"Your Retirement Planning Guide
Is Your Roadmap To a Longer, Healthier,
and Wealthier Retirement"

Introduction

Suppose you went to your "friendly" investment advisor to talk about your Retirement Planning Guide.

How could you be sure that he/she would have your best interests at heart?

You couldn't.

We may be cynics but we'd rather be one of those than be ripped off by some smooth-talking yuppie in fancy clothes.  We've witnessed it so many times and read about it even more times.  People being ripped off is what we're referring to.  It happens.

Just in case you haven't got our idea about Retirement Investing, it's this:

DO IT YOURSELF!

Here's a sad headline we saw in a recent newspaper. 

Headlines like this make our blood boil. 

Headline in Front Page Daily Newpaper

Just so we are clear on this:  DO IT YOURSELF

Make Your Own Retirement Plan

Devise your own Retirement Planning Guide.

It doesn't have to be time-consuming.  You don't have to research for months, even years, like Warren Buffett and Charlie Munger. 

You could be a passive investor by opening a DIY Pension Platform and just buy into Blue Chip companies and hold forever.

Now that wouldn't be our strategy, but we'd wager that even that crude method would beat your average whiz-kid financial advisor.

You may be in your 30s, your 40s, your 50s, or even your 60s (and maybe more).  It doesn't matter.

Traditionally, so it goes, is that the older you get, the more conservative you should be about how you "allocate your assets".

It's a fact.  People are living longer these days.  What happened to three score and ten?

More like, three score and another score plus ten.

Old thinking was that as you get older, you should gradually put your cash into more accessible (a.k.a. safe) investments.

"The Rule of 100"

Old thinking, and there are plenty of dinosaurs still around, was that you take a person's age and subtract it from 100.  Thus giving you the percentage of his/her investments that should be in safe, accessable, investments (cash, bonds, and whatever else).

For example, take a man aged 50.  Using the Rule of 100: subtract his age (50) from 100 - gives you a figure of 50.

The Rule then states that 50% of his pension should be invested in equities and 50% in "safe" investments.

What a load of cobblers.  And that's being polite.

Wakey wakey!!  We're in the 21st. century.

In this kind of situation we always ask ourselves: what would Warren Buffett do?

Firstly, we think he would use stronger language than what we just have!

Secondly, he would invest 90% in equities and 10% in cash on deposit.  He would use that 10% should any "bargains" come his way (i.e. he would be 100% invested if necessary).

Who would you rather have advise you?  Warren Buffett or that idiot in fancy clothes?

We rest our case.

"Your Retirement Planning Guide"

Let's keep this simple. 

Here's our crude plan for the stages in life (as we see them).

You may not be a teen just starting out, but whatever your age right now you will fall into one of the categories described below. 

If you're in your 50s then go straight to Stage #4.

If you're nearing retirement, then schlepp on over to Stage #5.

Here are the various stages:

Stage #1:  Leaving home, going to Uni (or not), getting your first meaningful vocation.

If you've been to Uni we have the greatest respect for you.  It's not easy.  We know.  (We did it and in a way, we regret it. But that's another story).

You've probably piled up a great deal of debt (loans, credit card debts, overdrafts).  Not to mention your lack of earnings in the years that you were studying. 

Most professions require a University education but some do not.  We know dozens of people that, given their time again, would not opt for Uni.   Their argument being that colleagues without a degree have done just as well as those with a degree.  They have learned by experience.

If we had the choice again, or if our kids were thinking of going to Uni, we would urge them to think 10 times about it.  We mean, why saddle yourself with huge debt when some of your contemporaries end up with the same salary as you but without the sacrifices.

So to our way of thinking, it's a big choice so early in your life. Uni or no Uni?

Then the question is: what can you do with the money that you earn?  Spend it on a good time and fast cars?  Or spend some and save some?

It's a rare 20 something that thinks about a pension. 

Suppose you are employed.

If you are fortunate to have an employer who will match any contribution you put in to a pension - snap his hand off.  It's free money. 

Now, imagine this ...

You save consistently from your early 20s into retirement age. What do you think this could grow into?  Punch those numbers into our Pension Pot Calculator and find out.

We guarantee you'll be surprised.

And if you're not in a company pension scheme (or even if you are), your 20s is a great time to start your DIY Pension.

And if you can discipline yourself just a little more, plan to save some extra cash in a separate investment account to enable you to fund Stage #2.

Stage #2:  Get Married and Buy a Home

Probably the hardest part of buying a home is finding the deposit.  A good sized deposit will reduce the size of your mortgage and a lower loan-to-value mortgage will likely be less expensive.

We're old enough to remember the days when you could get 100% and even 105% mortgages.  They are probably gone forever.

But Real Estate has long been, and probably always will be, the biggest financial commitment you will make. And, hopefully a good investment.

Choose wisely.

Here's a great tip: Buy the house that you need, not the house that you want!

Shop around.  Dare we say this?  Get yourself a good financial advisor who can get you a great mortgage deal.

During this time, make every effort to make monthly contributions to your Retirement Fund. 

If you need to batten down the hatches because things are a bit tight financially, make sure that your pension contributions are where you would make cuts last. 

Cut down on the weekly shopping, cut down on annual holidays.  But don't cut down on your pension contributions.  The tax advantages are too generous to forfit.

Yes, at the time, it won't feel like a top priority.  But it is a very important one.  We can't stress enough just how important saving for your retirement is.  You do not want to end up like so many people today with not enough of a pension.

Stage #3:  Start a Family

Average couples start a family not long after moving in to their new home.

This could mean the loss of one wage-earner.  Although it's possible that this may only be temporary.

Ideally, depending on your total family income, you would want to start an investment plan for your new born.  These generously can carry the same tax advantages as those for adults. If you have the spare cash - do it.  It will be the best start possible for your new-born.

Imagine what their pension pot would look like as they get older.

This is the toughest period for young couples.  We've all been there.

You've got a mortgage.  You've got young kids.  You're (hopefully) paying into a company or private pension plan (or both).  You're still young enough to go out and enjoy yourself. You may only have one income coming in.

There's not a lot of spare cash around. It's tough.

Stage #4:  Your Peak Earnings Years

Most people reach their peak earnings potential in their 40s and 50s. 

Although if you are on contract and not salaried, rates seem to go up year on year. But so too salaries.

If you are on contract, as opposed to being salaried, it is even more important that you take out a DIY Pension - if you have not already done so.

The tax advatages of doing so are huge.  You'd be crazy not to do it.

Do we sound like a broken record?

It's during this period of your life that you should consider upping, quite steeply, your pension contributions. 

Your mortgage may be paid off, or you may even be thinking of up-grading, which means you may have extended your mortgage.  Even so, now is the time to increase your monthly drip feed to your Pension Pot.

Salt away as much as you can afford.  Even go beyond what you can afford and cut down elsewhere.  You will reap the benefits when you get to Stage #6.

Stage #5:   Approaching Retirement

Say you're now in your early 60s.  Convention has been to gradually reduce the risk of your investments and start thinking about buying an annuity.

A lot has changed. 

You don't now have to buy an annuity.  New pension freedoms have given us all better choices. How sensible is that?  That must have been a shock to the old boys network!

You can now keep on growing your Pension Pot and initiate Drawdown (see Stage #6).

Well recommended. 

Annuities were yesterday's flavour.  It's all about Drawdown now.  People are living longer. The capital growth and income growth that investing in shares gives has forced this turnaround. 

It's a good thing.

These new pension freedoms give you, the individual, scope to invest as you want to and for longer.

Gone are the days when approaching retirement you switched into some form of fixed interest investments.

How boring that must have been. 

Some folk will be super-conservtive and super-cautious with their money.  Don't you be one of them.

Decide whether you want to receive an annuity or go into drawdown.  Any sane person would choose the latter.

Stage #6:  In Retirement

When you finally retire.  What a relief.

Personally, we haven't "retired."  We may have given up full-time employment, but we're anything but retired. 

If you're lucky.  Or have made your own luck. Then it's possible that you may retire with more than one pension.  Good for you.

For a start.  You will have your state pension.  That should take care of the necessities of life.

You may also have a pension from your place of work, or places of work.  we know plenty of people that have four, five and even more little pensions.

Our suggestion to them would be to consolidate them into one.  Stick them all into your DIY Pension.

Life's necessities paid for, you should now be looking at income. 

Your DIY Pension could provide a decent income for you if you decide to invest in growing, but high yielding shares.  They do exist.

If you follow everything on this website, you will retire very wealthy with a regular income to boot.

But finally, a small change of direction:  you may consider gifting any surplus cash that you have and reduce your inheritance tax liabilities. After all, you haven't worked and invested all those years to give it away to the taxman. 

Have you?

Visit Our Quick-Start Retirement Plan

We have put together a very simple Retirement Plan.  We call it: Your 30 Minute Retirement Plan.

Print it out, or devise your own, and let it be your mantra for the next 30, 40, or more years.

You can access the guide right here: Your 30 Minute Retirement Plan

You may also want to read the article: How To Save For Retirement

And if you are lacking in confidence and want to start right at the beginning, take a quick read of our article: The Stock Market Explained

Conclusion

Set out, from an early age, to plan for retirement.  So many people do not do this.  It is a BIG mistake.  Make no bones about it - your state pension alone will not be enough.  You MUST supplement the state pension that you receive.

Set up a Retirement Planning Guide.

Use the 6 stages as outlined above to help you plan.

We cannot stress enough that you must financially prepare for your retirement.  Failure to do so will result in misery once you end your working days.  We've seen too many of our contemporaries "on the breadline" by failing to plan for their twilight years.

Check out the Getting Started piece (located in the footer of every pages) or articles like  Basic Retirement Investing.

Don't you be one of them. 

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