• Warrick

Do you care about choice? Then you must care about retirement

When should I focus on retirement and is retiring about age or something else.


Hello fellow Protagonists,


Back on track with The Mindful £100K series.


For many of us pensions and retirement can be some of the least interesting parts to focus on when we think about our money, especially when we are so fresh faced and youthful. Given a choice maybe you would prefer to watch a ten part series on the history of the door stop. Tough call.


I mean who cares, retiring is light-years away and stuff that we can leave the older members of the parish to worry about.




What if we were to change the word retirement to choice instead. Yeah...choice... choice sounds good.


Oddly enough retirement is what kick-started my whole interest in personal finance and is one of the main reasons behind The Daily Buff starting. I honestly feel that retirement is something all adults would benefit from focusing on, at least a little bit, whether you are 62 or 22.


I also wish they taught more of the basics in school. I could not tell you anything about what retirement planning meant but I could draw you a near perfect motte-and-bailey castle.


For me it was the day that the national retirement age was increased (again) and now my generation can expect to work until they are at least 68 before getting access to the state pension. First thought "Not a f*cking chance".


There is already a part of the plan to increase this to 69 (cheeky) in the next 20 years.


As for who decided to increase the pension age. In a roundabout way, thank you former Chancellor for bringing this in because I didn't really give a toss before.


First off, many of my family didn't even make it past this age. Despite what people may think, nothing is permanent. We do not know when that day will come for us. All I know is that 68 is a larger number than 66, 60, and 55.


It is not that I do not necessarily want to work all the way up to 68, it is that if I am still working it will be by choice rather than forced upon me.


Choice like an olde sweet shoppe. Bonbons and Milk bottles for the win!





So my interest in personal finance quadrupled because now we are talking about choice, something I care a great deal about. What weight does personal choice have in your opinion? Is it something you value?


So when can I retire?


Now that we can adapt retirement to choice, lets also adapt where the point of retirement begins. A quote that stood out for me to change my view came from Chris Hogan.


"Retirement is a number not an age"


Chris offers financial coaching as part of the Dave Ramsey team. He also has a book I would highly recommend Everyday Millionaire. It is like a modern take on The Millionaire Next Door by Thomas J. Stanley. Two books there to add to your collection if you have not had the chance to read them yet.


What actually is retirement?


What retirement means, is when we reach a point where other streams of income can cover our cost of living without requiring a job. It does not have to be directly related to an age, which is why we are left confused when we hear of some people who do retire in their 30's.


When we think of retirement we may also jump straight on the term pension. Another word that for some of us may leave a chalky taste in our mouths.


A pension is not the only way that we can build towards retirement.


Any asset that brings income without a job can be part of our retirement plan and combining multiple streams of income from different sources (diversification) can potentially help spread the risk.


This is your own personal choice. I am no professional Financial Adviser and if you did want one on board then that is also your choice. Here are some ideas of what could constitute an asset.


I know people who plan their retirement around selling their business, around downsizing their house, investing in the stock market, working part-time or waiting for their pension. It's all about choice baby.


Pensions can be a solid part of our plan. We just have to know what we are signing up for. I have been open in sharing what part my pension had in creating my first £100K. I just also need to be aware that taking money out of this pension before state retirement age comes with hefty charges.


All investment values, including pensions, form part of our net worth. From the cases discussed in Chris Hogan's book, retirement savings seem to be the largest part of a millionaires net worth as well. So not something to sniff at.


Pensions that are matched by our companies are truly one of the only times we can say we are being given free money. Again it is your choice but if increasing your payment also increased your company's match, then this is just more free money.


All investments, including pensions, come with their own risks. My previous post focused on risk and how we can never truly escape it, so base your choices on the risks you are willing to take.


Ideally investments require time to grow. For those who feel they are too late in the game, I can throw an old Chinese proverb your way.


"The best time to plant a tree was 20 years ago. The second best time is now."





I hope that this has shifted some thoughts around retirement. It is about choice and that choice is based on a number, not by our age.


Our retirement is important to plan. We also need to balance this alongside living for the day. To hit a point when we know where we want our retirement income to come from but not to obsess or stress about the future.


So now it is up to you whether you want your freedom of choice or to be told what you can do and when. The red pill or the blue pill Buff people.


GLHF


Warrick


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