Week 9
Future-Proof Your Finances: Stress-Testing Your Wealth and Winning the Money Game

Learn the math behind retirement, explore the 4% rule, and utilise Katie’s retirement calculator to plan your future.

Week 9: Planning for the future

Learn the math behind retirement, explore the 4% rule, and utilise Katie’s retirement calculator to plan your future.

Planning for the future

This week was in 2 parts. Firstly we looked at the maths behind retirement and how the 4% rule works. Secondly we showed you how to predict/build your future and a big part of that was showing you how to use Katie’s retirement calculator!

We also talked about doing things future you will be grateful for. You can’t know the whole path before you start. Get going now and start doing things every single day that future you will thank you for.

Future planning

The general overview of the Rebel Finance School course has been:

  1. Work out where all the money goes and the size of your gap
  2. Take a good look at where you are financially (net-worth)
  3. Work on your money mindset and beliefs around money
  4. Pay off expensive debt and build an emergency fund so you’re ready to invest
  5. Start to talk to the people around you about money and understand each other
  6. Work together to track and measure your finances on a monthly basis (monthly finance meetings)
  7. Learn how to invest the gap you have created between what you earn and what you spend

Once you have started to invest and are seeing your money work for you, you start to ask questions like “if it keeps going like this then will I have enough to retire?” and “how do I know when I have enough money?”

Week 8 of the course looked at the retirement principles and the 4% guideline and then this week helped you work through the retirement calculator that Katie created and work out when you would have enough to retire. Of course to do this we had to make some assumptions (that will be wrong, but guide us along the right path).

4% rule

This week we looked at the maths behind the 4% rule and why it works. The reason for doing all this work was so that you could trust that your money won’t run out in retirement!

Blog post: The maths behind retirement

Assumptions

Here are the assumptions you need to go through to get to grips with predicting a retirement date.

  • Growth rate – how much you think your stocks and shares will grow by. Financial advisors use 7%. We tend to think it will be more than that and use 10%
  • Inflation rate: on average in the UK this has been 2.73% over the last 30 years
  • You won’t die before you retire. Please look after your health! You won’t miss it until it is gone!
  • How much you will earn.
  • How much you will spend pre and post retirement. We have split this out as most people spend less later in retirement.

The retirement calculator

I lost Katie for a few days and she built a retirement calculator from scratch! I am still in shock of how she did it and how well she did it!

Your job is to have a play and use it. Play with the numbers. If you spend £1000 less a year, what does that do to your retirement age? What about if you earn £1000 more or got 1% better returns? How does this all affect your date?

Creating the future

After you have had a play with the retirement calculator and made some assumptions and predictions then the next step is to get on and build the future you want.

Alan loves to repeat on his podcast “The Extraordinary belongs to those that create it”.

What I have come to realise that the extraordinary is rooted in the mundane daily actions we take… setting up the direct debit to invest £100 into your SIPP each month… cancelling Netflix and investing the money instead… forcing your pension provider to give you answers(!)

None of these things are particularly sexy or exciting but they are the steps that build your future. It is the mundane daily actions like ringing your pension provider and forcing through the pain of getting them to transfer it that changes the course of your future.

Time for the homework for this week!

Week 9 homework

This week there are a few things to do on the homework front which will help you get closer to having your finances in order and to keep tracking your progress!

As Katie has been telling me for years homework is FUN FUN FUN! Or it can be. Find a buddy to do this stuff with, make a nice cup of tea, maybe have a hobnob (international friends who have no clue what this means click here!) and let’s enjoy working on your financial future. Sometimes I have to take a deep breath before I make phone calls to financial providers but I know that these actions are what I need to do to create the future I want!

Let’s make this happen!

  1. Play with the retirement calculator – test different scenarios and note the results. Go and have a good play! If you get confused, there is a detailed description below the calculator of what all the terms mean, what the limitations are and what assumptions we had to make. If you are still confused after reading this, reach out in the FB group for help.
  2. Get your existing investments in order. Consider if it’s worth moving over to different funds and/or a different platform. The best way to do this is to create a simple table of the investments which shows you:
    1. What funds are they invested in?
    2. What are the fees?
  3. Schedule in the next monthly finance meeting – this should be in your calendar already!?? Where are you going to do it and how can you make it pleasurable?

Community

Community is so important. Surround yourself with people that are working towards a similar goal to you and you’ll be amazed what you can learn from each other. For those of you in the UK I wrote this article for you about the FIRE movement in the UK. There are good people out there who want to support you and help you! And obviously there are the amazing people in the Rebel Finance School Group as well! If the people closest to you aren’t supporting you as much as you would like on this journey then find people who will.

The Donegans are cheering you on!

Week 10 of Rebel Finance School

We have a last section of content for you, including starting to think about what you want life in retirement to look like. We’ll also have a celebration and culmination of all that we’ve been talking about for the last 9 weeks. Can you believe it’s been 9 weeks?! One more week y’all! Looking forward to it already!

Plus we have a HUGE HUGE HUGE special guest star coming next week to chat to you all and hang out. One of my favourite people in the world!

Ask for help

​If you have emailed us asking for help and we haven’t replied, we’re not ignoring you! We have been inundated with emails asking for help. Sorry. We are working as hard as we can but there is only so much of us to go round!

Remember to reach out in the Facebook group with any questions you have or if you get stuck. Don’t let confusion be an excuse for not progressing with this stuff. We are here to support you!

Financial Forecasting

For Rebel Finance School 2022 we did a bonus week all about forecasting your financial future. No calculator is perfect (sorry Katie) so if you want to work out the details of your particular personal situation (e.g. the split of your investments between ISA and SIPP) and really chart out your own course you need your own spreadsheet / model.

This workshop helps you create that. Watch the video here!

The Sacred Order of the Rebel Pineapple

Last night we did a ceremony to thank the incredible Rebel Ninjas who have helped us to run the course throughout the last 9 weeks and into the final week next week. They have tirelessly answered questions, helped us write articles, managed Q&As and managed the YouTube comments. They are our Knights, Lords and Ladies of the Sacred Order of the Rebel Pineapple.

They are amazing. If you get a chance send them a thank you note. This course would not have been what it is without them! THANK YOU

Bonus content to tidy up!

What was your wealth-building rate last month?

*If this is confusing or overwhelming please leave it. All will become clear as we go through the course together*

This is covered by Part 2 of the How Big is your Gap calculator.

It’s all very well having a gap, but what are you actually doing with it? We want to track that to know how much you’re using to look after future you. This is the wealth-building rate.

Read this article to help you understand more about what we mean by the wealth-building rate

You work out your wealth-building rate by comparing how much you are putting towards building wealth with how much you earn.

What does building wealth mean?

  1. Putting money in your emergency fund
  2. Buying assets (not sure what this means?! Hang fire for weeks 6-8 of the course)

For example, you earn 3,000 after tax. You put 300 in your emergency fund.

Your wealth-building rate is 10% (300/3,000)

You don’t need to do any of the maths if you don’t want to. The calculator works this all out for you.

Why are we bothering with any of this?!

Your wealth-building rate is directly linked to how long it will take you to get to retirement. We’ll cover this more when we come on to FIRE principles in week 8. If you’d like to read ahead now check out this article by Mr Money Mustache.