Do I have enough? The retirement question everyone asks

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You've already built the wealth, now it's time to build the plan. You might spend a third of your life in retirement. I think that's a mind-blowing statistic that people really won't have really wrestled with. That's a very empowering way of thinking about it, actually. I mean, Fergus as an investment manager, I'm sure you have people coming in who think they know what they need to save for their retirement. How often are they right? Rarely, I think is probably the honest answer. A client once asked me to plan for a specific rejuvenation clinic in Switzerland that was quite a bonkers sum. I really have bonkers. About 150,000.

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Welcome to the power of good advice, a series built on a simple belief. Good advice shouldn't be kept behind closed doors. Everyone deserves to have clarity, to feel confident, to build a prosperous future and to unlock the good advice that can lead you there. At the heart of this series are the experts who guide people through life's most important financial decisions. Wealth isn't just about numbers, it's about your goals, the people who matter to you and the life you want to build. In today's episode, we are going to explore a topic that's at the heart of our psychology, the way we see ourselves and our relationship with money. Why do so many of us struggle to make longer term decisions where outcomes won't benefit us until years in the future? Well, at the heart of our ability or inability to make long term decisions is whether or not we can envision our future selves. Can we see ourselves in 20, 30 or 40 years time? Can we fundamentally make decisions today that will benefit that future self?

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I'm Katie Derham and I'm joined today by two leading experts from Evelyn Partners. We've got the Financial Planning Director Gabriela Turner here and Investment Management Partner Fergus Boyd and it is lovely to have you both here with me. Now, when I think about my future self, I hope that there'll be a little bit more time for relaxation. I'm not sure I really envisage not working at all, but I think it's having the luxury of choice. Do I want to spend today or this week in my garden or do I want to do an interesting project and maybe earn a bit of money? I don't know, but that's I suppose a sort of a broad picture. How about you Gabriela? I would love to spend my retirement travelling. The more obscure, the better, the more interesting, the better, the more adventurous, the better. So my next big trip that I'm currently planning is guerrilla trekking, hopefully. I'm trying to do as much as I can now given the time I've got and then hopefully continue it in the future. So I think staying fit and active is quite key for that happening. Absolutely. I mean, that does sound exciting though, I have to say. Sounds like as well you want to take off as many different places as possible. Definitely keeping yourself fit and healthy and also having the resources to do that. Yeah. So that's something we can talk about. How about you Fergus? What does your future life look like? Well, my future life I think has a slightly different complexion because my wife made it very clear to me a long time ago that she married me for life, not for lunch. And so therefore, you know, she was quite taken seeing some senior colleagues who before who were sort of working well into their 70s and indeed beyond. And when they were encouraged to go and spend a bit more time outside the office, they simply rented some office space in the building and continued to come in every day. So for me, I think it's about making sure I've got something kind of fulfilling and interesting and rewarding that still will tolerate me coming in every day, if only for lunch. Well, it sounds as if you enjoy your work as well. So clearly that's part of how you envisage your sort of older years as well. It doesn't completely just sort of cut off at a certain point. No, it's a fascinating job to sort of distill what we do. You are in a way a sort of a paid observer of current affairs. And, you know, the way markets react to news and innovation is, I think, a very privileged position to find yourself sitting in. It's interesting, though, hearing about how we all see our lives in the future. It's not all about facts and figures on a page. It's about goals and it's about well-being.

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When you have clients coming in to talk about financial planning for their future, I mean, Gabriela, how do you start with them to help them envisage what that's going to look like? I think it's very easy to kind of ask what do clients love doing now? And do they see themselves doing that for the next 20, 30 years? Or do they see that changing and evolving? So asking questions, really getting to understand the individual, the families and how, you know, how everybody works is important. But I think it can be quite tricky to try and fast forward 30 years and think, how is my health going to be? Am I going to be as active as I am right now? You know, you don't know what life's curveballs will be throughout that period. And so it's trying to

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understand how they see themselves in the future and trying to help them help that then fit in with their finances and how that plan looks. I mean, Fergus, generally, you know, you've been in this world for a wee while now when you've had so many clients coming through to you. Do people generally have clarity or not? No. And I think that's the fascinating thing because I think, well, there's a range. You have some, you know, I remember I had one lovely client who really wanted his plan to to be kind of constructed around the idea he was going to die at the age of 89. Okay. And that was, you know, that was an interesting one to talk through. But the great majority of people, I think, come without an idea. And I think the concept of the future, you know, it's a bit like the middle of the ocean, it's sort of deep and unknowable. And so I think, you know, what we do come and help people with is putting a bit of structure around it. Well, before we get into the nitty gritty of that kind of discussion, let's start with a few numbers that really kind of help frame why planning has never been more important. And of course, we're living longer than we have ever lived before. Better health outcomes, better quality of life, which is great. Also means a lot of us will work way beyond our sixties. Some of us will spend over a third of our lives in retirement, which is a bafflingly large chunk, isn't it? It's extraordinary. And that means what we are now will need to last, of course, so much longer. And research showing that more than half of people struggle to imagine their future selves as we've just been talking about. So who can help us make long term decisions today? Well, Gabriella, you can. What do you think are the most noticeable things that the people you talk to have in common? Are they excited about spending their money? Are they savers? Do you think that's changing? Give us a few sort of bit of an outline. I think the one overarching question that seems to come up in one form or another is do I have enough? I think most people, if they're honest with themselves, are a bit scared. I think we're in a pitter patter of going to work or setting up a business. And you have a routine for 30 odd years and then suddenly you retire. And if you've been giving so much time to one thing, it's quite hard to imagine how that looks in the future. So it's almost a mind shift and paying yourself forward, I guess, now for the future. And do you think more people, when they come to talk to you about planning for the future, are they generally talking about, okay, I want to make sure I've got plenty of money to spend on treats and exciting adventures, the sort of things that you've been talking about? Or is it perhaps more about spending time with family or helping their children or their grandchildren? How does that sort of work? Yes, some people have a very clear vision. And I think that's also very helpful, kind of from a numbers perspective also to know how much you need to have. I think I had a client once asked me to plan for a specific rejuvenation clinic in Switzerland that was quite a bonkers sum. I really have bonkers. About 150,000. I think it was a week or for two weeks. So quite an unusual goal to have at quite a young age, I thought. But again, that leans into family backgrounds, maybe their parents were unwell, maybe that then triggered focusing on their health going forwards and longevity. So sometimes a clear picture helps, but it's rare that you get a clear focus, a clear picture from everybody. Yeah. I mean, Fergus as an investment manager, I mean, obviously, I'm sure you have people coming in who think they know what they need to save for their retirement. I mean, how often are they right? Rarely, I think is probably the honest answer, because the kind of concept of what the number is, is obviously contingent and subjective upon

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all the kind of what they want out of it, really. Yeah, but they want to go to the health clinic. Yeah, exactly. And spend 150 grand in the first week of their retirement. Yeah. And you get some people who want to spend every penny that they've got. And that's always quite an interesting discussion. And you've got others who are, I think, to use a sort of slightly glib phrase, quite happy to be the richest person in the graveyard, and, you know, really want to, you know, cling on to everything. And again, that might be some associated financial trauma, you know, in their past, where they can't bear the idea of letting go. And so the number is, or, you know, how much they need is all very, very dependent on what kind of lifestyle is expected out of it, you know, out of the bottom of it. And do you think there's a sort of a common misconception of those people who come to that initial meeting of what they think they need to do to be prepared? I think the longevity point is a really good one. I think the idea that, you know, you say you might spend a third of your life in retirement. You know, I think that's a mind blowing statistic that people, you know, really won't have really kind of wrestled with.

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You know, I think people come to us because they feel they haven't engaged with this topic.

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And so, you know, then suddenly, you know, it's not the scales fall from their eyes, but actually, they're kind of the complexity and the longevity, I think the longevity is probably the hardest bit to wrestle with. Your retirement is essentially another career when you think about it in years, which is quite a nice way to draw focus to it and the importance of making sure that A, your vision is there, but two, it can come true. That's a very empowering way of thinking about it actually. I'm taking this on board as you're telling me, Gabrielle. This is great. Some of us just aren't very good at planning or it doesn't come easy to them. And that's why they would come to somebody like you, Gabrielle, I guess. I mean, why do you think we aren't better at looking out for our futures? I mean, why some people just almost refuse to do it, bury their head in the sands? Yeah, so I think it's just so far away. People start working most commonly straight after kind of education. And at that point, you're so busy trying to get, you know, earning, trying to establish yourself, et cetera, do whatever you're trying to give time to. It's really hard to visualize 30 years forward, but actually just providing some useful numbers that actually the state pension is X and you're earning, you know, four or five times more than that, et cetera. So you need to do an element of saving to be able to continue the lifestyle you have, continue to buy the same milk you're buying now as you want to buy in retirement. And unless you save for it, you know, through various ways, it's quite the, you have to save the money for it to have it later on. Yeah, there's no getting away from that. It's not going to suddenly appear out of thin air. No, and you have to have, I think, examples help asking what people like doing and would you like to still do that in the future? But we've actually quite commonly used cashflow modeling with clients that we look after, which is essentially a financial roadmap of your life from now, typically to age 100. And I think that sort of visual aid is extremely helpful to show you what life is like at different stages. So what could it look like at 50 or at 60 and at 65 or 70, and you can really plug in some, anything really. So you can plug in that health clinic at 150,000 a week and see what that looks like. That visual aid helps give you kind of clarity of what that roadmap of your life, of your financial life looks like. These are difficult questions to talk about in in the abstract. But Fergus, I mean, can you answer the question, how much is enough to retire on?

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It really, really depends, and this, of course, that's the worst answer to an abstract question, on what you want out of your life. To use the sort of cliched fast cars and champagne for breakfast type of scenario, then you need quite a lot. But there's a sort of rule of thumb that you can come up with, a percentage of your investments that you can draw on every year that will give you a measure of both what you can live on and make sure that there's still enough money in the pot. And that's an equation that is relevant for someone who might have a lot, they're hoping, a long period of retirement seniority, if we're not calling it retirement,

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left in their life, you can do that sort of equation, then you can start saying, if this were the Katie Foundation, and this was meant to be a perpetual sum of money, that's the kind of calculation you can reach. So you have all sorts of different people coming into, even in partners and wanting to retire at different ages. Just give us some examples of what successful retirement can look like. Well, we work together on lots of clients, we've got three who we've sort of thought of here who will call Tim for the benefit of the tape, and for simplicity. Are they actually all called Tim? I'd like to think they were. No, neither confirm nor deny. And we have, you know, we've got one who is approaching retirement, and he's worked in a kind of successful industry, and he's been trying to kind of conjure what he thinks the right number is. And then we had another who I think has retired rather early than he might have anticipated. About 10 to 15 years earlier than state pension age. So extremely exciting, has made some brilliant plans, you know, moving house, traveling, etc. But bringing that forward and knowing they can do that with confidence, I think has been really key. Tim, who's just sold his business. Yeah. So Tim, who's coming up to retirement, who has had a long career, you know, long successful career. And part of the work that we've been doing has been around working up the plan, getting it, you know, getting all the ducks in a row to understand exactly what's needed. Then we've had another Tim who has probably retired earlier than he thought he might he his business got sold. So much more than he was expecting. Yeah. And so it accelerated plans. Okay, what's been lovely seeing them is, is getting an email from a new location, you know, every couple of months. You know, we're in a happy stage at this time or another time. Great travel inspiration. I'd like to imagine it's from the deck of a yacht, perhaps. Oh, I don't know. I'm I painting a good picture for this Tim. It almost certainly could be at some point. So there's some great plans. And then the third Tim for illustrative purposes is is kind of much more advanced in his retirement. You know, when he became a client of mine, you know, over sort of 1520 years ago, he was he was already in retirement. But actually what we don't say, though, the role that we've had has been one kind of managing the portfolio investment says that they're an age gap with with his wife and then talking, you know, we met last month to talk about longevity. Yeah. And like, you know, plans have changed, family dynamics have changed. It's how do we then keep that plan flexible and working for them, but also crucially, because of the age gap, not accelerating, you know, certain very generous gifting plans before they've looked after themselves. So really making sure that they are number one in their plan. And then, you know, looking at what that looks like. And then, you know, looking at other options. Interesting. And I suppose, okay, I mean, we've got so older Tim, we've got recently had a massive windfall to him, who's now wanting to retire a lot earlier than you might have expected. And then Tim, who's come to the end of his sort of successful career, but at a more sort of standard, what kind of mid 60s kind of age? Yeah, so three very different scenarios. And I get is there sort of a common theme? Have they all been clients for quite a while? Have you been able to sort of build up quite a good relationship with all three? Yeah, they have. I mean, sort of the the older Tim has been, there's been the client for the longest. But really, I think the sort of the other two have been, you know, for several years. And so actually, you know, where we've become involved in their plans has almost been at these kind of turning point moments, where, you know, there's been the kind of accumulation then the point where life changes where, you know, the kind of wise counsel that Gabriella can provide and say, right, this is what this is what the turning point looks like is, you know, is really is really valuable. And I mean, this seems an obvious question, I suppose. But if somebody suddenly changes their mind, it says, I thought I was going to work until 65. But actually, do you know what, quite like to make that 55. I mean, how achievable is it for people to then sort of be able to turn that around? So that they're probably my favourite meetings. Oh, really? I love it. I love to be able to give people kind of time back and freedom, everything I've been doing for a long period of time and to say, actually, you're in a really great position, off you go. And it gives them confidence. And most often not people don't, they don't, you know, bring retirement forward 10 years, but it's knowing they have that freedom actually, shoulders drop, they know that if they're having a bad day, they can just say, off I go. And it's really powerful. That's probably one of my favourite messages to give somebody in show. I kind of feel like I'd really like you to be my financial planner right now. I fear I haven't done the homework. But you know, I just want to go see Gabriella, she'll tell me I can do anything. Let's just try and in a brief and easily digestible way say, okay, I'm in my 30s. I've got a young family, I bought my first house, hopefully. What should I be doing? How should they be thinking about their retirement or their later life planning? So in your 30s, I would say as your salary increases, increase the amount you're saving for your future, let those savings compound up with growth, let them do their thing whilst you're building your career and whatever you're passionate about. Fergus, any additional thoughts? No, I would reiterate this idea of saving more money you can't spend and allow that to compound over time. Let that pot grow and bubble over. I always think the magic porridge pot.

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Okay. 40s, what should people be doing in their 40s? In your 40s, I think retirement feels closer to some people, especially if you want to ideally bring that forward. So have those conversations earlier rather than later to help you save earlier, to help you plan earlier. There are always things you can do, but I think 40s are a really key area to really plan for that third career, the second career actually in retirement next 30 years. Okay. 50s. Gurns here financial planner, because this is the point at which you can begin to really see the turning point coming. I think it's very abstract in your 30s and 40s, but in your 50s, you can really begin to see that turning point coming where your career might be changing or however it is. And so the importance of having a plan and starting to think about what the future holds in a slightly more granular form. Yeah. And I think, sorry, just to add to that as well, just thinking about it, in your 50s, I think you get very excited about retirement or you can be very excited about retirement. So looking forward to it is also great, but knowing that you've done everything you can do at that point to have the life you want later is great. And then 60s, what should we be doing? Plan those trips. That's what I would say. Plan your trips, plan the cricket trip. Yeah. I think lean into your hobbies, lean into what you love, because that's how you're going to be spending the next 30 odd years and figure out what really makes you tick, because things will change. And I think what you want from life will also change. Fergus, do you think there's a mindset that can be a help and a mindset that's a hindrance when it comes to planning? And how would you describe that? I think a realistic mindset is probably quite a constructive one. And so yes, to this idea of you've got a pot or your aggregated pots of x, this is a realistic return. And this is what we think you could take this out annually. And that will be okay. That should be about okay. And making sure that's aligned with their expectations. I think this point about if you just raise picturing a very different retirement and then having to gently feather in the reality that perhaps they might be flying a bit further back in the plane than they might have envisaged or whatever that detail might be. Gabriella, you mentioned the word curveball. Fergus, tell me, I mean, of course people have curveballs that unexpected things happen in people's lives. What kind of stuff has come across your desk? It can be everything from severe illnesses to peculiarly divorce and later life, which requires a division of assets that was very much not on the agenda. Beforehand, you could have

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troubles further down the family spectrum. So it might be that a child's got divorced or there's been other health considerations. So that will be where large or medium to large sums of capital are required, slightly out of the blue. And those are the kind of situations where actually the number that you were working off suddenly is a third or a half smaller.

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And then you can still do something with that, but it's more challenging, I guess. It is. And you have to... There's this idea of either there's cutting your cloth to fit, which I think is a normal, disciplined conversation to have anyway. Or it's working out, saying, well,

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you're just kind of increasing your risk of something, increasing your risk of a slightly less positive outcome because you have a smaller pot of money. And I don't think there are ever sort of damascene moments for the clients who say, gosh, I hadn't expected that at all. But I think it's having the reassurance to have someone to speak about it, speak to about it. And the idea that you'd be confronting that by yourself would for many people be quite alarming. Again, this idea of you guys being a sort of a wise counsel in not just financial terms, it's very interesting. Gabriela, we talk sometimes about the gender pensions gap. Let's just dig into that a little bit because women often do face a very different retirement reality from men, don't they? Yes. And there are so many studies that I've shown that over the years. And it's actually quite interesting. I think it's closing now for those in their 20s and 30s, but actually, if you look at women currently in their 40s and 50s, actually, that gap is far wider. And I think it's roughly men end up having about 40% more in their kind of retirement pots and plans than women. And hopefully, that's getting better. I think there are,

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there's certainly more awareness about it. But keeping a handle on things, having those conversations earlier, not fearing those conversations, I think is really key to make sure that you are happy and comfortable and taking off that worry that is always kind of niggling at you, I think. It's the classic scenario, isn't it? You've taken a few years out of the workplace, not been earning because you've been having a family and that might be a matter of months or it might be many years, it might be decades. So how do you help women either redress the balance or prepare for that? I think starting with a kind of a, what do we have now and where do we need to be is really important. And reassessing how they see themselves in retirement and applying that reality check that you were mentioning, Fergus, I think is really key to see, is this possible? Is this not? What can we do to try and help and bridge those gaps? And if you're not working, you may not be able to save into a pension.

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Your savings into a pension are very limited compared to someone that is working, but there are other ways in which you can save for a time and that aren't necessarily, we've got different, there are different ways in which you can save. It's interesting, isn't it? Even though here we are well into the 21st century and in marriages, in couples or in families, there's a sense that, well, that's not my responsibility. Somebody else is going to do that. It might be the husband, might be the wife, whichever way around, but there's often a sort of a divvying up of the kind of bureaucracy, the financial admin in a household. I can imagine that could cause some problems at times. I mean, Gabriela, do you see that? I do. And I think being a kind of a female, female financial planner, I think a lot more when I'm sitting in front of couples specifically, a lot more females will kind of engage and open up questions that they may not have asked or they may think are silly questions and there are never any silly questions. But being more engaged, and I think the media at the moment is, it can be very unhelpful at times, but at the moment, there's quite a lot of focus around this. And so women are coming forward and having those questions, but there is, I do certainly see a divvy up in roles in the doer, but engagement at any kind of level is really key, I think. And even if you do delegate, I think just being aware of who to turn to, having your trusted advisor, your trusted person is really key to know that if something does go wrong, who can you go to, your safe place really. So if somebody's watching this and they are still not quite sure whether they've got the time or the energy or they're worried it's going to be a bit stressful or a bit worrying, how would you convince them to come in and talk about their financial future? I think come in, speak to us. We meet people almost daily. So there are no silly questions, it's a judgment free zone and we're very much here to help. And even if you don't know what to ask, we will already know kind of key areas to kind of nudge you on to help. So I think starting those conversations earlier is quite key. And do you think there's anything, Fergus, that people could do just a little tiny lifestyle change that they could do today and it would make a big difference to their futures? It would be, I think if true wealth is having choice, is having options, it would be thinking about money that perhaps you don't need here and now and that you can afford to lock away and building up your base of assets that you can't or you don't spend and you allow the kind of the benefits of long-term compounding growth in wealth. I think that would be a very useful discipline for everyone to practice. And I think that sort of discipline and that kind of sense that it's possible you guys are here to help and that it could make our third chapter, our second career, however we want to talk about what used to be called retirement, that would be just so much more comfortable and stress-free, wouldn't it? So I guess that's the aim. Thank you so much for joining me for today's conversation and thank you to my guests, Financial Planning Director Gabriella Turner and Investment Management Partner Fergus Boyd from Evelyn Partners. If you'd like personalised guidance or want to explore your own retirement plans in more detail, then the team at Evelyn Partners are here to help. There are plenty of ways you can get in touch and find out more. Click the link in the description.

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Thank you for watching and goodbye.