What do you think?
Rate this book
Your Retirement Salary: How to use your lifetime of pension savings to pay yourself an income in your retirement
You have spent a few decades working, earning a salary, and saving into company and personal pensions along the way. Now, retirement is approaching. How will you turn your savings into a salary to pay for essentials and – and non-essentials – in retirement? How will you make sure that you don’t run out of money in retirement? What do the UK pension freedoms mean for you? In this one-of-a-kind book, personal finance experts Richard Dyson and Richard Evans answer these questions and equip you with everything you need to know to turn your pension savings into an income that will last throughout your retirement. You will learn: -- How to take control of your pension savings by tracking down all of your pension pots and combining them. -- When you can afford to retire. -- Steps to take to avoid running out of money. -- How to build an income-paying portfolio of fund investments from scratch. -- How to withdraw a sustainable income from your portfolio. -- How annuities work and whether they have a role for you. -- How to make the most of the tax rules. -- The importance of the state pension and how to maximise it. -- When to seek professional advice. This is your complete, step-by-step guide to organising your pension money and making the most out of it to pay yourself a retirement salary. Don’t enter retirement without it.
157 pages, Kindle Edition
Published April 1, 2019
9 people are currently reading
17 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 5 of 5 reviews
May 10, 2020
Very useful with plenty of practical advice and references.
Read
August 14, 2022** Most experts say your retirement income should be about 80% of your final pre-retirement annual income. 1 That means if you make $100,000 annually at retirement, you need at least $80,000 per year to have a comfortable lifestyle after leaving the workforce. **
Should you fund your retirement by releasing cash locked up in your home? Should you be selling shares to generate income – and, if so, how many shares can you safely sell each year? We’ve covered a fair bit of ground in this book, but you probably still have a question or two about your retirement.
Few people are better equipped to answer those questions than Suze Orman’s British colleagues, Richard Dyson and Richard Evans. Want to dig deeper into the retirement question? Check out Your Retirement Salary, by Richard Dyson and Richard Evans!
---
You can save a lot of money by making smart decisions about the car you drive.
If you’re still working, you’re in a strong position to boost your retirement package. This makes saving a top priority, but lots of future retirees struggle to come up with the money they feel they’ll need later on. If this sounds familiar, don’t worry, there’s an easy fix. All you need to know is what to cut.
Reducing your spending by, say, $500 or $1,000 a month might sound like a punishment, but think of it this way: every dollar you save now is a dollar you won’t need to generate during your retirement. Put differently, spending less today reduces your retirement overhead – the surplus you’ll need to see you through your sunset years.
So what should you be cutting back on to find those extra dollars? Let’s look at an expense you can’t eliminate entirely but which you can drastically reduce: your car.
If you’re not buying your car outright, you’ll need a loan. But if you’re borrowing money anyway, you may as well get the car you really want, right? Wrong! As a general rule of thumb, you shouldn’t commit to a loan you can’t pay down within three years. If you can’t afford to do this, you can’t afford the car – it’s that simple.
Paying off a loan within 36 months means you’ll be spending more each month than if you’d taken a longer loan, of course. In the long run, however, you’ll spend less. The faster you wipe out the debt on this depreciating asset, the less you’ll pay in overall interest.
You can also reduce your costs – and free up even more cash for your retirement – by opting to buy a car that’s a couple of years old. This doesn’t mean buying any old wreck from a shady secondhand car dealership, though. Look out for certified pre-owned, or CPO, deals. These are used cars that have been inspected and come with an extended warranty. Typically, a CPO car can cost up to 40 percent less than the same model brand-new.
Finally, aim to drive your car for at least ten years rather than trading it in every three or four years. Remember, your goal is to get your loan paid off ASAP. This maximizes the number of years in which you aren’t servicing debts but funneling your money into retirement savings.
---
An income annuity provides a guaranteed income that offsets the demands of investing in the stock market.
Longevity statistics suggest you should plan for a multi-decade retirement, and this means that you’ll have to take inflation into account. As we’ve learned, that’s an argument for owning stocks, which have a higher chance of generating inflation-beating gains. Bear markets, however, can cause sudden falls in the value of your stocks, so you can’t draw a steady income from this kind of investment. Quite a quandary, right?
But what if there was a way of combining the best of both worlds – stability and the managed risk of stock market investments? Well, there is!
Chances are, your number one priority in retirement is security. What you need is certainty that you’ll be able to cover essential living costs. Put differently, you want a guaranteed income that’s always there, even if the stock market – and your investment portfolio – is in free fall.
So where can you find this kind of security? Well, one option is an income annuity. This is a personal pension you create for yourself. In return for a lump sum, which is typically payable before you retire, an insurance company agrees to send you a locked-in payment every month once your annuity starts.
How much you get depends on how much you pay up front and the number of years over which you plan on claiming your annuity. As of late 2019, for example, a 70-year-old woman who wanted a guaranteed income of $1,000 a month for the rest of her life could expect to pay around $200,000 for an income annuity. A 70-year-old man married to a 67-year-old woman who wished to lock in $1,000 a month until the surviving spouse dies, by contrast, would be looking at a payment of around $220,000.
Now, the idea of handing over such large sums to an insurance provider can be pretty intimidating, but it might still be worth it – it all depends on how highly you value peace of mind. Remember, income annuities require no hands-on management, meaning there are no bear markets to worry about and no portfolios to rebalance.
Once you’ve paid, you’ll receive a guaranteed, fixed monthly income. No matter how crazy the world gets, the same amount of money will be deposited into your account every month. This is a buffer that gives many retirees the confidence to leave a chunk of their savings in the stock market and generate those all-important inflation-busting yields.
---
To avoid running out of money, assume you’ll live to 95 and take inflation into account when you plan for retirement.
How long will you live? Well, if you’re in good shape in your early 60s, you should assume you’ll make it into your 90s. If that sounds crazy, take a look at the odds. A 65-year-old woman in average health has a 44 percent probability of living to 90. A couple, both 65 and in average health, meanwhile, has a 62 percent probability of one spouse being alive at 90.
In other words, if you don’t have a medical condition that is likely to limit your life span, it’s important to take the long view when you’re planning your retirement.
Research shows that we struggle to connect with our future, older selves. We worry about the here and now and rarely think about the bills we’ll be paying in two or three decades. That’s a mistake that can wreak havoc later on in life.
Take it from the author’s mother. Her husband, who died when she was 66, left her some money. It wasn’t much, but she wasn’t worried. Both her parents and grandparents had died in their 60s, so she assumed she didn’t have many years ahead of her either. She was wrong and ended up living to 97. By the time she hit her 80s, she was broke and would have been in serious trouble if her daughter, the author, hadn’t been able to step in and help out.
When your financial horizon stretches 30 years into the future, you need to take a second factor into account as well – inflation, the increase in prices and fall of purchasing power over time. True, inflation is pretty low right now, but even low inflation rates stack up over time. If inflation were to run at 2 percent a year for the next two decades, for example, you’d still need $1,650 to cover $1,000 of expenses today.
So how do you keep up with inflation? Simple: stocks. Over decades, stocks have, on average, delivered returns above the rate of inflation – a feat money kept in banks and credit unions has struggled to match. This means that stocks are likely to be a part of your retirement plans. How you can counterbalance the risk of stock market investments with the security of a guaranteed income.
Should you fund your retirement by releasing cash locked up in your home? Should you be selling shares to generate income – and, if so, how many shares can you safely sell each year? We’ve covered a fair bit of ground in this book, but you probably still have a question or two about your retirement.
Few people are better equipped to answer those questions than Suze Orman’s British colleagues, Richard Dyson and Richard Evans. Want to dig deeper into the retirement question? Check out Your Retirement Salary, by Richard Dyson and Richard Evans!
---
You can save a lot of money by making smart decisions about the car you drive.
If you’re still working, you’re in a strong position to boost your retirement package. This makes saving a top priority, but lots of future retirees struggle to come up with the money they feel they’ll need later on. If this sounds familiar, don’t worry, there’s an easy fix. All you need to know is what to cut.
Reducing your spending by, say, $500 or $1,000 a month might sound like a punishment, but think of it this way: every dollar you save now is a dollar you won’t need to generate during your retirement. Put differently, spending less today reduces your retirement overhead – the surplus you’ll need to see you through your sunset years.
So what should you be cutting back on to find those extra dollars? Let’s look at an expense you can’t eliminate entirely but which you can drastically reduce: your car.
If you’re not buying your car outright, you’ll need a loan. But if you’re borrowing money anyway, you may as well get the car you really want, right? Wrong! As a general rule of thumb, you shouldn’t commit to a loan you can’t pay down within three years. If you can’t afford to do this, you can’t afford the car – it’s that simple.
Paying off a loan within 36 months means you’ll be spending more each month than if you’d taken a longer loan, of course. In the long run, however, you’ll spend less. The faster you wipe out the debt on this depreciating asset, the less you’ll pay in overall interest.
You can also reduce your costs – and free up even more cash for your retirement – by opting to buy a car that’s a couple of years old. This doesn’t mean buying any old wreck from a shady secondhand car dealership, though. Look out for certified pre-owned, or CPO, deals. These are used cars that have been inspected and come with an extended warranty. Typically, a CPO car can cost up to 40 percent less than the same model brand-new.
Finally, aim to drive your car for at least ten years rather than trading it in every three or four years. Remember, your goal is to get your loan paid off ASAP. This maximizes the number of years in which you aren’t servicing debts but funneling your money into retirement savings.
---
An income annuity provides a guaranteed income that offsets the demands of investing in the stock market.
Longevity statistics suggest you should plan for a multi-decade retirement, and this means that you’ll have to take inflation into account. As we’ve learned, that’s an argument for owning stocks, which have a higher chance of generating inflation-beating gains. Bear markets, however, can cause sudden falls in the value of your stocks, so you can’t draw a steady income from this kind of investment. Quite a quandary, right?
But what if there was a way of combining the best of both worlds – stability and the managed risk of stock market investments? Well, there is!
Chances are, your number one priority in retirement is security. What you need is certainty that you’ll be able to cover essential living costs. Put differently, you want a guaranteed income that’s always there, even if the stock market – and your investment portfolio – is in free fall.
So where can you find this kind of security? Well, one option is an income annuity. This is a personal pension you create for yourself. In return for a lump sum, which is typically payable before you retire, an insurance company agrees to send you a locked-in payment every month once your annuity starts.
How much you get depends on how much you pay up front and the number of years over which you plan on claiming your annuity. As of late 2019, for example, a 70-year-old woman who wanted a guaranteed income of $1,000 a month for the rest of her life could expect to pay around $200,000 for an income annuity. A 70-year-old man married to a 67-year-old woman who wished to lock in $1,000 a month until the surviving spouse dies, by contrast, would be looking at a payment of around $220,000.
Now, the idea of handing over such large sums to an insurance provider can be pretty intimidating, but it might still be worth it – it all depends on how highly you value peace of mind. Remember, income annuities require no hands-on management, meaning there are no bear markets to worry about and no portfolios to rebalance.
Once you’ve paid, you’ll receive a guaranteed, fixed monthly income. No matter how crazy the world gets, the same amount of money will be deposited into your account every month. This is a buffer that gives many retirees the confidence to leave a chunk of their savings in the stock market and generate those all-important inflation-busting yields.
---
To avoid running out of money, assume you’ll live to 95 and take inflation into account when you plan for retirement.
How long will you live? Well, if you’re in good shape in your early 60s, you should assume you’ll make it into your 90s. If that sounds crazy, take a look at the odds. A 65-year-old woman in average health has a 44 percent probability of living to 90. A couple, both 65 and in average health, meanwhile, has a 62 percent probability of one spouse being alive at 90.
In other words, if you don’t have a medical condition that is likely to limit your life span, it’s important to take the long view when you’re planning your retirement.
Research shows that we struggle to connect with our future, older selves. We worry about the here and now and rarely think about the bills we’ll be paying in two or three decades. That’s a mistake that can wreak havoc later on in life.
Take it from the author’s mother. Her husband, who died when she was 66, left her some money. It wasn’t much, but she wasn’t worried. Both her parents and grandparents had died in their 60s, so she assumed she didn’t have many years ahead of her either. She was wrong and ended up living to 97. By the time she hit her 80s, she was broke and would have been in serious trouble if her daughter, the author, hadn’t been able to step in and help out.
When your financial horizon stretches 30 years into the future, you need to take a second factor into account as well – inflation, the increase in prices and fall of purchasing power over time. True, inflation is pretty low right now, but even low inflation rates stack up over time. If inflation were to run at 2 percent a year for the next two decades, for example, you’d still need $1,650 to cover $1,000 of expenses today.
So how do you keep up with inflation? Simple: stocks. Over decades, stocks have, on average, delivered returns above the rate of inflation – a feat money kept in banks and credit unions has struggled to match. This means that stocks are likely to be a part of your retirement plans. How you can counterbalance the risk of stock market investments with the security of a guaranteed income.
October 9, 2022
Retirement is a hard-earned reward for a lifetime’s work. Pensions, however, aren’t what they once were. Today, individuals around the world fret about making ends meet once their working lives come to an end. Their biggest worry? Stretching their savings to cover increasingly long lifespans.
Then there are the vexed questions of taxation, investment portfolios and annual withdrawals. Throw technical jargon like “annuities” and “natural yields” into the equation and it’s no wonder people feel overwhelmed.
It’s time for some help. These blinks help clear a path through the minefield of retirement. Along the way, you’ll find out how the British pension system works, as well as plenty of actionable insights you can apply to your own retirement, wherever you live.
Pensions have changed over time. The generous company pensions of the second half of the twentieth century have been eroded by a combination of falling interest rates and increasing lifespans. Today, savers play a more active role in managing their pension pots. Because most retirees aren’t in a position simply to live off the revenue generated by their investment portfolios, they need to sell off their assets gradually to make up shortfalls. As they get older, they can guarantee their income by making use of annuities. Together, these strategies ensure a comfortable retirement while providing for spouses and heirs.
Then there are the vexed questions of taxation, investment portfolios and annual withdrawals. Throw technical jargon like “annuities” and “natural yields” into the equation and it’s no wonder people feel overwhelmed.
It’s time for some help. These blinks help clear a path through the minefield of retirement. Along the way, you’ll find out how the British pension system works, as well as plenty of actionable insights you can apply to your own retirement, wherever you live.
Pensions have changed over time. The generous company pensions of the second half of the twentieth century have been eroded by a combination of falling interest rates and increasing lifespans. Today, savers play a more active role in managing their pension pots. Because most retirees aren’t in a position simply to live off the revenue generated by their investment portfolios, they need to sell off their assets gradually to make up shortfalls. As they get older, they can guarantee their income by making use of annuities. Together, these strategies ensure a comfortable retirement while providing for spouses and heirs.
October 30, 2023
I think some of the concepts are a bit out of date. With the advent of ETF's and passive index investing the world has moved on. I think some of the actual portfolios presented have done particularly badly since publication. In the last market rout bonds and stocks fell together so conventional 60/40 portfolio split would mean nursing hefty losses. A multi-asset fund would be a better suggestion for most people and indeed how you can replicate this by choosing a well-balanced selection of ETF's would be a good topic to have covered.
October 12, 2021
practical advice
The advice is very practical (other books that I have read on the subject) give nice theories - this is a good complement to those books.
Good advice? Seems like it, we will now in 30 years time!
The advice is very practical (other books that I have read on the subject) give nice theories - this is a good complement to those books.
Good advice? Seems like it, we will now in 30 years time!
Displaying 1 - 5 of 5 reviews