WEBVTT

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And many people who watch this channel have a

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real good grasp of pensions invested and they

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actually add to the channel by challenging and

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enriching the content in the comments. Now this

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adds extra dimension to the channel and it makes

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the content I think more useful. But what motivated

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me to set up the channel was the impact that

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some basic information about pensions had on

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me. Now the impact came a bit later in life for

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me, early enough for me to make some adjustments

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that enabled me to retire at 55. If I can have

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a similar impact on even one other person then

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that's enough for me. I don't mean that I'll

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encourage them to retire at 55. This was personal

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ambition for me and not something I'm suggesting

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is a good thing. But what is a good thing is

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having the basic information that will give you

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options. These options arise from confidence

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in your financial position. I might be through

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understanding things better. This confidence

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in your numbers will open up opportunities That

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might be the option to maybe change a stressful

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job that's adversely affecting your mental health

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or your physical health. It might be the option

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to reduce your hours to make the job more manageable

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or better for the family. It might be an option

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to take a break from work or to fulfill an ambition.

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I mean, only you know how. better financial planning

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can help you make these kinds of changes. Now,

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I think that if I were to say something here

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that may have a knock -on effect to help somebody

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to make a big change for themselves, well, what

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would that be and who would be the likely person

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to benefit from it? So I think the person would

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be someone who's never really taken time to think

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about. how they can use their personal pension

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to impact things. And the basic advice that I

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would give that would be likely to have the most

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impact will probably be how to use the tax rules

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to their advantage. Now, this is basically what

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enabled me to move from a difficult demanding

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job to a much more fulfilling and enjoyable job.

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And that was when I was 45. And it also enabled

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me to retire at 55. So let you tell a bit about

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my story to see if anything in there that will

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work for you or somebody that you want to share

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this video with. So when I was 35, I took some

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time to look at my finances and I was actually

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quite shocked at how much I was paying into monthly

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income tax. I was a higher rate taxpayer paying

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40 % and everything over. at the time of 30 ,400

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pounds, at 40 % a lot. At this rate, for every

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thousand pound extra I earned, 400 pounds of

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it was disappearing forever to the tax office.

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So what I did is I upped my pension significantly.

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And I found that I was actually paying less national

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insurance each month. My employer had upped their

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own contribution as well. And the drop in the

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level of tax That was shown on my payslip. It

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was actually amazing. It was fantastic. Okay.

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So I was taking home less money, but I found

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that these adjustments not too difficult to manage.

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I moved to a smaller car. I'll come back in a

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sec. So I moved to a smaller car. I revised my

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holiday destination sector and you know, As a

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family, we got on just as easily from A to B

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and we have as many great memories on our holidays

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as I suspect we would have if we'd gone to some

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more exotic locations. By the time I hit 45,

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my pension statements report, that was in a really

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good position. So I started finding my job challenging

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at this point. Long hours and quite a lot of

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working away from home. I could. I'll make a

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decision, one of two things, either I could stick

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with this challenging job, I retire at 52, or

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I could take a much easier job and then retire

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at 55. Now, I took the second option. I'd heard

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of stories of quite senior people where I worked

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retiring at 55 and then dropping dead a few months

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later, and it had been down to... adrenaline

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that kept on going for all them years. So I was

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determined not to go along that route. So I moved

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jobs to a normal 37 and a half hour week when

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I hit age 45. So no even work, no weekend work,

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my time was my own. I geared down my job again

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a few years later to actually work in a home

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job. and then I actually finally retired when

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I was 55. I'm glad I made these choices at age

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35. I think I actually probably was a bit of

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a workaholic and I wouldn't have been able to

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retire in a healthy state if I'd gone on this

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100 mile an hour job right up to retirement.

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So the big change for me was paying money into

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my pension instead of paying it to the tax office.

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So how does that work? Well, your pension contributions

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are taken up by your employer before you are

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charged any income tax. So you're paying a smaller

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amount. Now this might even drop you below a

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tax threshold. So maybe from higher rate tax

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of 40 % to standard rates of 20%. So anyway,

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you've paid less of your salary to the tax office

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and you've paid more of it into your pension.

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Now, there are different types of pension, but

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the most common one now is a defined contribution

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pension. So if this is a complete pension, the

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money you have paid into your defined benefit

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company pension will be topped up. but be topped

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up with some extra money by the company you work

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for. This pot of money then will grow over the

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years that you're paying because you and your

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employer keep topping it up, but it will also

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grow because the pension company invested for

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you. Now, typically your pension will grow at

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a faster rate than inflation. So overall you're

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making gains and you'll get generally a lot more

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out over the years than you paid in. Hope this

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was useful.