1 00:00:00,000 --> 00:00:05,600 Hey everyone and welcome to another deep dive. 2 00:00:05,600 --> 00:00:10,240 This time we're looking into a topic that's probably on everyone's mind at some point. 3 00:00:10,240 --> 00:00:11,240 Retirement planning. 4 00:00:11,240 --> 00:00:12,240 Yeah, for sure. 5 00:00:12,240 --> 00:00:17,720 You sent over a YouTube video from Time to Retire with Eric sharing his personal approach. 6 00:00:17,720 --> 00:00:18,720 Right. 7 00:00:18,720 --> 00:00:20,120 And it's surprisingly relatable. 8 00:00:20,120 --> 00:00:21,120 It is. 9 00:00:21,120 --> 00:00:22,120 Yeah, it's really interesting. 10 00:00:22,120 --> 00:00:25,160 He seems like a pretty normal guy just trying to figure it all out. 11 00:00:25,160 --> 00:00:26,160 Exactly. 12 00:00:26,160 --> 00:00:29,480 So we're going to dig into his method and see if it works for you guys too. 13 00:00:29,480 --> 00:00:39,240 So Eric actually outlines two main ways to kind of assess if you've saved enough. 14 00:00:39,240 --> 00:00:42,320 And then later in the video, there's this really cool twist. 15 00:00:42,320 --> 00:00:43,320 Oh yeah. 16 00:00:43,320 --> 00:00:45,320 It's like a ha moment he has. 17 00:00:45,320 --> 00:00:47,040 Which could have totally changed his strategy. 18 00:00:47,040 --> 00:00:48,040 For sure. 19 00:00:48,040 --> 00:00:49,040 I'll definitely get to that. 20 00:00:49,040 --> 00:00:51,680 But let's start with the first part, which is all about understanding your spending. 21 00:00:51,680 --> 00:00:52,680 Right. 22 00:00:52,680 --> 00:00:55,360 Because you can't really plan for the future if you don't know where your money is going 23 00:00:55,360 --> 00:00:56,360 now. 24 00:00:56,360 --> 00:00:57,360 Exactly. 25 00:00:57,360 --> 00:01:01,800 So Eric really dives deep into analyzing your current spending habits. 26 00:01:01,800 --> 00:01:02,800 Okay. 27 00:01:02,800 --> 00:01:04,080 So how does he suggest we do that? 28 00:01:04,080 --> 00:01:08,440 Well he recommends looking at your bank statements for an entire year. 29 00:01:08,440 --> 00:01:09,440 An entire year. 30 00:01:09,440 --> 00:01:10,760 Yeah, a whole year. 31 00:01:10,760 --> 00:01:12,520 Why a whole year? 32 00:01:12,520 --> 00:01:15,720 Because it helps you catch those seasonal variations in your spending. 33 00:01:15,720 --> 00:01:18,440 Oh, like those holiday sprees we all know and love. 34 00:01:18,440 --> 00:01:19,440 Exactly. 35 00:01:19,440 --> 00:01:21,680 Like Christmas gifts or summer vacations, things like that. 36 00:01:21,680 --> 00:01:23,560 Yeah, that makes sense. 37 00:01:23,560 --> 00:01:27,200 It's easy to underestimate those costs if you're only looking at one or two months. 38 00:01:27,200 --> 00:01:28,200 Yeah, exactly. 39 00:01:28,200 --> 00:01:30,800 A full year gives you a much more accurate picture. 40 00:01:30,800 --> 00:01:35,120 Plus maybe you'll even spot some areas where you could cut back and save before you retire. 41 00:01:35,120 --> 00:01:36,120 Absolutely. 42 00:01:36,120 --> 00:01:37,280 It's all about being proactive. 43 00:01:37,280 --> 00:01:38,280 Two birds, one stone. 44 00:01:38,280 --> 00:01:39,280 Exactly. 45 00:01:39,280 --> 00:01:43,680 So the key takeaway here is to arrive at a realistic monthly expenditure number. 46 00:01:43,680 --> 00:01:44,680 Yes. 47 00:01:44,680 --> 00:01:48,480 That number becomes like the foundation of your entire retirement plan. 48 00:01:48,480 --> 00:01:51,880 It's all about knowing where you stand right now so you can plan for the future. 49 00:01:51,880 --> 00:01:52,880 Exactly. 50 00:01:52,880 --> 00:01:53,880 All right. 51 00:01:53,880 --> 00:01:56,080 So we've analyzed our spending thanks to Eric's first method. 52 00:01:56,080 --> 00:01:57,080 Right. 53 00:01:57,080 --> 00:02:01,280 How do we actually know if we'll have enough coming in during retirement? 54 00:02:01,280 --> 00:02:02,840 That's where Eric's second method comes in. 55 00:02:02,840 --> 00:02:03,840 Okay. 56 00:02:03,840 --> 00:02:04,840 It's all about income. 57 00:02:04,840 --> 00:02:05,840 Income. 58 00:02:05,840 --> 00:02:09,960 Specifically identifying your income sources and when you can access them. 59 00:02:09,960 --> 00:02:10,960 Don't you? 60 00:02:10,960 --> 00:02:16,880 So Eric actually uses this hypothetical couple, Sue and Bob, to kind of illustrate this. 61 00:02:16,880 --> 00:02:17,880 Okay. 62 00:02:17,880 --> 00:02:21,120 And they've got a combination of pensions, which is super common. 63 00:02:21,120 --> 00:02:22,120 Right. 64 00:02:22,120 --> 00:02:23,440 And that's actually where I started to get a little confused. 65 00:02:23,440 --> 00:02:24,440 Yeah. 66 00:02:24,440 --> 00:02:29,240 So he mentions state pensions and defined benefit pensions and defined contribution 67 00:02:29,240 --> 00:02:30,240 pensions. 68 00:02:30,240 --> 00:02:31,240 Right. 69 00:02:31,240 --> 00:02:32,240 Like what even are all those? 70 00:02:32,240 --> 00:02:33,240 Yes. 71 00:02:33,240 --> 00:02:34,240 So let's break those down. 72 00:02:34,240 --> 00:02:35,240 Okay. 73 00:02:35,240 --> 00:02:36,240 So first you have the state pension. 74 00:02:36,240 --> 00:02:37,240 Okay. 75 00:02:37,240 --> 00:02:38,240 Think of that as your foundation. 76 00:02:38,240 --> 00:02:39,240 Okay. 77 00:02:39,240 --> 00:02:42,040 It's funded by those national insurance contributions you make while you're working. 78 00:02:42,040 --> 00:02:43,040 Gotcha. 79 00:02:43,040 --> 00:02:46,560 So like everyone gets the same amount once they reach retirement age? 80 00:02:46,560 --> 00:02:47,560 Not necessarily. 81 00:02:47,560 --> 00:02:50,680 The amount you get depends on your individual national insurance record. 82 00:02:50,680 --> 00:02:51,680 Okay. 83 00:02:51,680 --> 00:02:55,960 So that's like a guaranteed income from the government once you hit state pension age. 84 00:02:55,960 --> 00:02:56,960 Okay. 85 00:02:56,960 --> 00:02:57,960 That makes sense. 86 00:02:57,960 --> 00:02:58,960 What about those other pension types? 87 00:02:58,960 --> 00:02:59,960 Right. 88 00:02:59,960 --> 00:03:02,960 So then you have defined benefit and defined contribution. 89 00:03:02,960 --> 00:03:06,600 So a defined benefit pension is more common in like the public sector. 90 00:03:06,600 --> 00:03:07,600 Okay. 91 00:03:07,600 --> 00:03:10,880 Think teachers, NHS workers, civil servants. 92 00:03:10,880 --> 00:03:11,880 Gotcha. 93 00:03:11,880 --> 00:03:16,360 And with a defined benefit pension, the amount you get at retirement is predetermined. 94 00:03:16,360 --> 00:03:17,360 Okay. 95 00:03:17,360 --> 00:03:22,320 So that's really based on like your final salary and how long you worked for that employer. 96 00:03:22,320 --> 00:03:26,000 So it's kind of like a promise like work for us for this long and we'll give you this much 97 00:03:26,000 --> 00:03:27,560 each month when you retire. 98 00:03:27,560 --> 00:03:28,560 Exactly. 99 00:03:28,560 --> 00:03:29,560 Yeah. 100 00:03:29,560 --> 00:03:30,560 Okay. 101 00:03:30,560 --> 00:03:32,720 That makes sense. 102 00:03:32,720 --> 00:03:34,480 And what about defined contribution? 103 00:03:34,480 --> 00:03:38,840 So a defined contribution pension is more common in the private sector these days. 104 00:03:38,840 --> 00:03:39,840 Okay. 105 00:03:39,840 --> 00:03:43,520 And with this type, you contribute a certain amount each month. 106 00:03:43,520 --> 00:03:45,240 Your employer often meshes some of it. 107 00:03:45,240 --> 00:03:46,240 Okay. 108 00:03:46,240 --> 00:03:47,240 And that money is invested. 109 00:03:47,240 --> 00:03:48,240 Okay. 110 00:03:48,240 --> 00:03:51,360 So your final pot at retirement depends on how well those investments perform. 111 00:03:51,360 --> 00:03:53,360 Ah, so it's a little bit more of a gamble. 112 00:03:53,360 --> 00:03:54,360 Yeah. 113 00:03:54,360 --> 00:03:55,360 It is a bit riskier, yeah. 114 00:03:55,360 --> 00:03:57,920 Because the outcome isn't guaranteed like it is with defined benefit. 115 00:03:57,920 --> 00:03:58,920 Exactly. 116 00:03:58,920 --> 00:03:59,920 Yeah. 117 00:03:59,920 --> 00:04:03,400 Higher potential returns, but also the risk of lower returns depending on how the markets 118 00:04:03,400 --> 00:04:04,400 do. 119 00:04:04,400 --> 00:04:05,400 Makes sense. 120 00:04:05,400 --> 00:04:07,240 So how does that 80% rule fit into all of this? 121 00:04:07,240 --> 00:04:08,240 Right. 122 00:04:08,240 --> 00:04:13,680 So the 80% rule is this common guideline that suggests you'll need about 80% of your pre-retirement 123 00:04:13,680 --> 00:04:15,560 income to maintain your current lifestyle. 124 00:04:15,560 --> 00:04:16,560 Okay. 125 00:04:16,560 --> 00:04:17,560 And you'll need to actually retire. 126 00:04:17,560 --> 00:04:18,560 Okay. 127 00:04:18,560 --> 00:04:22,680 So it's a decent starting point, but Eric advocates for a more personalized approach. 128 00:04:22,680 --> 00:04:23,680 Okay. 129 00:04:23,680 --> 00:04:27,680 Which is where his method of calculating that monthly spending becomes really valuable. 130 00:04:27,680 --> 00:04:28,680 Right. 131 00:04:28,680 --> 00:04:32,680 So instead of just relying on some general rule of thumb, you tailor it to your actual 132 00:04:32,680 --> 00:04:33,680 spending. 133 00:04:33,680 --> 00:04:34,680 Exactly, yeah. 134 00:04:34,680 --> 00:04:35,680 Okay. 135 00:04:35,680 --> 00:04:37,640 And then Eric also talks about consolidating your pensions. 136 00:04:37,640 --> 00:04:38,640 Right. 137 00:04:38,640 --> 00:04:39,640 He does, yeah. 138 00:04:39,640 --> 00:04:40,640 He has like seven of them. 139 00:04:40,640 --> 00:04:41,640 He did. 140 00:04:41,640 --> 00:04:42,640 He had seven different pensions. 141 00:04:42,640 --> 00:04:43,640 Wow. 142 00:04:43,640 --> 00:04:45,640 And he ended up combining them all into a SIPP. 143 00:04:45,640 --> 00:04:46,640 SIPP. 144 00:04:46,640 --> 00:04:49,840 Which stands for a self-invested personal pension. 145 00:04:49,840 --> 00:04:50,840 Okay. 146 00:04:50,840 --> 00:04:55,160 And this gave him more control and simplified managing his retirement savings. 147 00:04:55,160 --> 00:04:58,320 That sounds like a pretty smart move, especially if you've had several jobs throughout your 148 00:04:58,320 --> 00:04:59,320 career. 149 00:04:59,320 --> 00:05:00,320 It is. 150 00:05:00,320 --> 00:05:02,240 Yeah, definitely something to consider if you're in that situation. 151 00:05:02,240 --> 00:05:03,240 Okay. 152 00:05:03,240 --> 00:05:05,060 So we've got the spending part down. 153 00:05:05,060 --> 00:05:07,120 We know what kinds of income we might have. 154 00:05:07,120 --> 00:05:08,120 Right. 155 00:05:08,120 --> 00:05:12,760 But how does knowing the timing of that income affect the overall plan? 156 00:05:12,760 --> 00:05:13,760 That's a great question. 157 00:05:13,760 --> 00:05:14,920 Like does it even matter? 158 00:05:14,920 --> 00:05:16,760 Yeah, it actually does. 159 00:05:16,760 --> 00:05:18,000 It's a really crucial point. 160 00:05:18,000 --> 00:05:19,000 All right. 161 00:05:19,000 --> 00:05:20,960 So let's go back to Eric's example of Sue and Bob. 162 00:05:20,960 --> 00:05:21,960 Okay. 163 00:05:21,960 --> 00:05:23,280 They want to retire at 55. 164 00:05:23,280 --> 00:05:24,280 Okay. 165 00:05:24,280 --> 00:05:27,000 But their state pension won't kick in until they're 67. 166 00:05:27,000 --> 00:05:28,000 Right. 167 00:05:28,000 --> 00:05:29,000 So they've got that 12-year gap. 168 00:05:29,000 --> 00:05:30,000 Exactly. 169 00:05:30,000 --> 00:05:31,000 Okay. 170 00:05:31,000 --> 00:05:32,920 They've got two distinct phases they need to plan for. 171 00:05:32,920 --> 00:05:35,000 Pre-state pension and post-state pension. 172 00:05:35,000 --> 00:05:36,000 Exactly. 173 00:05:36,000 --> 00:05:37,000 Okay. 174 00:05:37,000 --> 00:05:39,800 And they have to calculate their income needs for each phase separately. 175 00:05:39,800 --> 00:05:40,800 Okay. 176 00:05:40,800 --> 00:05:41,800 That makes sense. 177 00:05:41,800 --> 00:05:45,400 They're factored in potential growth on their investments. 178 00:05:45,400 --> 00:05:47,400 He used a conservative 6%. 179 00:05:47,400 --> 00:05:48,760 Okay. 180 00:05:48,760 --> 00:05:53,960 And he also looked at different drawdown strategies for their defined contribution 181 00:05:53,960 --> 00:05:58,080 pensions to make sure they don't run out of money before the state pension starts. 182 00:05:58,080 --> 00:05:59,080 Right. 183 00:05:59,080 --> 00:06:00,080 That's really important. 184 00:06:00,080 --> 00:06:01,080 Exactly. 185 00:06:01,080 --> 00:06:04,280 It's all about matching your income to your expenses throughout retirement. 186 00:06:04,280 --> 00:06:05,280 Okay. 187 00:06:05,280 --> 00:06:08,240 And this is where Eric has his big revelation right. 188 00:06:08,240 --> 00:06:09,240 This is the good part. 189 00:06:09,240 --> 00:06:10,240 All right. 190 00:06:10,240 --> 00:06:17,840 Eric, what did Eric discover that could have changed everything? 191 00:06:17,840 --> 00:06:19,640 This is a part that blew my mind. 192 00:06:19,640 --> 00:06:20,640 Okay. 193 00:06:20,640 --> 00:06:26,640 So after meticulously planning, you know, doing all the calculations and figuring out 194 00:06:26,640 --> 00:06:30,960 his retirement, Eric discovered that many pension providers are actually required to 195 00:06:30,960 --> 00:06:35,640 give you an advance on your pension funds specifically to get professional financial 196 00:06:35,640 --> 00:06:36,640 advice. 197 00:06:36,640 --> 00:06:39,920 Well, seriously, you can use your pension money to pay for financial advice. 198 00:06:39,920 --> 00:06:40,920 Yeah. 199 00:06:40,920 --> 00:06:41,920 Crazy, right? 200 00:06:41,920 --> 00:06:42,920 Why didn't he know this sooner? 201 00:06:42,920 --> 00:06:46,840 It's one of those things that's often like buried in the fine print, you know. 202 00:06:46,840 --> 00:06:48,840 Most people wouldn't even think to ask about it. 203 00:06:48,840 --> 00:06:49,840 This is huge. 204 00:06:49,840 --> 00:06:51,320 Like this changes everything. 205 00:06:51,320 --> 00:06:52,320 It really does. 206 00:06:52,320 --> 00:06:55,840 So if you're feeling overwhelmed by all this, you know, the calculations and the pension 207 00:06:55,840 --> 00:07:00,240 jargon and all that, you can actually use your own pension to hire a professional to 208 00:07:00,240 --> 00:07:01,240 guide you through it. 209 00:07:01,240 --> 00:07:02,240 Exactly. 210 00:07:02,240 --> 00:07:04,760 It's like an investment in peace of mind, you know. 211 00:07:04,760 --> 00:07:08,920 Having a financial advisor can help you create a personalized plan that's tailored to your 212 00:07:08,920 --> 00:07:14,200 specific situation and it just removes so much of the guesswork and the uncertainty. 213 00:07:14,200 --> 00:07:16,680 I could see why Eric wished he'd known this from the start. 214 00:07:16,680 --> 00:07:17,880 Oh, absolutely. 215 00:07:17,880 --> 00:07:22,440 It makes you wonder how many people are out there struggling to do this all on their own 216 00:07:22,440 --> 00:07:23,800 when this option exists. 217 00:07:23,800 --> 00:07:24,800 Right. 218 00:07:24,800 --> 00:07:25,800 It's definitely a game changer. 219 00:07:25,800 --> 00:07:26,800 It is. 220 00:07:26,800 --> 00:07:28,920 So let's bring this back to our listeners for a second. 221 00:07:28,920 --> 00:07:29,920 Okay. 222 00:07:29,920 --> 00:07:34,920 Have you taken the time to really understand your spending habits? 223 00:07:34,920 --> 00:07:35,920 Yeah. 224 00:07:35,920 --> 00:07:41,640 Do you have a clear picture of when your various pensions will become available? 225 00:07:41,640 --> 00:07:45,080 And most importantly, have you considered reaching out to a financial advisor? 226 00:07:45,080 --> 00:07:46,080 Yeah. 227 00:07:46,080 --> 00:07:49,840 They might be more accessible than you think, especially with this option of using pension 228 00:07:49,840 --> 00:07:51,720 funds to cover the cost. 229 00:07:51,720 --> 00:07:52,720 Exactly. 230 00:07:52,720 --> 00:07:55,400 It's all about planning for a future that you're excited about. 231 00:07:55,400 --> 00:07:56,400 Right. 232 00:07:56,400 --> 00:07:59,160 Retirement planning isn't just about crunching numbers. 233 00:07:59,160 --> 00:08:02,600 It's about designing a future that you're genuinely excited about. 234 00:08:02,600 --> 00:08:06,600 You know, a future where you feel confident and financially secure. 235 00:08:06,600 --> 00:08:07,600 Absolutely. 236 00:08:07,600 --> 00:08:13,400 And having a solid plan and maybe even seeking some expert guidance to create that plan can 237 00:08:13,400 --> 00:08:14,560 make all the difference. 238 00:08:14,560 --> 00:08:16,000 Couldn't agree more. 239 00:08:16,000 --> 00:08:17,000 Awesome. 240 00:08:17,000 --> 00:08:19,400 Well, thanks for joining us on this deep dive into retirement planning. 241 00:08:19,400 --> 00:08:20,400 Yeah. 242 00:08:20,400 --> 00:08:21,400 Thanks for listening, everyone. 243 00:08:21,400 --> 00:08:26,360 We hope you feel empowered to take those next steps towards a fulfilling and financially 244 00:08:26,360 --> 00:08:28,160 secure retirement. 245 00:08:28,160 --> 00:08:33,160 Please take charge of your future.