A Guaranteed Retirement Income For Life – This is what most people are looking for in retirement, and there is a tool that can provide this for you, but over the last 15 years, low-interest rates have caused it to fall out of favour.
But with interest rates on the rise, I see Annuities forming the cornerstone of many people’s retirement plans. So what are Annuities, and how can you use them?
🎯 Work with me 🎯
I am a Chartered Wealth Manager providing financial planning services in the UK. If you would like to find out more about working with me, please follow this link: (LIMITED AVAILABILITY)
Compare Annuity Quotes (Money Helper) :
Cashflow Planner:
DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice – James is not responsible for investment actions taken by viewers. Please seek out a regulated advisor if you require assistance (whilst James is a financial adviser, he does not provide advice through this Youtube Channel, which is not affiliated with his employer).
James Shack™ property of James Shackell
Copyright © James Shackell 2023. All rights reserved.
The author asserts their moral right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this channel and any video published on it.
00:00 The Problem
0:52 The Example
02:48 The Solution
4:09 How To Create a Guaranteed Income For Life
6:06 Why Annuities are Better
08:18 How To Use Them Effectively…(read more)
LEARN MORE ABOUT: Retirement Annuities
REVEALED: How To Invest During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
Retirement planning can often be a tricky and daunting task, with many different strategies advocated by professionals. However, there’s one approach to retirement that has been commonly dismissed by many, but is quickly becoming more popular: the “FIRE” movement.
The term “FIRE” stands for Financial Independence, Retire Early, and the movement promotes a strategy that emphasizes saving an incredibly high percentage of one’s income in order to attain early retirement.
At first glance, this approach may seem unrealistic and too extreme. Many critics argue that successfully following the FIRE strategy requires a significant amount of luck, a high income, and a willingness to live frugally, often at the expense of having fun during one’s prime years.
Despite these criticisms, the FIRE movement has gained thousands of followers, along with a growing number of success stories. The movement has become so popular that there are now countless blogs, podcasts, and online forums devoted to sharing tips and success stories.
One of the main principles of the FIRE movement is saving a large percentage of income, often as much as 50% or more. This is achieved through cutting expenses, living frugally, and finding creative ways to save money.
Another important aspect of the FIRE strategy is investing aggressively in the stock market, with the aim of generating significant returns that can be used to cover living expenses during retirement. This requires a willingness to take on risk, but in many cases, this high-risk approach has paid off handsomely for those who’ve followed it.
Perhaps the most appealing aspect of the FIRE movement is the idea of achieving financial independence at a relatively young age, often in their 30s or 40s. This can be incredibly freeing, as individuals are no longer dependent on a traditional career track and can instead focus on pursuing their passions and interests without the stress of a traditional job.
While the FIRE strategy certainly isn’t for everyone, its popularity is rapidly growing as more people are looking to take a more proactive approach to retirement planning. At its core, the FIRE approach is all about living below one’s means, investing wisely, and prioritizing long-term financial goals over short-term pleasures.
Regardless of whether or not you decide to follow the FIRE strategy yourself, the underlying principles it promotes – saving more and investing wisely – are ones that can benefit almost anyone looking to achieve financial independence and a comfortable retirement.
Thank you to everyone who has provideded me with feedback on the Cashflow Planner! I will be releasing a new version with updated features for the new tax year.
No idea what I'm talking about? Check it out here: https://james-shack.co.uk/cashflow-planner
So want to buy an annuity whilst these interest rates are high but I am only 53. Can I use this bond ladder instead? I am concerned interest rates may drop in the next two years. What should I do? My pot is 500k. I can use 40% of this as an annuity with inflation protection and 25% is needed tax free to clear mortgage, with rest invested in VUSA and 3 years of drawdown cash.
Excellent, thank you.
I've just come across your site and am already impressed with your content. Cheers.
Did this a year or so ago. Converted part of my LGPS AVC sum into an annuity and took the rest as a tax free lump sum. This boosted my monthly income to a level which will comfortably pay all my bills with some discretionary spending above that level while allowing me to save/invest the lump sum. It’s provided great peace of mind whatever happens. My Mum is going strong at 96 and Dad died at 91 so avoiding outliving my funds is essential.
I'm about to retire early on a DB pension and was looking to invest a chunk of cash. this sounds very promising. Very informative channel, keep up the good work.
“PRINCIPAL”
What would be the max amount of money in any single Lifetime Annuity? That would be safe.
And if Said insurance company goes belly Up…. ? ( No insurance on these i believe..unlike a US at least.. bank .) .. .with 100,000 FDIC coverage. Am I missing something? Not to mention various Fees and Penalties usually involved.
I'll just work till I drop. Problem solved.
I doubt I would ever buy an annuity – first because I would never voluntarily stop working entirely, and second because a total stock market ETF is always going to make you more money over a 10-year-period. If you have the knowledge and will to manage and monitor your own portfolio, I think you are better off just riding the total market.
It would be nice to know what equities the insurance companies invest in, because after all, they know those investments will yield more than the annuity payments they have to make. Maybe they just buy an S&P500 fund and leave it at that. That's what I do rather than buy an annuity.
I've never understood why you'd take a cash lump sum, surely buying a bigger annuity is better?
Didnt hear you mention the inheritance issue either. when you die, if you have no spouce set up to take the income then that's its game over thanks for playing, the insurance company keeps it all! There are better investment vehicles, Schroders offer a bond that pay a fixed income but keeps the money invested for you, so your capital can still grow and with if your fixed income and it avoids means testing should you go into care etc.
I have often considered putting some of my retirement account into an annuity. I have no heirs, so I am not concerned with leaving anyone money. What I want is to have a guaranteed income for life. My dad is 99 and still kicking. So, my retirement account might not last me my whole life. But an annuity would. It might actually give me more than I would otherwise have had. And if I died early, I still would have lived with a guaranteed income. I don't care what happens to the money when I go.
I just wouldn't get an annuity. I also wouldn't go 60% into bonds, though. Like he said in the video, stocks are almost guaranteed to outperform both. I'd rather stay heavily invested in stocks with 10% or so in cash equivalents +adjusting spending to ride out down markets. That's just much more likely to result in more money for me in retirement and more money for my kids to inherit.
I like your style .. I am 50 and hate working ,lol. I semi retired at 36 . I live in Thailand and work in the UK every year for 3 months as a Carpenter. I have 2 houses that I rent out in the UK and live off the Rent /money earnt working . I have a Personal pension worth about £100k . I am currently Selling one of my houses and will DCA into stocks over the next 2 years . I have a small amount of Crypto ,Silver and gold . I should have £300k invested ,no Debt and a house Paying £700 a month . I will draw off the Savings @4% and spend the rent .. At 60 take the private pension and at 67 the state pension will kick in . If I run out of money I will sell the house at 70 (it's a cheap house £150k) . I arnt working anymore . I Know lots of older people and we simply dont spend much money as we get over 70 .. I have done everything already ,so have no need for a Porsche or 5 Start resort holidays . I can live well on £1500 a month in Thailand .. This should actually allow my money to grow .. Thanks for the Videos .
How can I get access to the famous excel?
Hi James. Love your videos. Why, if life expectancy is lower for men and they (I guess) do more paid working hours over their working life, doesn't their state pension pay out earlier than women? Or how can the Govt justify paying state pension on equal life expectancy?
I’m 52 right now. Looking at retiring at 57 and will have approx £550k in the pension pot by then, plus a property I currently let out which I will sell in my first year of retirement for around £300k (or I might even sell now and add to my pension & ISA)
I will drawdown/ufpls from the pension pot, taking 25% tax free each month. I just can’t see an annuity working for me at all! Maybe, maybe, I’ll take a fixed term annuity for 10 years until the state pension kicks in, but I doubt it…
I am so lucky. 30 k db , state pension to look forward to. Then I have about 400k in my defined contribution. I plan to use that as drawdown so can pass full amount to my wife on death. Then for simplicity I think she may as well get an annuity with it as no children to pass it on to.
I’m currently 34. 20k in pension pot. If my total contributions from now until 60yrs old paying £711 a month. What would my total pot look like at 60?
Just cuz you insure you drive irresponsibly. There is study and experiment proving that.
Annuity is not guaranteed income. Till Friday would you say for 100% credit Suisse will default?
So now u spend your money with Aviva and they default next month. Black swan. But where is guarantee?
one of the main reasons for considering annuitys is that if taken early ie early 60s .It will continue paying out so if you live to 90s thats a long time to get it .Also when paying into pension we did not pay that much in .Its the growth that has made it ie say you have 100k now you have only really put in roughly 25 to 30k so if you have annuity even after 5years they pay you thats your money back every thing else is extra.based on that it makes it a good product and also keeps paying you .I know you cant pass on unless you have fixed term but you can give from the annuity or have other plans like use the lump sum to invest in stock market which pay dividend stocks that way you are in charge of what you do also isas and bonds now paying 4%so adding to them helps
58 now….will be getting made redundant at the end of the year (59 by then).
Will have around 150K (this will include 30k redundancy i will be receiving) the rest will be made up of Pension/ISA/Bonds.
Question is….what the hell do i do??
Hi James, interesting video about annuities. Question and thoughts that I have is why wouldn't you invest in either blue chip stocks like L&G, Aviva, etc who pay a good dividend, take the income and keep your capital? Yes I know these shares go up and down, but in 10 or 20 years time you will still have the capital left. Whereas in an annuity its gone (either when you pass or at the end of a fixed term annuity). Alternatively an IT such as City of London which currently pays a yield of nearly 5% and is spread over several good high yielding shares looks to give a similar return as an annuity but again you still retain your capital. Would appreciate your thoughts as this is what I'm currently considering. Thanks
Hi James. I’ve recently went self employed and have been looking into saving into a sipp for my pension. However I’m still young and with the retirement age going up and up each year I’m worried in 30/40 years if I’ll ever be able to access it and enjoy my retirement as I’ll be too old. I’m looking at possibly saving my pension into an isa and investing it myself, so I have more flexibility on accessing my funds if I wish to retire younger. What’s ur view on this? And have u any advice? Keep up the great work thanks lew.
I wasn't financially free until my 40’s and I’m still in my 40’s, bought my third house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made. Great video! Thanks for sharing!Very inspiring! I love this