Retirement is now more difficult than it was in the past. it's all about balancing your risk tolerance with your long-term goals. Maybe consider speaking to an advisor to help in diversifying your portfolio to spread out the risk.
Financial planning and retirement strategies are crucial, especially in today's economic climate. With global economic fluctuations and uncertainties, it's essential to have a solid plan in place to protect your financial future.
with the ever-changing global economy, tax laws and regulations can also vary, impacting how investments are taxed. It's essential to stay informed and plan strategies accordingly.
Agreed, I've always delegated my excesses to an advisor, since suffering major portfolio loss early 2020, amid covid outbreak. I'm now semi-retired and only work 7.5 hours a week, with barely 25% short of my $1m retirement goal after subsequent investments to date.
My CFA, Joseph Nick Cahill is a renowned figure in his field. I recommend researching his name online; you'll find all his credentials and everything you need to work with a reliable professional. With many years of experience, he is a valuable resource for anyone looking to navigate the financial market.
Thanks Diane, great video with an important message. Really good that you're highlighting this - it took me a long time to recognise the implications 😮. I ditched lifestyle funds a few years back for the reasons you highlight. I'm now on a crusade with my kids to get them to look at both the funds they're invested in and the platform charges of their old pension pots 👍
The worst aspect of lifestyling is that it takes no account of the strength of the bond market when the assets start being sold off to buy into bonds, classic one-size-fits-all but as we all know your retirement is probably one of the most unique and personal things you will ever plan in your life, lifestyling goes against that. The lifestyling can be as bad as 75% in bonds which is crazy when you need that final push towards the handover into retirement. The lifestyling kicks in at a low point and it's like just taking your foot of the accelerator on the hard-shoulder and letting the car just coast along on whatever car's engine can manage, everyone else is passing you by at 70 and you're oblivious to the fact that you're not getting anywhere. I engaged with an IFA this year and it was one of the first things to be discussed and checked, they still advise use of bonds but only as a "smoothing" mechanism to ride out the worst of any sequencing risks and even then they said max 3%-5% of the fund is permanently held in bonds just as a small buffer so when you start drawing you can bump over down turns in equity performance for a couple of months.
Full on life styling might be over the top but you have to diversify when you get close to retirement rather than put it all in risky equities. Or you are exposed to sequencing risk.
@PaulB-q3d yes, which is why you have to be careful and compromise. A decision made due to FOMO about growth could mean you lose a lot and run out of money if there's a big dip early in your retirement and you end up living a long life.
@@davidnash4393So split into a safe low-growth portion to cover you for years 1-10 (say) and leave the rest invested in stocks? On the grounds that stocks are unlikely to be down across that long a time frame.
With about 5 years to go for me I see retirement as a balancing act. You have to balance your portfolio to make sure you get returns in line with what you're taking out, and you need to balance time spent managing it against time spent enjoying all the new free time you have. You can't spend every day worrying about your money as time will pass you by. I recently got in touch with a pensions IFA and the best part was learning about the subtle management they do, they advise pulling some of the portfolio into bonds and out of equities but that's only to smooth out the sequencing risks, you can't avoid them completely but you can smooth the bumpy ride when they happen, the "engine" of growth is still in the equities and the skill is in managing that distribution to keep the growth going, ideally to try to get more coming in than you will spend but at the very least keep the downward spend on the fund under control. I worry enough now that I won't do a very good job and that's why I've chosen to hire someone who can take that stress away. It's 1% of the fund a year but if it means I almost never worry then it's money well spent as you can't put a price on a good night's sleep! Ha ha!
I was a stay at Home mom with no money in my IRA or any savings of my own, which was scary at 53 years of age. Three years ago I got a part time job and save everything I make. After 3 years, I am 56 yo and have put $9,000 in an IRA and $40,000 in my portfolio with CFA, Evelyn Infurna. Since the goal of getting a job was to invest for retirement and NOT up my lifestyle, I was able to scale this quickly to $150,000. If I can do this in a year, anyone can.
I went from no money to lnvest with to busting my A** off on Uber eats for four months to raise about $20k to start trading with Evelyn Infurna. I am at $128k right now and LOVING that you have to bring this up here
Evelyn Infurna Services has really set the standard for others to follow, we love her here in Canada 🇨🇦 as she has been really helpful and changed lots of life's
I first saw this reported a few years ago and adjusted my funds in my work pension back into the growth funds. The drawdown/ accumulation fund was performing horribly I was 59/ 60 at the time. I was effectively seeing nil growth other than the money I was putting in. You have to be prepared to accept greater volatility brings greater risk but I’ve seen big gains the last few years even though I retired last November just short of 64th birthday. I have left this fund churning away in growth mode and am using a much smaller already crystallised fund to provide until a work DB scheme pays out then state scheme a year later
The best financial strategy I adopted was to get accustomed to frugal living when I was still working. This made it easier to slip into retirement when the money became, let's say, a bit less than before.
That reminds me of an old story, fictional or not. An impoverished academic feeds his well-off university colleague, who says that if he learned to flatter the king then he wouldn’t need to eat lentils every day. To which the academic replied that, if his colleague learned to enjoy lentils, he wouldn’t need to flatter the king!
Exactly mine and my wife's way of thinking over the last 5 years as we hit both hit 50. We started really cutting back, not going without but just cutting the junk out and spending more wisely, in the back of out mind is "When there's no wage coming in, could we afford to have XYZ?", we don't do that for every single thing but it's a mindset you need to train up for with 5-10 years lead in and then hope we hit the ground running and it will be a smooth transition from salary to drawdown.
From my own experience, I've left and in some case sought out funds that are a minimum risk level 5 and in many more cases 6, 7 and even 8. My reward has typically been 10 to 12% p/a growth. Why on earth you would de-risk when you might have 30 years in retirement is beyond me! Methinks, this "life styling" is a myth created by pension providers who are providing extremely poor advice and guidance. My regret is that I didn't take charge of matters long before, when I could easily have doubled or even trebled what is now, thanks to my input, a very healthy pot.
@@dontuno because of sequencing risk. You will see good growth over the long term while you are building your pot. After retirement you are no longer contributing but you are in drawdown. If there is a crash early in retirement it's very difficult to recover if you are over exposed to high risk stocks, and you could run out of money.
Hindsight is a wonderful thing, hey? Warren Buffett knows a thing or two about investing and I gather he isn’t particularly bullish for US stocks at the moment, so has a larger portion than usual in cash.
Throughout my working life I paid into a personal pension, it didn't really interest me and I left it to my advisor which was a mistake. Some of these people it seems are in it for themselves only. My pension was moved to different companies quite a few times and I now realise it was probably down to inducements and bigger management fee's for her. Now I have both pensions combined and while in a "safe," fund are accumulating nicely. Needless to say the advisor is gone but the inheritance tax is a worry.
Thanks. The key message is to be conscious about investments and not to assume that a Pension Scheme or general Fund Manager will manage your investments based on your own personal requirements/Risks/Timelines.
The irony is that they all sell these one-size-fits-all solutions for the very reason that there's a million people with a million different retirement plans. The worst part is that most people don't know and won't know this is happening. Pension reforms in 2016 were fantastic but as I tell people, the rules are so flexible now but the owness is on you now, if you don't pay attention and you mess it up then that's your fault. People just don't know any of this.
Totally agree. If you retire at 65 and plan to fund yourself to 90, half of your pot will still be untouched 12.5 years later. Equities is where a big fraction should be invested for that time period.
In the UK many pension providers have various pension products, it’s worth spending time to research them all and grow your pension if you are more than 10 years from retiring. I left my pension in this default things for a long time, then less riskier funds. Now am more comfortable with high funds with a trace record, I am invested in funds that beat the market consistently.
Simple life savers ;-) .. many people are nervous about changing their pension ... BUT if nothing else make sure your expected retirement age is correct or lifestyling will really work against it as you'll end up in cash products way to early and make things even worse. 2nd if you're really young and just starting out check your pensions have no cash products in them, they do it to protect against volatility but at 20 or 30 that's just stupid as you have so long to even volatility out and benefit from higher rates,
Quick and easy way to change the lifestyling issue is to adjust your retirement date up a decade or 2. I did and my pension benefited from the 2024 rates. Only if you understand the risk/volatility though 🙂. Great video as always.
Did you do that before or during the lifestyle change kicked in? I did that recently with Scottish Widows and it doesn't seem to have changed it, I wonder if it has just 'paused' it for longer
@@spencerholdaway I did it after but it was post a workplace talk from them which was less than convincing on their part tbh. I mentioned lifestyling and it being outdated and due for a revamp and they brushed it off. I'd check your plan as with SW they usually have 4 options. 1 and 2 are less risk adverse from memory. They do take a while to change things over though.
I don't particularly want to broadcast to my company that my target is another five years all being well which would be ten years before the target age.
I never liked the lifestyle funds even when annuities were the only option. Better to have a small portfolio of good funds. I know many colleagues with these plans who are sleepwalking to a poorer retirement as a result.
Inheritance tax change was announced but not implemented until April 2027. I guess we all expect to live beyond that so there's time to make plans if you don't die in the next 2 years 4 months.
Yes good information as you say virtually everyone is in the default lifestyle scheme luckily for me i changed about 8 years before retirement into a more % shares based scheme with better returns as closer to retirement they try and derisk to much.
Lifestyling is another example of bad "advice" that you can guarantee that nobody giving it would actually follow unless they intended to take an annuity. What is worse is that as shown by the recent bond rout it actually made it worse for a a large number of individual approaching retirement who saw substantial drops in the value of their pension when it was supposed to be in low risk investments.
The Pension companies (who probably know a bit about asset allocations) do not do a lot about making it easy to move back into equities. The real risk is leaving pensions to get worn away by inflation. True the funds suffered during crashes but always more than made up for themselves over bonds in the long term.
Great video, thank you for covering this subject. I have lifestyle funds in a pension drawdown account with Aegon. If I change to a non-lifestyling fund do I risk triggering the MPAA. I have taken only tax free cash so far but don’t want to accidentally trigger the MPAA, so have refrained from doing anything else. I recently changed my other uncrystallised funds to ones with more equity and less bonds but was too scared to touch the funds in the drawdown. Everything I have read suggests I am ok to change them but I want to be sure.
No, the type of investments has no bearing on whether you trigger the MPAA but you probably shouldn't take advice from a random on RUclips. Just Aegon that specific question and they will answer you.
I never understood why people move their pension capital out of the stock market. In this case he has enough income to live on a good life, perhaps he has cash savings in ISA for emergencies, so all of his pension should be invested for growth
Thank you so much for this amazing video! Could you help me with something unrelated: My OKX wallet holds some USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How should I go about transferring them to Binance?
Always love the videos - thanks! Think "take control" and "the right decision for you" are importantly the headline themes here. I've heard that Nest even subdue equity weighting in the earlier years (for 'cognitive purposes' ... i.e. not to scare people off) - which is a bit outrageous. Individuals can be very different. I'm nearing 40 years of contribution into a DB scheme (effectively a rather rigid annuity) and am shoveling via salary sacrifice into a parallel DC fund. That evidences how close I am to retirement, the DC pile can all be taken tax-free, and I just want to keep that DC fund safe - money market/liquidity fund does just what I want. Though it's not the default, it does have the lowest risk, and at a few years to go before retirement I simply don't want to take risk on that pot. Think that the right personalised decision in later working years includes only investing what you can afford to lose.
Well done on taking control of your pension and making decisions that are right for you. I know of a few people who are stuck with Nest as their workplace pension provider so make regular transfers out into a SIPP to ensure they don’t lose employer contributions but also have a better investment choice
Speaking as someone who totally ignored his pension until retiring, I wonder if the lifestyling feature of the default fund might have offered me some protection from sequencing risk, as had the market crashed just before I retired it’s impact would have been reduced?
It's possible but it depends on the year. In 2022, people who had a high bond fund lost huge amounts of money. The people I know are hoping to retire in 2026 as a result. So, a four year recovery period. Let's hope there isn't another crash in that time period.
There are James Shack videos on this. Look for titles such as the 4% rule. My understanding is that a diversified stocks/bonds portfolio is less likely to burn out due to withdrawals combined with investment losses in the early years. If, as here, you have other assets you can draw on (e.g. ISAs, after they lose their IHT advantages) then you can consider investing more in stocks, if you can live off other sources during a 1-3 year crash. Equally if you start drawing down and see 10% portfolio gains for a few years, you might consider “banking” some of the outperformance by moving it into cash or short-dated bonds, or making larger withdrawals (into ISA savings, say) than planned if you don’t start paying 40% tax.
@@kinggeoffrey3801In 2021 and early 2022, interest rates were very low. The ECB was even at -0.5% for a few years. Rates were very unlikely to move lower than that, but if rates were to increase from there then bond holders would lose out. As happened to your friends, unfortunately. With hindsight, it would have made little sense to go into bonds in 2021-22, given that their largest possible price moves were down. Is it better now? On the one hand, rates are 4-5% in many countries, so “rates up 2%” and “rates down 2%” are realistic “large move” possibilities. On the other hand, the debt/GDP ratios of many countries are getting to 100% or more, so if bond investors start demanding larger coupons then that would increase long-dated rates and cause losses…
Thank you for your video, … you know,.. I can’t recommend Shellane Maxwell enough! When I first approached her, I was overwhelmed about retirement planning…Thanks to her guidance, I was able to restructure my investments and focus on high-yield options. Within just a year, my retirement fund grew by 55%!
She also helped me create a savings strategy that allowed me to set aside an additional $10000 a month. Now, I feel confident that I can retire five years earlier than I originally planned. If you're serious about securing your financial future, Shellane Maxwell is the one to talk to!
Wow I am suprise to see her mention here, after following her investment strategy, my retirement account grew from $500,000 to $750,000 in less than 6 month
My work based pension is currently on 20k I pay into it weekly which is about £800 a month when you add it up. I am 56 should I stop the life style option it's currently in with Aegon. I am happy to increase risk
Same story like mine. I was in default Lifesight life styling and when changed job took all money out to put it in 100% stocks and my growth was phenomenal. Now moving once again as changing my strategy from mainly UK high dividend stocks to Vanguard ETF. My Vanguard ETF saw 50% growth in two years but my UK stocks just 22%. Money should work hard for you so you don’t have to work as hard to get it! Lifestyling is DEAD unless you want to lose money on inflation and buying an annuity
@ with another SIPP provider I used some vanguard etf as well as UK stocks. Now moving everything to Vanguard SIPP to have only vanguard ETFs as well as my vanguard ISAs that exist
Good advice Dianne. I had my workplace pension with Scottish Widows and as I approached my chosen retirement date my money was automatically moved into "low risk" bonds, shortly before the Liz Truss 2022 bond crash! Luckily a few months prior to the crash I took control and moved out of bonds and back into equities...a very good move! I've since transferred into a SIPP and haven't looked back. So much more control and freedom, plus lower fees!
I retired at 52 and honestly, I wish I’d done it sooner. The 9-to-5 grind steals your freedom for a paycheck that barely scratches the surface. My advice? If you’re in your late 30s or early 40s, start saving for FIRE now - Financial Independence, Retire Early. And if you’re in your 50s, invest smartly and break free from relying on your job. Market trends, like the Trump Effect, have made millions for many, including me. Stay focused, stay consistent, and remember: financial freedom is within reach if you make it a priority.
Yes it is a risk. As I said, he has a higher capacity for loss than most people given he had no intention of touching the pension prior to the change in IHT
No, Mark wouldn't have lost 50% of his fund value. The fund at that point would be 50% lower. It's only a loss if you cash in that loss. Remember May 2020, all stock markets plunged due to Covid. All investments were down. About 4 months later, all had recovered, and now about 40% higher. It's called investing, sit tight through the downturn.
@@GG5150 Once again it's all well and good talking when you know what happened,what if the bounce back hadn't occurred in time for his retirement. I need one of these crystal balls you all have.
Retirement is now more difficult than it was in the past. it's all about balancing your risk tolerance with your long-term goals. Maybe consider speaking to an advisor to help in diversifying your portfolio to spread out the risk.
Financial planning and retirement strategies are crucial, especially in today's economic climate. With global economic fluctuations and uncertainties, it's essential to have a solid plan in place to protect your financial future.
Consulting with a financial advisor can provide personalized insights and help align your investment strategy with your retirement goals.
with the ever-changing global economy, tax laws and regulations can also vary, impacting how investments are taxed. It's essential to stay informed and plan strategies accordingly.
Agreed, I've always delegated my excesses to an advisor, since suffering major portfolio loss early 2020, amid covid outbreak. I'm now semi-retired and only work 7.5 hours a week, with barely 25% short of my $1m retirement goal after subsequent investments to date.
My CFA, Joseph Nick Cahill is a renowned figure in his field. I recommend researching his name online; you'll find all his credentials and everything you need to work with a reliable professional. With many years of experience, he is a valuable resource for anyone looking to navigate the financial market.
Thanks Diane, great video with an important message. Really good that you're highlighting this - it took me a long time to recognise the implications 😮.
I ditched lifestyle funds a few years back for the reasons you highlight.
I'm now on a crusade with my kids to get them to look at both the funds they're invested in and the platform charges of their old pension pots 👍
The worst aspect of lifestyling is that it takes no account of the strength of the bond market when the assets start being sold off to buy into bonds, classic one-size-fits-all but as we all know your retirement is probably one of the most unique and personal things you will ever plan in your life, lifestyling goes against that. The lifestyling can be as bad as 75% in bonds which is crazy when you need that final push towards the handover into retirement.
The lifestyling kicks in at a low point and it's like just taking your foot of the accelerator on the hard-shoulder and letting the car just coast along on whatever car's engine can manage, everyone else is passing you by at 70 and you're oblivious to the fact that you're not getting anywhere. I engaged with an IFA this year and it was one of the first things to be discussed and checked, they still advise use of bonds but only as a "smoothing" mechanism to ride out the worst of any sequencing risks and even then they said max 3%-5% of the fund is permanently held in bonds just as a small buffer so when you start drawing you can bump over down turns in equity performance for a couple of months.
Full on life styling might be over the top but you have to diversify when you get close to retirement rather than put it all in risky equities. Or you are exposed to sequencing risk.
You might retire at 50 and live till 90, that’s a lot of growth to miss if you’re out of equities.
@PaulB-q3d yes, which is why you have to be careful and compromise. A decision made due to FOMO about growth could mean you lose a lot and run out of money if there's a big dip early in your retirement and you end up living a long life.
@@davidnash4393So split into a safe low-growth portion to cover you for years 1-10 (say) and leave the rest invested in stocks? On the grounds that stocks are unlikely to be down across that long a time frame.
With about 5 years to go for me I see retirement as a balancing act. You have to balance your portfolio to make sure you get returns in line with what you're taking out, and you need to balance time spent managing it against time spent enjoying all the new free time you have. You can't spend every day worrying about your money as time will pass you by.
I recently got in touch with a pensions IFA and the best part was learning about the subtle management they do, they advise pulling some of the portfolio into bonds and out of equities but that's only to smooth out the sequencing risks, you can't avoid them completely but you can smooth the bumpy ride when they happen, the "engine" of growth is still in the equities and the skill is in managing that distribution to keep the growth going, ideally to try to get more coming in than you will spend but at the very least keep the downward spend on the fund under control.
I worry enough now that I won't do a very good job and that's why I've chosen to hire someone who can take that stress away. It's 1% of the fund a year but if it means I almost never worry then it's money well spent as you can't put a price on a good night's sleep! Ha ha!
I was a stay at Home mom with no money in my IRA or any savings of my own, which was scary at 53 years of age. Three years ago I got a part time job and save everything I make. After 3 years, I am 56 yo and have put $9,000 in an IRA and $40,000 in my portfolio with CFA, Evelyn Infurna. Since the goal of getting a job was to invest for retirement and NOT up my lifestyle, I was able to scale this quickly to $150,000. If I can do this in a year, anyone can.
I went from no money to lnvest with to busting my A** off on Uber eats for four months to raise about $20k to start trading with Evelyn Infurna. I am at $128k right now and LOVING that you have to bring this up here
Evelyn Infurna Services has really set the standard for others to follow, we love her here in Canada 🇨🇦 as she has been really helpful and changed lots of life's
This is interesting. I heard a lot about the same person not long ago, please how can I contact her?
Use her name to quickly conduct an internet search.
SHE’S MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
I adjusted my presumed retirement age from 67 to 75 to keep the lifestyle ratio at bay on my Scottish Windows pension.
Exactly what I'm doing as well
I first saw this reported a few years ago and adjusted my funds in my work pension back into the growth funds. The drawdown/ accumulation fund was performing horribly I was 59/ 60 at the time. I was effectively seeing nil growth other than the money I was putting in.
You have to be prepared to accept greater volatility brings greater risk but I’ve seen big gains the last few years even though I retired last November just short of 64th birthday. I have left this fund churning away in growth mode and am using a much smaller already crystallised fund to provide until a work DB scheme pays out then state scheme a year later
Yup. And transfer it all into portfolio 1.
The best financial strategy I adopted was to get accustomed to frugal living when I was still working. This made it easier to slip into retirement when the money became, let's say, a bit less than before.
That reminds me of an old story, fictional or not. An impoverished academic feeds his well-off university colleague, who says that if he learned to flatter the king then he wouldn’t need to eat lentils every day. To which the academic replied that, if his colleague learned to enjoy lentils, he wouldn’t need to flatter the king!
Exactly mine and my wife's way of thinking over the last 5 years as we hit both hit 50. We started really cutting back, not going without but just cutting the junk out and spending more wisely, in the back of out mind is "When there's no wage coming in, could we afford to have XYZ?", we don't do that for every single thing but it's a mindset you need to train up for with 5-10 years lead in and then hope we hit the ground running and it will be a smooth transition from salary to drawdown.
From my own experience, I've left and in some case sought out funds that are a minimum risk level 5 and in many more cases 6, 7 and even 8. My reward has typically been 10 to 12% p/a growth. Why on earth you would de-risk when you might have 30 years in retirement is beyond me! Methinks, this "life styling" is a myth created by pension providers who are providing extremely poor advice and guidance. My regret is that I didn't take charge of matters long before, when I could easily have doubled or even trebled what is now, thanks to my input, a very healthy pot.
@@dontuno because of sequencing risk.
You will see good growth over the long term while you are building your pot.
After retirement you are no longer contributing but you are in drawdown. If there is a crash early in retirement it's very difficult to recover if you are over exposed to high risk stocks, and you could run out of money.
@@davidnash4393 Already been there in 2021 and simply stood firm and waited for the recovery which indeed came last and this year.
Hindsight is a wonderful thing, hey? Warren Buffett knows a thing or two about investing and I gather he isn’t particularly bullish for US stocks at the moment, so has a larger portion than usual in cash.
Throughout my working life I paid into a personal pension, it didn't really interest me and I left it to my advisor which was a mistake. Some of these people it seems are in it for themselves only. My pension was moved to different companies quite a few times and I now realise it was probably down to inducements and bigger management fee's for her. Now I have both pensions combined and while in a "safe," fund are accumulating nicely. Needless to say the advisor is gone but the inheritance tax is a worry.
Thanks. The key message is to be conscious about investments and not to assume that a Pension Scheme or general Fund Manager will manage your investments based on your own personal requirements/Risks/Timelines.
The irony is that they all sell these one-size-fits-all solutions for the very reason that there's a million people with a million different retirement plans. The worst part is that most people don't know and won't know this is happening. Pension reforms in 2016 were fantastic but as I tell people, the rules are so flexible now but the owness is on you now, if you don't pay attention and you mess it up then that's your fault. People just don't know any of this.
Totally agree. If you retire at 65 and plan to fund yourself to 90, half of your pot will still be untouched 12.5 years later. Equities is where a big fraction should be invested for that time period.
In the UK many pension providers have various pension products, it’s worth spending time to research them all and grow your pension if you are more than 10 years from retiring. I left my pension in this default things for a long time, then less riskier funds. Now am more comfortable with high funds with a trace record, I am invested in funds that beat the market consistently.
Clearly explained and very informative. Thank you.
Simple life savers ;-) .. many people are nervous about changing their pension ... BUT if nothing else make sure your expected retirement age is correct or lifestyling will really work against it as you'll end up in cash products way to early and make things even worse.
2nd if you're really young and just starting out check your pensions have no cash products in them, they do it to protect against volatility but at 20 or 30 that's just stupid as you have so long to even volatility out and benefit from higher rates,
Very informative, thank you.
Glad it was helpful!
Quick and easy way to change the lifestyling issue is to adjust your retirement date up a decade or 2. I did and my pension benefited from the 2024 rates. Only if you understand the risk/volatility though 🙂. Great video as always.
Did you do that before or during the lifestyle change kicked in? I did that recently with Scottish Widows and it doesn't seem to have changed it, I wonder if it has just 'paused' it for longer
@@spencerholdaway I did it after but it was post a workplace talk from them which was less than convincing on their part tbh. I mentioned lifestyling and it being outdated and due for a revamp and they brushed it off. I'd check your plan as with SW they usually have 4 options. 1 and 2 are less risk adverse from memory. They do take a while to change things over though.
I don't particularly want to broadcast to my company that my target is another five years all being well which would be ten years before the target age.
I never liked the lifestyle funds even when annuities were the only option. Better to have a small portfolio of good funds. I know many colleagues with these plans who are sleepwalking to a poorer retirement as a result.
Inheritance tax change was announced but not implemented until April 2027. I guess we all expect to live beyond that so there's time to make plans if you don't die in the next 2 years 4 months.
Yes good information as you say virtually everyone is in the default lifestyle scheme luckily for me i changed about 8 years before retirement into a more % shares based scheme with better returns as closer to retirement they try and derisk to much.
Lifestyling is another example of bad "advice" that you can guarantee that nobody giving it would actually follow unless they intended to take an annuity. What is worse is that as shown by the recent bond rout it actually made it worse for a a large number of individual approaching retirement who saw substantial drops in the value of their pension when it was supposed to be in low risk investments.
The Pension companies (who probably know a bit about asset allocations) do not do a lot about making it easy to move back into equities. The real risk is leaving pensions to get worn away by inflation. True the funds suffered during crashes but always more than made up for themselves over bonds in the long term.
Great video, thank you for covering this subject.
I have lifestyle funds in a pension drawdown account with Aegon. If I change to a non-lifestyling fund do I risk triggering the MPAA. I have taken only tax free cash so far but don’t want to accidentally trigger the MPAA, so have refrained from doing anything else. I recently changed my other uncrystallised funds to ones with more equity and less bonds but was too scared to touch the funds in the drawdown. Everything I have read suggests I am ok to change them but I want to be sure.
No, the type of investments has no bearing on whether you trigger the MPAA but you probably shouldn't take advice from a random on RUclips. Just Aegon that specific question and they will answer you.
Thank you Dianne
Did they have " Lifestyling " pensions 20 years ago ? I thought target date pensions were a relatively new concept. Interesting video.
I never understood why people move their pension capital out of the stock market. In this case he has enough income to live on a good life, perhaps he has cash savings in ISA for emergencies, so all of his pension should be invested for growth
Thank you so much for this amazing video! Could you help me with something unrelated: My OKX wallet holds some USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How should I go about transferring them to Binance?
Always love the videos - thanks! Think "take control" and "the right decision for you" are importantly the headline themes here. I've heard that Nest even subdue equity weighting in the earlier years (for 'cognitive purposes' ... i.e. not to scare people off) - which is a bit outrageous. Individuals can be very different. I'm nearing 40 years of contribution into a DB scheme (effectively a rather rigid annuity) and am shoveling via salary sacrifice into a parallel DC fund. That evidences how close I am to retirement, the DC pile can all be taken tax-free, and I just want to keep that DC fund safe - money market/liquidity fund does just what I want. Though it's not the default, it does have the lowest risk, and at a few years to go before retirement I simply don't want to take risk on that pot. Think that the right personalised decision in later working years includes only investing what you can afford to lose.
Well done on taking control of your pension and making decisions that are right for you. I know of a few people who are stuck with Nest as their workplace pension provider so make regular transfers out into a SIPP to ensure they don’t lose employer contributions but also have a better investment choice
Speaking as someone who totally ignored his pension until retiring, I wonder if the lifestyling feature of the default fund might have offered me some protection from sequencing risk, as had the market crashed just before I retired it’s impact would have been reduced?
It's possible but it depends on the year. In 2022, people who had a high bond fund lost huge amounts of money.
The people I know are hoping to retire in 2026 as a result. So, a four year recovery period. Let's hope there isn't another crash in that time period.
There are James Shack videos on this. Look for titles such as the 4% rule.
My understanding is that a diversified stocks/bonds portfolio is less likely to burn out due to withdrawals combined with investment losses in the early years. If, as here, you have other assets you can draw on (e.g. ISAs, after they lose their IHT advantages) then you can consider investing more in stocks, if you can live off other sources during a 1-3 year crash. Equally if you start drawing down and see 10% portfolio gains for a few years, you might consider “banking” some of the outperformance by moving it into cash or short-dated bonds, or making larger withdrawals (into ISA savings, say) than planned if you don’t start paying 40% tax.
@@kinggeoffrey3801In 2021 and early 2022, interest rates were very low. The ECB was even at -0.5% for a few years. Rates were very unlikely to move lower than that, but if rates were to increase from there then bond holders would lose out. As happened to your friends, unfortunately. With hindsight, it would have made little sense to go into bonds in 2021-22, given that their largest possible price moves were down.
Is it better now? On the one hand, rates are 4-5% in many countries, so “rates up 2%” and “rates down 2%” are realistic “large move” possibilities. On the other hand, the debt/GDP ratios of many countries are getting to 100% or more, so if bond investors start demanding larger coupons then that would increase long-dated rates and cause losses…
Funny thing is, many people would be better of with an annuities while interest rates were low.
The company I worked for moved my funds to a Lifestyling fund without my knowledge (with Scottish Widows) and lost £15k
What if he was 100% equities from the outset? Presumably an even bigger “loss”.
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My work based pension is currently on 20k I pay into it weekly which is about £800 a month when you add it up. I am 56 should I stop the life style option it's currently in with Aegon. I am happy to increase risk
100% as your risk profile is high like mine!
Same story like mine. I was in default Lifesight life styling and when changed job took all money out to put it in 100% stocks and my growth was phenomenal. Now moving once again as changing my strategy from mainly UK high dividend stocks to Vanguard ETF. My Vanguard ETF saw 50% growth in two years but my UK stocks just 22%. Money should work hard for you so you don’t have to work as hard to get it! Lifestyling is DEAD unless you want to lose money on inflation and buying an annuity
Hello again! Thanks for sharing your experience as ever. I’m pleased to hear that getting out of lifestyling has worked out for you
out of interest are you using vanguard for the sipp, or just purchasing that ETF with another provider ?
@ with another SIPP provider I used some vanguard etf as well as UK stocks. Now moving everything to Vanguard SIPP to have only vanguard ETFs as well as my vanguard ISAs that exist
@@porschecarreras992cabriole8 thanks, I'm thinking about moving to vanguard as well
Lifestyling does not work. You don't know when you are going to retire or how to take your peension.
Good advice Dianne. I had my workplace pension with Scottish Widows and as I approached my chosen retirement date my money was automatically moved into "low risk" bonds, shortly before the Liz Truss 2022 bond crash! Luckily a few months prior to the crash I took control and moved out of bonds and back into equities...a very good move! I've since transferred into a SIPP and haven't looked back. So much more control and freedom, plus lower fees!
I retired at 52 and honestly, I wish I’d done it sooner. The 9-to-5 grind steals your freedom for a paycheck that barely scratches the surface. My advice? If you’re in your late 30s or early 40s, start saving for FIRE now - Financial Independence, Retire Early. And if you’re in your 50s, invest smartly and break free from relying on your job. Market trends, like the Trump Effect, have made millions for many, including me. Stay focused, stay consistent, and remember: financial freedom is within reach if you make it a priority.
Exactly My point! The 9to5 grind is just not worth it the stress and low payoff. What specific steps did you take to break free?
Got it! Thanks for the tip! I was curious, so I looked up Lorrie
I have 5 more years and I can’t wait!
So done with 9-5, its Depressing!
100% in equities is a risk. Mark could have quite easily lost 50% of his pot if the markets crashed.
Exactly,it all well and good saying what he should have done when you are looking back.
Most of us haven't got a crystal ball like these know alls.
Yes it is a risk. As I said, he has a higher capacity for loss than most people given he had no intention of touching the pension prior to the change in IHT
No, Mark wouldn't have lost 50% of his fund value. The fund at that point would be 50% lower. It's only a loss if you cash in that loss. Remember May 2020, all stock markets plunged due to Covid. All investments were down. About 4 months later, all had recovered, and now about 40% higher. It's called investing, sit tight through the downturn.
@@GG5150 Once again it's all well and good talking when you know what happened,what if the bounce back hadn't occurred in time for his retirement.
I need one of these crystal balls you all have.
@@GG5150remember if it had lost 50% it would have to grow by 100%just to get back where he was.
Admittedly 50% drop seems a lot but not impossible.