WEBVTT 00:00:00.000 --> 00:00:03.160 Hey everyone I'm Eric from the Time To Retire 00:00:03.160 --> 00:00:05.679 channel. Now welcome back to the channel and 00:00:05.679 --> 00:00:08.859 if you're watching this you're probably thinking 00:00:08.859 --> 00:00:12.599 about your future and specifically a future where 00:00:12.599 --> 00:00:16.320 you're not working anymore. Now retiring stress 00:00:16.320 --> 00:00:19.839 -free with a sense of security and freedom well 00:00:19.839 --> 00:00:22.899 that's the dream isn't it but the reality is 00:00:22.899 --> 00:00:25.739 that many of us make some crucial mistakes along 00:00:25.739 --> 00:00:29.519 the way and these can completely sabotage any 00:00:29.519 --> 00:00:38.079 plans that we've made. Today I'm diving deep 00:00:38.079 --> 00:00:42.000 into the biggest retirement savings pitfall and 00:00:42.000 --> 00:00:45.060 I'm challenging myself to uncover what not to 00:00:45.060 --> 00:00:47.500 do. Now this isn't just about saving money it's 00:00:47.500 --> 00:00:50.979 about protecting our peace of mind and ensuring 00:00:50.979 --> 00:00:55.320 that our golden years are golden. Now saving 00:00:55.320 --> 00:00:58.799 for retirement is One of the most critical financial 00:00:58.799 --> 00:01:01.560 goals we'll ever tackle. But let's be honest, 00:01:01.979 --> 00:01:04.980 it can be complicated. I mean, we've got figuring 00:01:04.980 --> 00:01:10.159 out what to invest in, battling to beat inflation, 00:01:10.879 --> 00:01:14.000 trying to predict our future living costs. It's 00:01:14.000 --> 00:01:18.299 no wonder a lot of us end up making costly mistakes. 00:01:18.840 --> 00:01:22.019 And these mistakes can have a huge impact on 00:01:22.019 --> 00:01:25.099 the quality of our retirement. and that could 00:01:25.099 --> 00:01:29.219 force us to work longer or to live on far less 00:01:29.219 --> 00:01:31.780 than we'd ever wanted to. Now the central problem 00:01:31.780 --> 00:01:35.340 is often two -fold. We aren't saving enough or 00:01:35.340 --> 00:01:38.879 we're making poor financial decisions and these 00:01:38.879 --> 00:01:42.579 decisions can slowly but surely erode our savings 00:01:42.579 --> 00:01:45.760 and the consequences of these can obviously be 00:01:45.760 --> 00:01:49.099 quite far -reaching affecting not just our bank 00:01:49.099 --> 00:01:52.099 account but our mental and physical well -being. 00:01:53.120 --> 00:01:56.200 Lack of savings can actually lead to quite a 00:01:56.200 --> 00:01:59.920 lot of stress and anxiety and this can be a terrible 00:01:59.920 --> 00:02:03.540 burden to carry in our later years and also limits 00:02:03.540 --> 00:02:07.400 our ability to travel, pursue our hobbies or 00:02:07.400 --> 00:02:11.439 just spend quality time. And this can make retirement 00:02:11.439 --> 00:02:15.280 feel more like a burden than a reward. And mistake 00:02:15.280 --> 00:02:19.000 one, not starting early enough. So this is the 00:02:19.000 --> 00:02:24.199 biggest of all mistakes. It's arguably the most 00:02:24.199 --> 00:02:26.439 damaging as well, not starting early enough. 00:02:27.180 --> 00:02:30.180 It's all about the magic of compound interest. 00:02:30.580 --> 00:02:32.659 Obviously it's not magic, it's simple maths. 00:02:34.960 --> 00:02:38.139 Imagine two people, Jane and Mark. Now Jane starts 00:02:38.139 --> 00:02:41.900 saving £300 a month at age 25, but Mark waits 00:02:41.900 --> 00:02:46.300 until he's 35, but he pays double £600 a month. 00:02:46.840 --> 00:02:50.020 By the time they both turn 65, who do you think's 00:02:50.020 --> 00:02:55.129 got the most money? Jane, now she started far 00:02:55.129 --> 00:02:58.389 earlier and even though Mark saved twice as much 00:02:58.389 --> 00:03:02.530 of a month, Jane had an extra decade of compound 00:03:02.530 --> 00:03:05.889 growth on her side and that extra 10 years of 00:03:05.889 --> 00:03:09.810 growth is really powerful. The sooner you start, 00:03:09.830 --> 00:03:13.449 even with small amounts, the more time your money 00:03:13.449 --> 00:03:17.250 has to grow and work for you. So don't wait until 00:03:17.250 --> 00:03:20.370 that next job or promotion comes along or you 00:03:20.370 --> 00:03:24.789 get some more stable income the best way to start 00:03:24.789 --> 00:03:27.949 is yesterday now the second best time to start 00:03:27.949 --> 00:03:33.050 is today so why don't we just all go and start 00:03:33.050 --> 00:03:38.990 saving now the next one is underestimating our 00:03:38.990 --> 00:03:42.789 expenses believe it or not expenses will automatically 00:03:42.789 --> 00:03:45.370 decrease in retirement generally isn't true a 00:03:45.370 --> 00:03:47.270 lot of people think well i'll be done with my 00:03:47.270 --> 00:03:49.710 mortgage my kids will be grown i won't have to 00:03:49.710 --> 00:03:53.050 commute and they're right these these costs will 00:03:53.050 --> 00:03:56.789 go down but other costs can sometimes go up as 00:03:56.789 --> 00:04:05.650 well. A single serious illness could drain significant 00:04:05.650 --> 00:04:08.750 proportions of our savings so we're all living 00:04:08.750 --> 00:04:11.030 longer as well which means our retirement needs 00:04:11.030 --> 00:04:13.969 to last for longer periods of time. You'll also 00:04:13.969 --> 00:04:16.769 have more time for leisure and travel and those 00:04:16.769 --> 00:04:21.269 things aren't free. My advice is be realistic. 00:04:21.589 --> 00:04:24.050 Use an online retirement calculator and play 00:04:24.050 --> 00:04:27.129 with the numbers. Factor in a fun budget and 00:04:27.129 --> 00:04:30.410 a buffer for any unexpected costs. It's much 00:04:30.410 --> 00:04:33.509 better to be over prepared than under prepared. 00:04:34.089 --> 00:04:37.189 Now mistake three is being too conservative with 00:04:37.189 --> 00:04:46.209 your investments. Now the stock market can be 00:04:46.209 --> 00:04:50.129 scary but being overly cautious especially in 00:04:50.129 --> 00:04:52.689 your younger years when you're quite a long distance 00:04:52.689 --> 00:04:54.970 from retirement can be just as dangerous as being 00:04:54.970 --> 00:04:58.790 too risky if all your retirement money is just 00:04:58.790 --> 00:05:01.009 sitting in low interest savings accounts it's 00:05:01.009 --> 00:05:04.529 not growing in fact it's losing value every single 00:05:04.529 --> 00:05:08.550 year due to inflation yeah inflation is the silent 00:05:08.550 --> 00:05:13.449 killer of your future purchasing power it's you 00:05:13.449 --> 00:05:18.529 know why we spend so much on a pint of milk you 00:05:18.529 --> 00:05:20.810 know which a decade ago was kind of half the 00:05:20.810 --> 00:05:24.410 price your investments need to at least keep 00:05:24.410 --> 00:05:26.949 pace with inflation to maintain their value for 00:05:26.949 --> 00:05:31.050 most of us that means having a significant proportion 00:05:31.050 --> 00:05:35.490 of your portfolio in growth orientated assets 00:05:35.490 --> 00:05:38.769 like stocks and mutual funds especially when 00:05:38.769 --> 00:05:41.329 you've got decades before you're due to retire 00:05:41.329 --> 00:05:45.290 so here's a real -life example that highlight 00:05:45.290 --> 00:05:47.529 some of the impacts of mistakes. I was recently 00:05:47.529 --> 00:05:49.930 talking to a couple they're in their 50s and 00:05:49.930 --> 00:05:52.829 they've been saving diligently for retirement 00:05:52.829 --> 00:05:57.709 but had their savings in a very conservative 00:05:57.709 --> 00:06:01.149 portfolio they hadn't adjusted their investment 00:06:01.149 --> 00:06:05.129 strategy for years and as a result the savings 00:06:05.129 --> 00:06:14.920 had lost significant purchasing power. This ended 00:06:14.920 --> 00:06:18.300 up making them delay the retirement by five years. 00:06:18.500 --> 00:06:21.420 The story underlines the importance of regularly 00:06:21.420 --> 00:06:24.620 reviewing and adjusting your retirement plans. 00:06:26.500 --> 00:06:29.779 Okay, so what can we do to avoid these pitfalls? 00:06:29.939 --> 00:06:33.699 It all comes down to being proactive and informed. 00:06:33.920 --> 00:06:37.160 So if you can, start today, even if it's just 00:06:37.160 --> 00:06:41.180 a small amount contributing to a retirement account 00:06:41.180 --> 00:06:45.000 now. Automate your savings if you can so that 00:06:45.000 --> 00:06:48.620 the money is taken out of your pay before you 00:06:48.620 --> 00:06:53.279 even see it. But be realistic. Sit down, create 00:06:53.279 --> 00:06:57.160 a realistic budget for retirement and consider 00:06:57.160 --> 00:07:00.720 all the potential expenses and use some online 00:07:00.720 --> 00:07:03.500 calculators to project what your needs might 00:07:03.500 --> 00:07:07.600 be. And take a thoughtful approach. Don't just 00:07:07.600 --> 00:07:11.279 blindly follow generic advice, educate yourself 00:07:11.279 --> 00:07:14.939 on the basics of investing and choose a diversified 00:07:14.939 --> 00:07:18.259 portfolio that aligns with your own risk tolerance 00:07:18.259 --> 00:07:21.759 and your timeline. A financial advisor can be 00:07:21.759 --> 00:07:25.339 great help here. By being informed and taking 00:07:25.339 --> 00:07:29.160 control of your retirement savings you can create 00:07:29.160 --> 00:07:33.040 a secure financial future for yourself. Now that's 00:07:33.040 --> 00:07:36.079 the major point that I wanted to get. home today. 00:07:36.199 --> 00:07:38.540 What would like to hear from you? I mean have 00:07:38.540 --> 00:07:42.699 you your own experiences with retirement savourings 00:07:42.699 --> 00:07:45.699 good or bad and what was the biggest lesson you 00:07:45.699 --> 00:07:48.600 learned? Let us know down in the comments and 00:07:48.600 --> 00:07:50.819 thanks for listening and I will see you on the 00:07:50.819 --> 00:07:51.160 next one.