6 Reasons to Retire as Soon as You Can

we have three main resources in life our time our health and our money and when you're younger you have an abundance of time and health and you are more than happy to trade this away for money but as you progress through your life continuing to make this trade your time and your health will start to become your most scarce resources and there will become a point where continuing to work is actually costing you far more than retiring as a financial advisor people think that I spend most of my time berating my clients to save more money but I actually spend far more time trying to convince them that they have already crossed this point and that they should retire and maybe you are in this position too which is why I want to show you six reasons why right now maybe the perfect time for you to retire hello and welcome back to the channel if you're new here hi my name is James I am a financial planner and this is a place where you can learn to make smarter financial decisions let's get straight into reason number one time we have already recognized that time may now be your most gas resource but I want to put that into perspective to help you appreciate just how precious that time is and as we go through this I want you to think about how you would apply this same process to your own life these squares represent a 90-year human life that's 90 Winters 90 Summers I'm currently 33 years old and according to the office of national statistics I've got a 50 50 chance of seeing another 52 Summers that's 52 more Champions League finals 26 more ashes tests 13 more Rugby World Cups now let's frame the time that I have left in terms of the things that I like to do I typically read about five books a year and even though right now it feels like I'll have the opportunity to read an endless amount of books in the future at my current rate I may only read another 300 books in my life which means that of all the millions of books in print I'm only ever going to get to find out the ending of three 100 of them whilst the rest will be lost to Eternity or how about cycling every other year I try to go on a cycling trip abroad with my mates to tackle a few Hills and a few bits I love it and assuming that we can keep this up until we're 60 that will give us another 13 cycling trips together when I think about all of the kilometers of climbing that this will involve it seems like quite a lot but once they're done they're done and it makes me realize just how precious each of these trips are but what about relationships I have some friends best mates that I only ever get to see once a year some of them live far away whilst others live close but somehow we just never seem to find the time to see each other at this rate I may only get to see them another 50 or so times if that's for a couple of hours each time I may only have a hundred or so hours left with some of the people that I love more than anything in the world but what really really gets me is when I think of my parents I'm lucky enough that both of my parents are still alive and they're fit and healthy but they're in their late 60s and we only see each other five or so times a year for maybe two days at a time that's 10 days a year so how many more days do we have left together whilst both of them are still fit and healthy I don't know 50 maybe 60. or if you view this from their perspective the perspective of a parent once your children have left home it's likely that you will already have used up 90 of your in-person time with them and for my parents that may mean that we've only got five percent of that time left although it is super depressing to visualize your life like this I would highly encourage you to do it because it helps you to identify the things that are important to you in life and how much time you are currently allocating to them and if it disturbs you great because it means that not only are you likely to relish those opportunities more but you'll also recognize that you are totally in control of the time that you have left and if you want to spend more time doing the things that you love with the people that you love then do something about it instead of just plodding along not realizing how much those extra years of work are really costing you reason number two interest rates when you get to retirement and you start living off your assets you're going to need to plan your cash flow much more carefully which often means holding much larger amounts of cash and lower risk Investments like bonds when interest rates were brought bottom this was not a particularly attractive Prospect but right now interest rates are higher than they have been for 15 years and as of filming you can get four percent on an easy access cash account 5.5 percent on fixed term deposits and annuity rates are the highest that they have been for a very long time of course these rates need to be assessed against the backdrop of inflation but the direction of travel is that inflation will fall faster than rates will so really now is as good a time as any to be thinking about retiring but James what about the risks of recession inflation and the threats of artificial intelligence how can I feel confident retiring when the future seems so uncertain well this brings me on to reason number three the future is uncertain it always has been and always will be when you read the news it's easy to think that we are living through one of the most uncertain periods of history with never before seen risks looming right around the corner but I can tell you that every single person that has ever retired has thought exactly the same thing because we have a recency bias that causes us to feel like the events of today and the risks of Tomorrow are much more significant than what anyone has ever experienced in the past that's not to dismiss the risks of today but even if we look back over the last 15 years we can see that there has been plenty to worry about we had the European debt crisis the scaling back of QE U.S government shutdowns recessions trade Wars with China brexit covet but all of these fears either came to nothing or very short-lived and if we look back over the last hundred years there have been even greater crises world wars cold Wars the collapse of superpowers but time and time again we see that human Ingenuity has overcome this uncertainty and we keep on marching high as Mark Twain or Churchill or somebody old and wise once said I have had a lot of crises in my life but few of them have actually ever happened given the amount of time we spend worrying about the future you would expect that when we look back on our lives that it must be littered with a huge number of dramatic events and painful experiences that we've had to live through but in the rear view mirror you realize that most of these worries never come to pass and the obstacles that you did face you either overcame or learned to accept the future will always be uncertain and a large part of retirement is just getting comfortable with that and having faith in your ability to adapt so why not do it now number four arbitrary goals working out exactly how much you need to retire seems like an impossible task because there are just so many variables how long will you live how much will you spend what will happen in the stock market so rather than grappling with this big hairy scary problem we just set arbitrary targets like I'm gonna retire when I'm 60. thinking that by the time that you're 60 you'll have everything worked out and you'll have a much better sense of your future but then 60 comes around and and you realize that you still haven't got your act together and your future is just as uncertain as it has ever been and because 60 is just an arbitrary number that is not grounded in anything that 60 can very easily become 62. and then 65. the same thing is true with arbitrary financial goals you may have a number in your head that you are aiming for a certain level of assets at which point you think that you'll finally feel a sense of calm and satisfaction that you'll finally feel like you have enough but when you finally get there it's likely that you'll find that you're not satisfied and you're still just as worried about X or Y and that you'll end up just replacing that first goal with an even bigger one that is just as arbitrary you would never take this lesion approach to setting targets or solving problems in the workplace so why would you do it with one of the most important questions in your personal life these arbitrary goals are preventing you from putting in the real work to find out when you can actually afford to retire and if you want to learn how to answer this question properly in the description of this video you will find links to three videos that take you through the step-by-step process us that I use with my clients number five losing your best years kicking the can down the road and working for just one more year may not seem like that big a deal but it is if you are 55 years old right now statistics suggest that you have a 50 50 chance of seeing another 29 Summers if you're married and we assume that you are the same age you have a 50 50 chance of seeing another 22 Summers together but of those Summers for how many of them will you both be fit and healthy 15 12. 10. these years are so precious and by kicking the can down the road even for just one more year you may be sacrificing a large proportion of this time number six you are probably in a much better financial position than you think there are two parts to this one the first is that it's likely that you are overestimating how much you will spend in retirement and the second is that you are also likely overestimating how large a pool of assets are required to produce the income that you need let's start with spending let's say you are a 60 year old couple and you've worked out that you currently need fifty thousand pounds per year to sustain your quality of life a mistake people often make is to assume that after accounting for inflation this level of spending will remain constant throughout retirement if this was the case and this couple expected to live to 85 they will be set to spend 1 million two hundred and fifty thousand pounds in today's money over the course of their retirement but retirement spending typically follows a smile-shaped pattern with highest ending at the start during the Go-Go years then less during the go slow years before it picks up again when you need to rely more on Healthcare which means that for this couple their lifetime expenditure may be closer to 900 000 pounds a lot less than what they're originally expecting and if they both have full State pensions we can expect that 380 000 pounds of this is already going to be covered leaving a much smaller proportion that needs to be covered from their Investments and it's also likely that you are overestimating the size of assets that you need to produce that income which is why you need to watch this video here where I look back at historical data to show you how large a pool of assets you would have needed to sustain different levels of income and it's much less than you think I'll see you there

Channel: James Shack

Views: 366,379

Keywords: retirement planning, retirement, when can I retire, Uk retirement, state pension

Id: OuDCDp9Z9Y4

Length: 10min 25sec (625 seconds)

Published: Sun Jul 16 2023