WEBVTT

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Each person plots their own route through life.

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I mean, I happen to join a profession where pretty

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much everybody retired at 55. Now there are a

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few professions that do this, and that means

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emergency services being one of them. And I've

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never worked in the emergency services, but I

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do imagine that the service prefer to have people

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in frontline services that are peak fitness.

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Pretty much for the same reason you may not choose

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a 55 year old to captain your football team.

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A team of firefighters may prefer to be supported

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in dangerous situations by other officers that

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are at their fittest. But the profession that

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I spent most of my career in was consulting with

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the big four, specifically POC and Deloitte.

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Now these companies also structure things, making

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it optimal. for you to leave at about the age

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of 55. And if you wander around any of these

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offices, you won't really see anybody above the

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age of 45, never mind 55. Nobody in these offices

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are likely to be chasing a burglar, scaling a

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burn, and stairway to rescue people. But they

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will be working in teams, much like in a football

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team, where your team is only is only as strong

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as your weakest player. So am I suggesting that

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55 year olds are worse performers in consulting

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than 35 year olds? Or maybe actually, yeah. But

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where age really becomes a disadvantage? is when

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winning contracts for the company. So let's take

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an imaginary situation. So we've got a PwC team

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pitching for a multi -million -pound contract

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for a management consultant to a big multinational

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company. And whilst they wait to do their pitch,

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they see a team from Deloitte come out of the

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boardroom. They've just pitched before them.

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And the average age of that team look around

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30 to 35. Then you look around your team. and

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your team has an average age of about 45 and

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at least one member is approaching 60. Now if

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you go into that pitch and you deliver exactly

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the same quality of pitch at the same price,

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you may find that you lose out just because of

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the unconscious bias of the customer. The Deloitte

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team probably just seems to have a bit more energy.

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So just like in the Fire Service, The culture

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and expectation throughout your working life

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is that you're going to retire at 55 or before.

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All people older than you in the same company

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seem to disappear before the 55, and you don't

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really need anyone in your organization above

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that age. This makes you think a bit differently.

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State pension is not something that you can rely

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on. You'll have at least 12 years of not working

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before that even comes into play. You start to

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become aware that you kind of must plan to have

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any chance of a successful retirement. And your

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employer is also planning with you, so they don't

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want you kicking around after 55. So they structure

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the way they pay you and the way they pay your

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pensions so that you're unlikely to be in a position

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where you're clinging on to stay in that job

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after you've reached 55, because they really

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prefer you to leave. Now, the amounts. They recommend

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you contribute to your pension and the amounts

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that they contribute for you are designed to

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make sure that you're comfortable going at 55.

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So in some ways, I had a bit of an advantage

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that my employer was setting things up to make

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a retirement of 55 for me. Not only possible,

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but quite likely really. But then... I decided

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to leave the Big Four when I was 45 and I moved

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to some jobs where people didn't really retire

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until they were in their late 60s and pension

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contributions were set at the minimum. I mean,

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at this point I knew I had to take more control

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of my own financial future, so I had to make

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a plan. I identified that the 40 % tax bracket

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was a big threat for me financially and I needed

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to make sure that my salary didn't all just disappear

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in tax. So I reviewed my finances to make sure

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that the amount I took as salary always kept

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me below the limit which I had paid 40 % tax

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at. This meant I had to speak to my employer

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and increase my pension contributions and this

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gave me a couple of added benefits really. One

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that I was paying less NI every month and also

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My employer then contributed more of their money

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to my pension as well. So I'd class that as a

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win -win -win. It also meant that every time

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my salary increased, that I would speak to an

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employer and ask them to put that increase into

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my pension contributions again. Now the tax savings

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I worked out were actually amazing on doing this.

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40 % is a lot of tax. But then I moved again

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to an employer that didn't actually permit me

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to change my pension contributions. They only

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allowed the basic 3 % from them, 5 % from me.

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I had no choice at this point other than to open

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a SIC, which is a self -invested personal pension.

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So now what was happening is my taxable pay was

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way above the limit for paying 40%. So I was

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losing a fair chuck on my salary to tax every

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month. Now when that money landed in my bank

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every month, I'd take the amount that I paid

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40 % on, and I would pay this into my SIP. Now

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a few weeks later, HMRC would then top up my

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SIP with an extra 25 % of this. And then in January,

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I'd fill my tax return out, and they would work

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out that I paid some tax of 40%, and then they'd

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pay an extra 25 % of it directly into my bank

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account. So for that money that I paid 40, 40

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% tax onto HMRC. They've now given me all our

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tax back, which is fantastic. And for anyone

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who pays a higher rate of tax, it really is worth

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having to think about this. What I actually did

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was to trade some of the income out my wages

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for a much higher amount that I could access

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than 55 onwards. And because I've been conditioned

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that 55 was the normal or sensible time to retire,

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this made perfect sense to me. I had a choice,

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a slightly bigger car at the age of 45 and retirement

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at 60, or a smaller car at 45 and retirement

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at 55, and I took the extra five years of retirement.

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The family I'm from has a history of dementia,

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and also I've got a hereditary eye condition,

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and I could see me blind by the time I reach

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state retirement age. We all have freedom to

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make our own choices between jam today and jam

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tomorrow and making either of these choices is

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not a crime, but not knowing the options exist.

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Now that is a crime to me. So make sure you do

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keep yourself informed on what your options are

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and I'll see you on the next video. Thanks for

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listening, guys.