WEBVTT 00:00:00.110 --> 00:00:02.810 If you just looked at your pension pot balance 00:00:02.810 --> 00:00:05.650 and felt your stomach drop like you're starring 00:00:05.650 --> 00:00:08.509 in your own personal financial horror movie, 00:00:08.830 --> 00:00:11.570 don't worry, you're in the right place. Now it's 00:00:11.570 --> 00:00:14.490 easy to feel like you've missed the last train 00:00:14.490 --> 00:00:17.390 for retirement, that everyone else is already 00:00:17.390 --> 00:00:20.530 sipping pina coladas on some sun -drenched beach 00:00:20.530 --> 00:00:23.370 while you're still stuck at the station. Well 00:00:23.370 --> 00:00:26.969 here's the thing, HMRC actually keep an extra 00:00:26.969 --> 00:00:30.390 train idling just for folks like us. who are 00:00:30.390 --> 00:00:34.109 in our 50s. So if you hang around I'll show you 00:00:34.109 --> 00:00:42.210 exactly how to board the train. So is it already 00:00:42.210 --> 00:00:45.649 too late for you? Does that question echo in 00:00:45.649 --> 00:00:48.109 your mind at 2am when you're crunching the numbers 00:00:48.109 --> 00:00:51.369 on your phone calculator desperately hoping to 00:00:51.369 --> 00:00:54.049 find a magic solution? I mean we've all been 00:00:54.049 --> 00:00:57.250 there staring at those figures feeling a knot 00:00:57.250 --> 00:01:00.600 tight in our stomachs but Let me give you a short, 00:01:00.899 --> 00:01:04.439 sweet, and hopefully reassuring answer. And the 00:01:04.439 --> 00:01:06.819 answer is absolutely not. It's not too late. 00:01:07.260 --> 00:01:09.099 So in the next few minutes, we're going to pull 00:01:09.099 --> 00:01:12.700 back the curtain and reveal the exact levers 00:01:12.700 --> 00:01:15.599 you can still push to make a massive difference. 00:01:15.980 --> 00:01:19.260 Those tax -efficient wrappers you might not have 00:01:19.260 --> 00:01:22.680 even heard about and some clever... cash flow 00:01:22.680 --> 00:01:25.640 hacks that can generally double or hopefully 00:01:25.640 --> 00:01:28.840 triple the size of your retirement accounts before 00:01:28.840 --> 00:01:31.260 you finally hand in your notice and ride off 00:01:31.260 --> 00:01:37.439 into the sunset. So the first thing we need to 00:01:37.439 --> 00:01:40.239 do is get brutally honest. We need to rip off 00:01:40.239 --> 00:01:42.700 the band -aid. I know it's uncomfortable but 00:01:42.700 --> 00:01:45.959 we need to face the music so... open up that 00:01:45.959 --> 00:01:49.180 last pension forecast you know the one that you 00:01:49.180 --> 00:01:53.760 get from gov .uk website then gather together 00:01:53.760 --> 00:01:57.040 every single retirement accounts statement you 00:01:57.040 --> 00:02:01.439 have your workplace pensions your personal pensions 00:02:01.439 --> 00:02:06.340 your sips any old final salary schemes add up 00:02:06.340 --> 00:02:10.159 every penny now here's the crucial part compare 00:02:10.159 --> 00:02:13.599 that total to the amounts you actually need to 00:02:13.599 --> 00:02:16.280 live comfortably in retirement. Not just survive, 00:02:16.500 --> 00:02:19.280 but actually live. Now most people, when they 00:02:19.280 --> 00:02:23.360 do this, they discover a pretty significant gap. 00:02:23.919 --> 00:02:27.000 I mean, it's often a motivation sapping gap. 00:02:27.780 --> 00:02:31.400 It can feel daunting, paralyzing. but you've 00:02:31.400 --> 00:02:34.699 got to name the shortfall acknowledge its existence 00:02:34.699 --> 00:02:37.240 it's the only way you'll ever close it so don't 00:02:37.240 --> 00:02:40.139 shy away write the number down on a sticky note 00:02:40.139 --> 00:02:43.599 make it prominent put it on your desk on your 00:02:43.599 --> 00:02:46.680 fridge anywhere that you'll see it on a daily 00:02:46.680 --> 00:02:50.830 basis because motivation real lasting motivation 00:02:50.830 --> 00:02:54.849 often starts with a clear visible target. Think 00:02:54.849 --> 00:02:59.090 of it as your financial GPS. You can't plot a 00:02:59.090 --> 00:03:01.629 route until you know your current location, your 00:03:01.629 --> 00:03:05.810 desired destination. So step two, let's vacuum 00:03:05.810 --> 00:03:08.469 up all the free money. Before you even start 00:03:08.469 --> 00:03:11.210 stressing about how to save more of your own 00:03:11.210 --> 00:03:14.289 hard earned cash, let's make absolutely certain 00:03:14.289 --> 00:03:17.349 you're not leaving any employer match contributions 00:03:17.349 --> 00:03:20.930 on the table. This is literally free money, guys. 00:03:21.349 --> 00:03:24.830 It's like finding 20 quid in an old coat pocket, 00:03:25.469 --> 00:03:29.789 but... way better on a much larger scale. Now 00:03:29.789 --> 00:03:32.169 many companies offer a match often something 00:03:32.169 --> 00:03:36.409 like 4 % on a £60 ,000 salary which would translate 00:03:36.409 --> 00:03:40.289 to about £2 ,400 a year of absolutely free cash. 00:03:40.750 --> 00:03:44.229 It's not a bonus, it's part of your pay and you're 00:03:44.229 --> 00:03:48.050 simply not claiming it. Now as an absolute top 00:03:48.050 --> 00:03:51.229 priority before doing anything else You should 00:03:51.229 --> 00:03:53.750 be contributing at least enough to grab every 00:03:53.750 --> 00:03:56.590 single penny of the match available. Why? Because 00:03:56.590 --> 00:04:00.490 it's an instance 50 -100 % on your money, depending 00:04:00.490 --> 00:04:02.969 on what the match structure is at your employer. 00:04:03.430 --> 00:04:06.409 And it beats any investment return every single 00:04:06.409 --> 00:04:09.169 time. It's guaranteed money that compounds from 00:04:09.169 --> 00:04:11.729 day one and it's sitting there waiting for you. 00:04:11.810 --> 00:04:15.780 So don't let it go unclaimed. want to talk about 00:04:15.780 --> 00:04:19.180 supersizing your annual allowance and carry forward. 00:04:19.420 --> 00:04:23.100 Now this is where late savers get serious superpower. 00:04:23.199 --> 00:04:25.959 Thanks to HMRC's rules most people can contribute 00:04:25.959 --> 00:04:29.079 up to £60 ,000 a year into their pensions and 00:04:29.079 --> 00:04:31.800 get tax relief. And this is called your annual 00:04:31.800 --> 00:04:35.100 allowance and it includes your contributions, 00:04:35.579 --> 00:04:38.199 your employer's contributions and the government 00:04:38.199 --> 00:04:42.199 tax relief top -up. But Here's the real magic, 00:04:42.779 --> 00:04:45.980 the carry forward rule. This lets you use any 00:04:45.980 --> 00:04:48.519 of your unused allowance from previous three 00:04:48.519 --> 00:04:52.519 tax years. Now imagine you only contributed £20 00:04:52.519 --> 00:04:55.319 ,000 a year for the last three years leaving 00:04:55.319 --> 00:05:00.620 £40 ,000 allowance unused each year. Now this 00:05:00.620 --> 00:05:02.939 tax year you could potentially contribute your 00:05:02.939 --> 00:05:07.620 full allowance of £60 ,000 plus that carry forward 00:05:07.620 --> 00:05:11.959 of £120 ,000 for a massive one -off contribution 00:05:11.959 --> 00:05:15.439 of £180 ,000 provided your earnings are high 00:05:15.439 --> 00:05:18.399 enough. Now to use the carry forward you must 00:05:18.399 --> 00:05:21.079 have been a member of a pension scheme during 00:05:21.079 --> 00:05:25.300 those previous years. Now imagine what you could 00:05:25.300 --> 00:05:29.480 do. with that nest egg. Now, let's talk strategy. 00:05:29.699 --> 00:05:32.899 When you contribute to a pension, you get tax 00:05:32.899 --> 00:05:34.740 relief from the governments. Now, if you're a 00:05:34.740 --> 00:05:40.100 basic rate taxpayer, for every £80 you put in, 00:05:40.459 --> 00:05:45.420 HMRC tops up with £20, making it £100. Now, higher 00:05:45.420 --> 00:05:48.139 rate taxpayers can claim even more back through 00:05:48.139 --> 00:05:51.910 their tax return every year. Then, when you retire, 00:05:52.129 --> 00:05:56.170 you actually take 25 % of that pot as a tax -free 00:05:56.170 --> 00:05:59.490 lump sum as well, with the rest taxed as normal 00:05:59.490 --> 00:06:02.930 income. It's like a little gift from HMRC designed 00:06:02.930 --> 00:06:06.089 to help you make up for that lost time. Be aware 00:06:06.089 --> 00:06:09.269 though, for very high earners, those with an 00:06:09.269 --> 00:06:13.209 adjusted income over £260 ,000, this annual allowance 00:06:13.209 --> 00:06:17.269 can be reduced or tapered down to as little as 00:06:17.269 --> 00:06:20.959 £10 ,000. Now I want to talk about turning your 00:06:20.959 --> 00:06:25.000 ISA into a stealth retirement pot. So this is 00:06:25.000 --> 00:06:27.980 a financial secret weapon that often gets overlooked. 00:06:28.579 --> 00:06:32.079 The stocks and shares ISA. So an individual savings 00:06:32.079 --> 00:06:35.139 account or an ISA lets you invest up to £20 ,000 00:06:35.139 --> 00:06:39.620 each tax year. It has a unique powerful tax advantage. 00:06:40.079 --> 00:06:42.319 While you contribute from your after -tax income 00:06:42.319 --> 00:06:44.920 all your investment growth and any withdrawals 00:06:44.920 --> 00:06:48.850 are completely 100 % tax free. Now here's the 00:06:48.850 --> 00:06:52.670 stealth retirement part. After age 55 raising 00:06:52.670 --> 00:06:57.069 to 57 in 2028 your pension income will be taxable. 00:06:57.399 --> 00:07:00.540 By building up a pot of tax -free cash and an 00:07:00.540 --> 00:07:03.740 ISA alongside it, you gain this flexibility. 00:07:04.000 --> 00:07:07.019 You can draw from your ISA, supplement your pension 00:07:07.019 --> 00:07:09.860 income, which could help you keep you in a lower 00:07:09.860 --> 00:07:12.939 tax bracket during retirement. Now this makes 00:07:12.939 --> 00:07:16.100 an ISA incredibly powerful. The tax -free growth 00:07:16.100 --> 00:07:19.319 combined with this flexibility gives you in retirement, 00:07:19.560 --> 00:07:22.879 makes it an essential tool. particularly if you're 00:07:22.879 --> 00:07:26.139 a late stage pension saver. But remember, unlike 00:07:26.139 --> 00:07:28.439 with a pension, if you don't use your £20 ,000 00:07:28.439 --> 00:07:31.339 allowance by the 5th of April, you lose it for 00:07:31.339 --> 00:07:35.629 that year. Now let's talk about freeing your 00:07:35.629 --> 00:07:38.930 cash flow by killing your debts. So let's get 00:07:38.930 --> 00:07:41.110 real about debt for a moment. Every single pound 00:07:41.110 --> 00:07:44.649 you're sending to an 18 % credit card interest 00:07:44.649 --> 00:07:48.149 rate is a pound that can't be compounded interest 00:07:48.149 --> 00:07:51.689 for yourself at 8 % or more in a pension or an 00:07:51.689 --> 00:07:54.430 ISA. It's a direct drain on your future wealth. 00:07:54.870 --> 00:07:57.329 So what do we do to fix it? Well we wage war 00:07:57.329 --> 00:08:00.519 on debt. This is called the Debt Snowball and 00:08:00.519 --> 00:08:03.560 the method is a classic one at work. So list 00:08:03.560 --> 00:08:06.420 all your debts from smallest to largest, regardless 00:08:06.420 --> 00:08:09.360 of the interest rate. Attack the small one first 00:08:09.360 --> 00:08:11.839 with everything you've got. Once it's gone, take 00:08:11.839 --> 00:08:14.420 the money you were paying on that debt and roll 00:08:14.420 --> 00:08:16.879 it into the payment for the next smallest debt. 00:08:17.319 --> 00:08:20.439 Keep repeating and rinse and this process then 00:08:20.439 --> 00:08:23.459 will create some momentum and some psychological 00:08:23.459 --> 00:08:27.850 wins as you knock out each debt one by one. can 00:08:27.850 --> 00:08:31.610 be incredibly motivating. Now once all that plastic 00:08:31.610 --> 00:08:34.490 is out of your life, once those car payments 00:08:34.490 --> 00:08:38.350 or personal loans disappear, redirect those freed 00:08:38.350 --> 00:08:41.710 up payments straight into your pension contributions. 00:08:43.250 --> 00:08:46.470 Now there was a couple on my course with this 00:08:46.470 --> 00:08:49.970 strategy and they wiped out £15 ,000 of credit 00:08:49.970 --> 00:08:54.820 card debt in 14 months. They then funneled £500 00:08:54.820 --> 00:08:57.700 a month straight into their pension contribution. 00:08:58.120 --> 00:09:02.379 And that single move will project £200 ,000 in 00:09:02.379 --> 00:09:05.299 their nest egg over the next decade. Now imagine 00:09:05.299 --> 00:09:09.860 what freeing up your cash flow could do. Now 00:09:09.860 --> 00:09:12.419 next I want to talk about resisting that lottery 00:09:12.419 --> 00:09:15.340 ticket urge. So when you're feeling behind, when 00:09:15.340 --> 00:09:17.960 your retirement gap looks intimidating, it's 00:09:17.960 --> 00:09:20.519 really tempting to look for a shortcut. There 00:09:20.519 --> 00:09:24.110 aren't shortcuts. Crypto coins promising overnight 00:09:24.110 --> 00:09:28.509 riches. penny stock your neighbor swore by, or 00:09:28.509 --> 00:09:31.450 some obscure meme investments, they all start 00:09:31.450 --> 00:09:33.710 to look attractive when you're really struggling. 00:09:33.889 --> 00:09:37.409 But don't do it. Seriously, resist the urge with 00:09:37.409 --> 00:09:40.990 everything you've got. A late start already shortens 00:09:40.990 --> 00:09:44.190 your time horizon for compounding growth. Now, 00:09:44.409 --> 00:09:47.730 a big speculative loss that you can't recover 00:09:47.730 --> 00:09:51.289 from is infinitely worse than making no gains 00:09:51.289 --> 00:09:55.440 at all. I mean, instead, Keep your equity allocation 00:09:55.440 --> 00:09:59.259 aggressive, maybe 70 % to 80 % of the broadly 00:09:59.259 --> 00:10:03.059 diversified stock index fund, but stay diversified 00:10:03.059 --> 00:10:06.279 with that. Markets are going to bounce around 00:10:06.279 --> 00:10:10.460 up and down, that's just how they work, but diversification 00:10:10.460 --> 00:10:13.299 is what keeps you in the game, protecting you 00:10:13.299 --> 00:10:17.080 from a single catastrophic loss, while still 00:10:17.080 --> 00:10:21.009 allowing you to capture market growth. Focus 00:10:21.009 --> 00:10:25.149 on steady, reliable progress, not wild gambles, 00:10:25.710 --> 00:10:28.970 consistency, not luck. Now if you want a checklist 00:10:28.970 --> 00:10:33.090 of your contribution limits and a guide to that 00:10:33.090 --> 00:10:35.950 debt snowball template, then send me an email 00:10:35.950 --> 00:10:39.929 at ericatimesretire .co .uk. It's the same worksheet 00:10:39.929 --> 00:10:44.730 that is on my course, so send me an email and 00:10:44.730 --> 00:10:47.809 I'll send you that free of charge. Next thing 00:10:47.809 --> 00:10:51.629 is to automate. Willpower is incredibly overrated. 00:10:51.730 --> 00:10:54.389 We all start with good intentions, but life gets 00:10:54.389 --> 00:10:56.730 busy, and those good habits can quickly fall 00:10:56.730 --> 00:10:59.610 by the wayside. That's why automating payments 00:10:59.610 --> 00:11:03.629 is your best friend. Now, what I would do is 00:11:03.629 --> 00:11:07.289 automatically escalate by 1 % every year until 00:11:07.289 --> 00:11:11.429 you hit your target. Schedule any ISA transfers 00:11:11.429 --> 00:11:14.610 the very day your pay lands in your bank account. 00:11:14.669 --> 00:11:16.919 And if you still have a mortgage, automating 00:11:16.919 --> 00:11:20.799 extra principal payments once a year. When saving 00:11:20.799 --> 00:11:23.500 is on autopilot, you can't forget to do it. And 00:11:23.500 --> 00:11:26.159 perhaps more importantly, you can't spend what 00:11:26.159 --> 00:11:28.960 you've never seen in your current accounts. It 00:11:28.960 --> 00:11:31.960 removes that decision making process, replacing 00:11:31.960 --> 00:11:35.909 it with a constant wealth building habits. Next 00:11:35.909 --> 00:11:37.669 thing I want to talk about is picking a target 00:11:37.669 --> 00:11:41.710 date, not a target number. Now, a million pounds 00:11:41.710 --> 00:11:44.549 sounds great, doesn't it? It's a nice round number 00:11:44.549 --> 00:11:47.470 that many people kind of latch onto as they retire 00:11:47.470 --> 00:11:50.909 and go, but there's a secret. A big arbitrary 00:11:50.909 --> 00:11:55.529 number can just be mislead, misleading and demotivating. 00:11:56.009 --> 00:11:58.570 What you actually need isn't a number of a lump 00:11:58.570 --> 00:12:01.850 sum. it's enough monthly income to cover your 00:12:01.850 --> 00:12:04.629 expenses for the rest of your life. So if we 00:12:04.629 --> 00:12:08.909 reframe it and multiply your expected yearly 00:12:08.909 --> 00:12:12.350 retirement budget, take away any guaranteed income 00:12:12.350 --> 00:12:15.090 like your state pension and then multiply it 00:12:15.090 --> 00:12:18.610 by 25 and that's your rough nest egg target. 00:12:18.710 --> 00:12:21.690 For example, if your state pension will be say 00:12:21.690 --> 00:12:25.389 £12 ,000 a year and you need £40 ,000 total to 00:12:25.389 --> 00:12:29.179 live on comfortably, you must fund the £28 ,000 00:12:29.179 --> 00:12:33.899 gap. So £28 ,000 multiplied by 25 equals £700 00:12:33.899 --> 00:12:37.720 ,000. Now knowing the real finish line based 00:12:37.720 --> 00:12:41.779 on your actual lifestyle keeps you from under 00:12:41.779 --> 00:12:44.580 -saving and over -saving and turning into the 00:12:44.580 --> 00:12:47.639 richest person in the graveyard. Now your goal 00:12:47.639 --> 00:12:51.460 isn't just to accumulate, it's to create sustainable 00:12:51.460 --> 00:12:55.330 income. Now the next section for me is work in 00:12:55.330 --> 00:12:58.769 the window, not the wishes. So you can't control 00:12:58.769 --> 00:13:01.950 past investment returns and you certainly can't 00:13:01.950 --> 00:13:05.269 wish away the years you may have delayed saving. 00:13:05.990 --> 00:13:09.250 But here's what you can control. Today's contribution 00:13:09.250 --> 00:13:13.070 and tomorrow's timeline. Now if you're say 55 00:13:13.070 --> 00:13:16.950 right now and plan to work to 67, that's a solid 00:13:16.950 --> 00:13:20.970 12 year runway. And 12 years is plenty of time. 00:13:21.360 --> 00:13:25.120 for compound growth to do some proper mathematics 00:13:25.120 --> 00:13:29.039 on your balance. Every year delay starting however 00:13:29.039 --> 00:13:32.580 cuts that runway short. It reduces the pressure 00:13:32.580 --> 00:13:35.539 time your money has to grow exponentially. So 00:13:35.539 --> 00:13:38.559 don't wait for the perfect moment or for some 00:13:38.559 --> 00:13:42.240 mythical bonus that your boss has promised. Start 00:13:42.240 --> 00:13:45.840 this month, this week, even today. Even if you 00:13:45.840 --> 00:13:48.419 can't max out everything immediately, make a 00:13:48.419 --> 00:13:51.159 commitment, increase your contributions with 00:13:51.159 --> 00:13:55.360 every pay rise you get, every bonus, and definitely 00:13:55.360 --> 00:13:59.139 every time you pay off a debt. Momentum actually 00:13:59.139 --> 00:14:02.779 matters more than perfection, just getting started 00:14:02.779 --> 00:14:06.379 consistently and adding more will carry you further 00:14:06.379 --> 00:14:10.159 than waiting for the ideal but often elusive 00:14:10.159 --> 00:14:13.899 perfect time. So in conclusion, it's never too 00:14:13.899 --> 00:14:17.080 late to catch up on your pension. Only if you 00:14:17.080 --> 00:14:20.279 never start. The truth is, HMRC has built this 00:14:20.279 --> 00:14:24.299 extra track specifically for us and the determined 00:14:24.299 --> 00:14:27.519 saver who's ready to make that sprint to the 00:14:27.519 --> 00:14:29.519 finish line. Some of the allowances I've talked 00:14:29.519 --> 00:14:32.200 about are incredibly generous. The carry forward 00:14:32.200 --> 00:14:35.559 rule, free tax perks of an ISA, those employer 00:14:35.559 --> 00:14:38.679 max contributions, that 20 -somethings often 00:14:38.679 --> 00:14:41.980 overlook. These are the tools designed to accelerate 00:14:41.980 --> 00:14:45.659 your savings into those prime earning years. 00:14:46.340 --> 00:14:49.220 Now nail these strategies aggressively to kill 00:14:49.220 --> 00:14:52.940 off your high interest debt and then let time 00:14:52.940 --> 00:14:56.440 and that unstoppable force of compound growth 00:14:56.440 --> 00:14:59.460 finish the job for you. You might be surprised 00:14:59.460 --> 00:15:03.500 at what five focused years of aggressive saving 00:15:03.500 --> 00:15:07.580 can do to undo two decades of savings neglect. 00:15:07.610 --> 00:15:10.610 Don't just think about it. Open your pension 00:15:10.610 --> 00:15:13.450 portal right now. Bump up your contributions 00:15:13.450 --> 00:15:16.850 by say just 1 % today and let the regret you've 00:15:16.850 --> 00:15:20.409 been carrying melt away. You're not late. You're 00:15:20.409 --> 00:15:23.129 right on time for the second half of the race 00:15:23.129 --> 00:15:26.250 and you've got some powerful advantages on your 00:15:26.250 --> 00:15:29.669 side. Thanks for listening. See you next time.