a real world out there where changes of circumstances are high to even thinking of a risk like this.

Yep, imagine becoming unemployable aged 50 and having a massive pension pot and little to no income. If you are a basic rate tax payer and with interest rates rising it’s making more and more sense to pay off the mortgage. All scenarios need to be weighed up.

@@danteburritar2822yeah pay. The mortgage off and then buy a property, and if you fall on hard times after 50 then sell it, but at least you have no mortgage.

If you're a FTB you probably want to be able to access the money for up-sizing so an ISA would make more sense. This is more for your final home.

Yes, that would be doing a bit of both.

@@drebin3806 Indeed.

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£94k tax free. So we need another £56 k to clear the mortgage. £56,000/0.6 (the tax rate) = £93k or in other words, £93k taxed at 40% (£37k tax) leaves you with £56k .

Thank you!