Title: Rebel Finance School 2026 — Week 9 Monday Transcript
Session: How Much Do I Need to Retire? | Rebel Finance School 2026 Week 9
YouTube Link: https://www.youtube.com/watch?v=QlK6AlikAdo
Course: Rebel Finance School 2026
Creators: Alan Donegan and Katie Donegan, Rebel Donegans
Canonical page: https://rebeldonegans.com/finance/rfs/course-notes/week-9/
Course hub: https://rebeldonegans.com/finance/rfs/course-notes/
Website: https://rebeldonegans.com/
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Copyright © Rebel Donegans. All rights reserved.
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Attribution:
If quoting or referencing this transcript, please credit Rebel Finance School by Alan and Katie Donegan and link to:
https://rebeldonegans.com/finance/rfs/course-notes/
Disclaimer:
This is financial education, not financial advice. Rebel Donegans are not regulated financial advisers. You are responsible for your own financial decisions.

YouTube Description:
Week 9 of Rebel Finance School answers the question that keeps people up at night: how much do I actually need to retire, work less or make work optional?

Alan and Katie Donegan break down the maths behind your personal Freedom Plan. You will learn how to price the life you want, allow for income starting at different ages, work out what your investments need to provide and explore the 4%, 4.5% and 5% Burn Rates.

We also show you how much freedom your current investments may already support, why freedom is not binary and why some of your Freedom Fund may need to be accessible before pensions or retirement accounts become available.

By the end, you will:

• Know how to build a personal Freedom Fund range based on your spending and future income
 • Understand the Robust, Balanced and Flexible Burn Rates
 • Measure the freedom you have already bought
 • Understand income phases, bridges and what may need to be accessible
 • Know which numbers to bring to the Freedom Calculator workshop

Your numbers are information, not judgement. Find the blue dot and choose the next move. 🍍

This video is part of the free 10-week Rebel Finance School course. For the accompanying notes, spreadsheets, and bonus material, sign up here: https://rebeldonegans.com/finance/rfs/

Join the Facebook group for friendly support from like-minded people:   / rebelfinance  

🔗 Links 

Burn Rate Tool https://rebeldonegans.com/finance/res...  

Workshop transcripts: https://rebeldonegans.com/finance/rfs... 

Week 9 AI prompts: https://rebeldonegans.com/finance/rfs... 

Disclaimer: We are not financial advisers 💼 This is not financial advice 💰. We are not regulated. We are not regulated financial advisors 🎓 We are never going to try and sell you any investments🛍️ You make your decisions 💭 Sharing our opinions and ideas 💡 These ideas may not continue to work for us or for you. You are 100% responsible for your financial future 💸 There are no guarantees here. For our full disclaimer, please visit: https://rebeldonegans.com/about-us/di... 

#retirementplanning   #FinancialIndependence #RebelFinanceSchool #PersonalFinance #FinancialLiteracy #RFS2026

Transcript:
Chapter 1: Introduction and review
0:011 second Welcome to Rebel Finance School week nine. If you've made it this far, you deserve a round of applause. Give yourself a round of applause for making
0:099 seconds it this far through the course. And this is a super exciting week cuz over the last weeks, eight weeks, you've done a
0:1717 seconds ridiculous amount of work. You've worked out your spending, your net worth, you've shifted investments. You have
0:2525 seconds done an insane amount of work to improve your finances which we are super impressed by and perhaps some of you haven't done any implementation yet and that's okay.
0:3535 seconds Perhaps you've been here listening, absorbing and learning a few bits as well.
0:3939 seconds Some of you have opened accounts and changed funds and fees. Some of you have been searching for old pensions and we had a fantastic message this week um
0:4848 seconds from a gentleman who said that he'd found a 30 grand pension that he didn't know about. Uh then he was pestering his
0:5757 seconds wife to do the same work. Uh find a pension, find a pension, find a pension.
1:021 minute, 2 seconds His wife went out there and did it and she found 120 grand pension. So, they had a little celebration with a dinner to celebrate finding money they didn't
1:111 minute, 11 seconds even know about. Um, so if you haven't done that piece of the homework, please search for old pensions cuz you never know what magic money is just waiting for you out there.
1:201 minute, 20 seconds Why have the people been doing this, Alan? Is it because we can like to like stroke our spreadsheets and things like that? What's going on?
1:261 minute, 26 seconds Uh, to build the freedom fund to buy freedom is the entire purpose of this course. And that brings us on to the big
1:351 minute, 35 seconds question. I'm sure you're all wanting to know the answer to which is can I retire yet? Am I done? Can I retire? But is
1:441 minute, 44 secondsthat actually the question, Katie? I want to strike that question out. That's not really the question that we want to ask. The question is that makes it sound
1:521 minute, 52 secondsso binary, doesn't it? The question really is not can I be retired? Yes. No.
1:561 minute, 56 secondsOr what freedom have I already got? What does freedom look like for me? And we want to broaden that question out. So it's not a yes, no switch. I'm retired
2:042 minutes, 4 secondsor I'm not retired. It's what life do I want to build towards and how far of the way there am I already?
2:092 minutes, 9 secondsSo let's start with a question. How much money do you think you need to be able to stop work and retirement? What do you
2:172 minutes, 17 secondsactually need? We would love answers in the chat. Are you like do I need 250 grand? Do I need 500 grand? Do I need a million? Do I need 5 million? If you've
2:262 minutes, 26 secondsgot spending habits like Wes and Kim, maybe maybe 10 million. Who knows? Like or maybe you've got no idea. We'd love
2:332 minutes, 33 secondsto know. What do you think? How much do you need to be able to retire?
2:382 minutes, 38 secondsAnd I'd love you to put your instinctive answer, not kind of a calculated answer that you might have heard along the way.
2:432 minutes, 43 secondsIt' be interesting to know or perhaps even before you came on Rebel Finance School or learned some of these concepts. What did you think you might need to retire? How much did you think you might need?
2:542 minutes, 54 secondsCuz the true answer is it depends. God, I sound like a consultant when I say I don't know. It depends.
3:013 minutes, 1 secondDon't know we're going to say that tonight. It depends on the life you want to fund. That's what it depends on. How
3:083 minutes, 8 secondsmuch money do you want to spend in the future for your retirement? That's the key bit.
3:133 minutes, 13 secondsAnd we've been working along these past few weeks to gather the ingredients to know the answer to these questions that we're going to answer tonight. So, back
3:223 minutes, 22 secondsin week one, all those many weeks ago, we looked at your current spending and your gap. And week two, we talked about your freedom fund, your net worth, and
3:303 minutes, 30 secondsthen we looked at where your investments are and some of your future income. And we went through all of those details.
3:373 minutes, 37 secondsWell, tonight is the payoff for all the wax on, wax off training you've been doing over the last nine weeks. Yes, you
Chapter 2: Planning principles
3:453 minutes, 45 secondsget to actually put it into implementation and use the crane move whilst we're doing this. If you don't know what I'm talking about, please
3:533 minutes, 53 secondswatch uh Mr. Miyagi and Karate Kid because it is phenomenal. But we've had the whole map and we've got the journey
4:014 minutes, 1 secondto freedom island, the create the gap, invest the gap, buy the freedom. Well, tonight's about measuring the freedom
4:084 minutes, 8 secondsyou have and building a plan to buy more. We'd love to know, none of this is about the money. This is about using
4:164 minutes, 16 secondsmoney as a tool to buy that freedom, to buy the life that you're building towards. Well, why? Why are you buying that freedom? Is it time with your
4:234 minutes, 23 secondsfamily? time to look after your health, to go on adventures, to be able to volunteer and contribute, to have more choice. Just I don't really know yet. I
4:324 minutes, 32 secondsjust like the choice that I don't have to work if I don't want to. What are you actually buying? Cuz for us, when we thought about what we were buying, it
4:404 minutes, 40 secondswas a life of contribution. It was a life of travel and adventure. It was a life of experiences and memories and
4:484 minutes, 48 secondstime with the people we loved and time to volunteer our time to help other people. That was what it was all about.
4:564 minutes, 56 secondsSo like why are you doing this? What's the life you're buying? What are you doing this for? Yes, I actually want to
5:035 minutes, 3 secondsknow your answers. Please tell us. And if you're on catchup, we want to know because this is the motivation or the juice that
5:125 minutes, 12 secondsgets us to get through the maths and do what we need to do to set ourselves up.
5:175 minutes, 17 secondsLeanne says, "Travel and golf." Uh there was another one that says, "More time to volunteer, less time working, less
5:245 minutes, 24 secondsalarms. How write my novel." I love that.
5:275 minutes, 27 secondsI love that. But that's the reason that is the goal of all of this is to be able to live the life that you want to live.
5:375 minutes, 37 secondsSo tonight you will discover or we will work out is probably a better term. It's not going to be revealed.
5:455 minutes, 45 secondsNo, I'm not going to reveal uh what's the life you want actually costs. So how much does it cost to live the life you
5:525 minutes, 52 secondswant? What size freedom fund might support that life? because the life cost this, how much do you need invested to
5:595 minutes, 59 secondsbe able to support it, how much freedom you already have, and then what could help you buy more. And please remember
6:076 minutes, 7 secondsas we go through this, your numbers are just information. They're not judgment.
6:126 minutes, 12 secondsThey're just information. And if you don't like the numbers, we just find where you are, choose the next action, and help you to improve from wherever you are.
6:216 minutes, 21 secondsWhat's this blue dot thing? The blue dot on the map. Got you.
6:246 minutes, 24 secondsIt shows you where you are. It's like the GPS dot. You know when you open Google Maps and it's like you are here.
6:296 minutes, 29 secondsThen you can choose the next destination.
6:326 minutes, 32 secondsI thought you were going to go old school and mention TomToms and satnav then.
6:366 minutes, 36 secondsNo, I'm not that old. If you don't know what a TomTom is, ask your parents.
6:406 minutes, 40 secondsOkay, tonight the numbers start to turn into time because this is the whole purpose of this is money buys back time.
6:486 minutes, 48 secondsBefore we do that, quick message from our lawyers. I wish we had lawyers. We don't have lawyers, but if we did, they'd look like this. This is not financial advice. We are not financial
6:566 minutes, 56 secondsadviserss. We are not regulated. We will not sell you investments. You make your own decisions. We're sharing our opinions and ideas. These ideas may or may not continue to work for us or for
7:037 minutes, 3 secondsyou. You are 100% responsible for your financial future. Yes, even you, Alistister. There are no guarantees here except the money back guarantee.
7:157 minutes, 15 secondsIf you don't like the course, please see Derek for a full refund. If Derek has eloped, you can check out Mark F. He'll be next in line. uh your investments can
7:237 minutes, 23 secondsand will go up and down in value. Uh also, we do not choose the adverts on our YouTube channel. Uh sorry if you had
7:307 minutes, 30 secondsto watch a dodgy one. If you're watching on Zoom, please use the Q&A button to ask Q&As's of the ninjas. That will
7:397 minutes, 39 secondshelp. If you're on YouTube live or catch up, put it in the comments and have a chat. And if you're on YouTube, please give us a like and subscribe. It gives
7:487 minutes, 48 secondsme a tingle and helps the YouTube gods know that we're amazing. You're all about the tingles, Alan.
7:527 minutes, 52 secondsOkay, Katie, why are we cutting out at this point?
7:557 minutes, 55 secondsUm, we notice sometimes a lot of you are excited answering questions as we go, asking questions, excuse me, as we go along. And what we'd love to say to you
8:038 minutes, 3 secondsis please make sure you listen to the content as well because often what we're saying is perhaps answering the questions you might have. So, I know you
8:108 minutes, 10 secondshave burning questions and we might just be answering it in what we say.
8:158 minutes, 15 secondsExactly. Now, tonight, it's like learning a new language. There will be lots of new terms. Don't expect to be
8:238 minutes, 23 secondsfluent in the first go. And there will be numbers. We have a number warning.
8:288 minutes, 28 secondsKatie gets excited. To the rest of you, please remember to breathe and we can work this out slowly
8:368 minutes, 36 secondstogether. You can always pause, you can rewind, you can watch on catch up as many times as you want because the speed with which we're delivering this
8:448 minutes, 44 secondsinformation is not necessarily the speed at which you are able to absorb and digest it. It takes multiple times to take in new concepts. So just use that
8:538 minutes, 53 secondspause button, come back, rewatch, and we've got some tips and stuff for you later on as well as to how you might do that.
9:019 minutes, 1 secondThe plan for today. So here is the full plan what we're going through. Number one, price the life you want to live in the future. How much does it cost?
9:099 minutes, 9 secondsNumber two, map out any potential future income like a state pension or superanuation, something like that.
9:189 minutes, 18 secondsThree, how much will it cost? Like what's the range of size of freedom fund you need to be able to live that life?
9:279 minutes, 27 secondsThen it's about choosing your burn rate.
9:309 minutes, 30 secondsAnd we're going to explain exactly what that means as we go. Then we're going to measure the freedom you already have, like how much have you already bought
9:379 minutes, 37 secondsbefore then connecting the phases. So in three, we mapped out future income. And then we're going to show you how to connect the phases with what we would
9:459 minutes, 45 secondscall a bridge. And finally, finally choosing the next move because there's lots of options and levers and controls that you can pull and play with to change the outcome.
9:569 minutes, 56 secondsAwesome. Now, let's get straight into this. We're going to do one, which is price the life. What does the life you want actually cost? Because before we
Chapter 3: Pricing the desired life
10:0410 minutes, 4 secondscan tell you the size of the freedom fund, you've got to price the life. And you've already started doing this because you've already started thinking,
10:1210 minutes, 12 secondswhy are we here and what am I currently spending? You looked at what the future might look like. Week five, we spoke about putting the vision at the front of
10:2110 minutes, 21 secondsyour monthly finance meetings. And the purpose is to give your vision of the future a number. So it's all about the
10:2910 minutes, 29 secondslife that you are working towards. How much does that cost? And the idea is to do that in today's money. Ignore
10:3710 minutes, 37 secondsinflation. And you might be thinking, hang on, Katie. I might my future life that I'm building towards 20 years away.
10:4410 minutes, 44 secondsI don't know what that will cost in 20 years time money. Well, the maths allows for that. So just ignore inflation.
10:5110 minutes, 51 secondsWe'll explain more on Thursday and next week as well. Just ignore that. Today's money only. And that makes it so much simpler. And also, we're going to some
10:5910 minutes, 59 secondsof the examples cuz they're British examples. We got pounds. You can just replace any currency with your own currency. The maths is exactly the same.
11:0711 minutes, 7 secondsSo, if you're in dollars or euros or Colombian pesos, the answers, the maths is all the same. Now, first off, quite
11:1511 minutes, 15 secondsoften the financial advisers will tell you like take your salary and then work out how much of that you want in retirement. Well, we don't think that's
11:2311 minutes, 23 secondsa good way of doing it. your salary is not the number you should be looking at because hopefully you've decoupled
11:3011 minutes, 30 secondsincome and spending and your spending is the number we actually want to start with.
11:3611 minutes, 36 secondsYou might be thinking, well, I don't really know what that's going to cost.
11:3911 minutes, 39 secondsWell, a really good starting point is what you're spending now. That's what we looked at in week one. And perhaps because you've only just started
11:4711 minutes, 47 secondstracking your spending, you don't know what a full year is going to cost. Well, just make your first best guess. take your monthly spending and times it by 12. That's a really solid first guess.
11:5711 minutes, 57 secondsAnd as you do more and more monthly finance meetings, you're going to start to build the data to know how much your life costs.
12:0412 minutes, 4 secondsExactly. And your current spending is the evidence of where your money is going and gives you an idea of what you
12:1012 minutes, 10 secondsmight actually spend. Then from there, we can then start to go, well, what might genuinely change or end? So, if
12:1912 minutes, 19 secondsyou go from working to not working, what might change? And this is one of the most disturbing photos we've got in the
12:2512 minutes, 25 secondsdeck of Katie uh on Southwest trains. I had to use AI to do it cuz I don't have a photo of that.
12:3112 minutes, 31 secondsUm, but you might stop commuting and for the trains up to London, that was £500 a month. That would be gone back in the day as well. I'm sure it's a lot more than that now.
12:4112 minutes, 41 secondsUh, you might stop buying work clothes.
12:4312 minutes, 43 secondsYou'll stop contributing to your pension. maybe child care costs evaporate, other work rellated costs uh
12:5012 minutes, 50 secondsor mortgage payments might end to which people say I still have a mortgage and
12:5912 minutes, 59 secondsKatie and I say back say it and then the other person says well I can't retire without a mortgage can I
13:0813 minutes, 8 secondsto which we say your mortgage does not stop you retiring having a mortgage does
13:1513 minutes, 15 secondsnot stop you retiring. An unaffordable life stops you retiring. So, we've got a different test. We call it the can I retire test.
13:2513 minutes, 25 secondsSo, the question is not have I paid off my mortgage. The question is can my freedom fund support the life I want to live which might include my mortgage payments if I still have them.
13:3513 minutes, 35 secondsIf yes, then you are finished. If no, then you are not. So, it doesn't matter if you've got a mortgage. A mortgage is
13:4213 minutes, 42 secondsirrelevant to whether you can finish or not.
13:4513 minutes, 45 secondsNow, when you actually get to retirement, there are actually occasions where you might want more things. You might want to spend more money on
13:5313 minutes, 53 secondstravel, eating out, breakfast, burritos, hobbies, experiences, family time, and support, health and fitness, learning,
14:0114 minutes, 1 secondgiving. Maybe you want to take the grandkids to Disney World. Uh, just for clarity here, we are the grandkids in
14:0814 minutes, 8 secondsthat final example. If you ever want to take us to Disney World, please send us a message. We would love to go with you.
14:1414 minutes, 14 secondsOkay, the next little bit is cars don't last forever. Uh, so there is going to
14:2114 minutes, 21 secondsbe some lumpy expenditure in your future. Maybe you've got a flat roof and you know it lasts 12 years or 15 years.
14:2914 minutes, 29 secondsWhen does it need replacing? Your boiler, laptops, uh, big dental work, big trips, a home repair, a replacement of something.
14:4014 minutes, 40 secondsYou have to spend money at some point.
14:4314 minutes, 43 secondsAnd kind of the summation of this bit is no year is normal. There's no average
14:5014 minutes, 50 secondsyear cuz some years you buy glasses, some years you don't, etc., etc. And you might spend a certain amount one year and then the next year you're like, "Oh,
14:5814 minutes, 58 secondswe had to get a boiler replacement and we increased our spending." And then the next year someone turned a birthday with zero and you had a big blowout. And then
15:0615 minutes, 6 secondsthe next year you have a reactionary year of like, oh, we spent a lot last year, I'll spend less. And what we're kind of looking to do is find out an
15:1515 minutes, 15 secondsaverage of what that might cost you in retirement cuz that we can plan from. So to bring this all together, so your the
15:2315 minutes, 23 secondsamount you want to spend in retirement or when you stop working is going to be your current annual spending. Take away anything, any costs that genuinely are
15:3115 minutes, 31 secondsgoing to end and then add in any new costs for the life you want and those irregular replacements, bigger costs,
15:3915 minutes, 39 secondswhich actually as your data that you have of your spending grows, those irregular replacements will start to be
15:4615 minutes, 46 secondsincluded in your current annual spending because you'll know every few years you're buying a new not a new car, a car that's new to you, buying a replacement
15:5415 minutes, 54 secondscar, you know, but all those bigger purchases, you're going to start to have the data So you don't necessarily need to add them in on top as you start to
16:0216 minutes, 2 secondsbuild this picture and understand your spending habits.
16:0416 minutes, 4 secondsNow to kind of show this, let's say your current spending is 40 grand a year. Uh you stop commuting and you save six
16:1216 minutes, 12 secondsgrand a year. That's quite possible with the price of Southwest trains. Uh and then you you actually go, well actually I want to spend more on travel. I want
16:2116 minutes, 21 secondsto spend more on funds. So you add in a bit more and you've got some irregular replacements like you want a new phone and laptop and you go actually my
16:2816 minutes, 28 secondsdesired spending afterwards well I'm right back at where I started. I want to spend 40 grand a year in retirement.
16:3716 minutes, 37 secondsBut that's the key. Then a very important step that we'd love you all to do is to split that yearly amount in two.
16:4516 minutes, 45 secondsessential spending, which is house, food, bills, basic transport, health, like your minimum
16:5316 minutes, 53 secondscommitments, and then the flexible spending, the good stuff, cuz this is the bit, you know, like, oh, you can
17:0117 minutes, 1 secondflex it if you need to. So flexible spending, extra travel, eating out, upgrades to life, gifts, hobbies,
17:0817 minutes, 8 secondsoptional experiences so that we can see how flexible you are in terms of your spending depending on
17:1717 minutes, 17 secondswhat happens in the future. So for an example, say your overall spending is 40 grand. Perhaps your essential spending is 28 of that and your flexible spending
17:2617 minutes, 26 secondsis the remaining 12. And you can see okay, 30% of my spending is flexible. So that you know if things happen, if you need to adapt, how you could change
17:3517 minutes, 35 secondsthat. And the key here is could you actually genuinely change it. And that's just where you need to look through and
17:4217 minutes, 42 secondsthink which of these if I needed to could I reduce or eliminate?
17:4817 minutes, 48 secondsAm I really willing to give up Netflix or whatever it is for you? That's the thing. Pizza.
17:5517 minutes, 55 secondsYeah. So the key is we just want your first best estimate. What do you spend now? What genuinely stops when you
18:0318 minutes, 3 secondsretire? And what would you want to add in? What irregular spending is missing?
18:0818 minutes, 8 secondsAnd then what is the percentage that's essential or flexible? That kind of gives us an idea of the lifestyle you
18:1618 minutes, 16 secondswant to fund in retirement and how flexible you are in retirement. And it's different for all of us. I love the
18:2518 minutes, 25 secondscomment on YouTube. L says, "I want to foster children. And it's like, well, okay, if you want to foster children,
18:3218 minutes, 32 secondsthen let's price that in. You get a little bit back for fostering, and then I assume it will cost you a lot more to pay for hungry young people's foods. So,
18:4118 minutes, 41 secondslet's price that in and work out what that life costs and help you to create it.
18:4718 minutes, 47 secondsAnd the key with all of this is not to compare your pineapples to run your own retirement. I really enjoy these
18:5418 minutes, 54 secondspineapples. I thought it was a bit creepy cuz the pineapple has pineapple legs. I thought that was weird.
19:0119 minutes, 1 secondThey've got pineapple. I think the one in the background's got a pineapple garnish, which is a little bit cannibalistic. But let's move on, Alan.
19:0819 minutes, 8 secondsOkay, your freedom fund is built to support the life, but it may not need to support all of
19:1619 minutes, 16 secondsit. Which brings us on to the second part of the plan for today. We've done how to price the life. Now, we're going
Chapter 4: Mapping future income
19:2419 minutes, 24 secondsto talk about mapping income. So, where does future income come from? Because
19:3119 minutes, 31 secondswe've got to work out how much must your freedom fund or your investments provide for you, but that freedom fund might not have to do all the work. And what do we mean by that, Katie?
19:4019 minutes, 40 secondsWell, there's a simple way to work this out. So, we've just been working on working out what your desired annual spending is. You might have income from
19:4919 minutes, 49 secondselsewhere. We'll come on to what that could mean. So then the bit that's left is what your investments need to cover the spending from the investments. So
19:5819 minutes, 58 secondsfor an example, say you want to spend 40 grand a year, you've got 10 grand income coming from whatever sources will come on to that leaves 30 that your freedom
20:0620 minutes, 6 secondsfund needs to cover. That's the equation. Uh what income can you reasonably expect? or some incomes
20:1320 minutes, 13 secondspromised or dependable such as the state pension, social security, superanuation, that thing you get at age 68. You can
20:2220 minutes, 22 secondsdepend on that. There might be you might have a defined benefit or a final salary pension or you might have a rental
20:2920 minutes, 29 secondsproperty that gives you an income every single month or other type of income later on. Then you might have stuff
20:3820 minutes, 38 secondsthat's a bit more flexible or not perhaps as dependable. Like maybe you do some part-time work or some consulting.
20:4520 minutes, 45 secondsMaybe you have a business that you think might be providing an income for you once you stop working in it. Maybe some side hustles or the gig economy where
20:5220 minutes, 52 secondsyou drive an Uber a little bit or ride your bike and delivery.
20:5820 minutes, 58 secondsYeah. Or maybe you Airbnb out your spare room because you like to meet people in retirement. Whatever it is, it doesn't matter. The point is money comes from
21:0621 minutes, 6 secondsdifferent places and for each income source we want to know how much is it a year do you think you'll get and you can
21:1421 minutes, 14 secondstell very clearly for the state pension it's £12,500 a year if you've got all the if you have all the years
21:2221 minutes, 22 secondswhat age does it begin so when does that income begin when does it end
21:2821 minutes, 28 secondssome end when you expire like the state pension some you go I'll work part-time for 3 is and that's it. Uh and then is it promised or is it optional?
21:3821 minutes, 38 secondsI just want to do one little caveat like is the state pension didn't exist? We talked about that in the UK on last time and was saying you can flex that
21:4721 minutes, 47 secondsassumption depending on what you think is going to happen. But if you're 60, you're probably going to get it. If you're listening to this and
21:5521 minutes, 55 secondsyou're 9 years old, we have a little bit more doubt as to whether it'll be there when you get there. But it changes over time. So, there's two types of
22:0322 minutes, 3 secondsretirement income. There's the income promised stuff, which we're talking about now, where they promise to pay you X a year, and there's your investment
22:1022 minutes, 10 secondspot that you're responsible for. The bit we're looking at the moment is the income promise stuff. And we're going to
22:1722 minutes, 17 secondstry and map it out because it doesn't all start on retirement day.
22:2322 minutes, 23 secondsSo, as you march on through life to expiration to expiration, uh your state pension
22:3022 minutes, 30 secondsmight come in at 68. Uh your SIP might come in at around 58. It's normally 10
22:3722 minutes, 37 secondsyears minus your state engine age roughly. So, these are my ages. 68 for my state pension, 58 for my SIP, and maybe you want to stop working at 55.
22:4822 minutes, 48 secondsWell, to get between those points, you need if you wanted to actually stop working at 55, you need accessible
22:5522 minutes, 55 secondsinvestments to get you through until that first SIP or pension comes available. And then that pension and the
23:0323 minutes, 3 secondsaccessible stuff has to get you through to the state pension. And that's the kind of bridging bit between the pieces.
23:1123 minutes, 11 secondsWe're going to meet Roger. Roger is our example that we've got throughout today's session to help to make this concrete. So, let's say that Roger is
23:1923 minutes, 19 secondsmarching on through time. He decides he would like to go part-time at age 55.
23:2523 minutes, 25 secondsHis he has a DB pension that starts at age 60, which is when he wants to fully retire and stop doing that.
23:3223 minutes, 32 secondsAnd then his state pension will come at 68. So, he's got these three different phases, the three different incomes that
23:4023 minutes, 40 secondsare going to be happening at those different ages.
23:4323 minutes, 43 secondsYes. And you might well have three different ages or phases that you go through. So age 55 to 59, Roger wants to
23:5223 minutes, 52 secondswork one day a week. Earns him 8 grand a year, but he's spending 40.
23:5923 minutes, 59 secondsSo his investments or his freedom fund have to cover 32 grand a year, his deficit for that period. Make sense? You with me? Please nod if you're with me.
24:1124 minutes, 11 secondsOkay, three people nodded. Duncan didn't I'm a bit worried about him. He's sleepy. He's sleepy. He's tired.
24:1824 minutes, 18 secondsAnd then Okay. So then when thumbs up from when Roger gets to 60, he decides he doesn't want to do that part-time gig anymore. He wants to stop working
24:2624 minutes, 26 secondscompletely. And his pension kicks in. He gets four grand a year. He's spending 40. So now his investments need to cover
24:3424 minutes, 34 secondsthe remaining 36 grand because he's not working anymore. He's not doing his part-time work anymore. So his investments need to cover more of his life.
24:4324 minutes, 43 secondsThen he gets to 68. Yeah.
24:4524 minutes, 45 secondsUh his DB pension is cons continuing because it goes all the way to expiration. Uh and his state pension kicks in. So suddenly he's got another
24:5324 minutes, 53 secondssum per year that helps. So he's got now got income of 16 12 grand. And if he still wants to spend 40, that means his
25:0325 minutes, 3 secondsinvestments only have to cover 23 by this point. And you might need less money later on because of those different phases.
25:1225 minutes, 12 secondsSo we just map this out in one table to help you to understand because you've got this one life. You've got one freedom fund trademark. It's not a
25:2025 minutes, 20 secondstrademark. We're thinking of asking the world for a trademark. But these different phases that happen over different ages depending on this income
25:2825 minutes, 28 secondsthat come and comes and goes. And this is what we're going to get you to think about as well. So that phase where he's going to do some part-time work, the
25:3625 minutes, 36 secondsphase where his defined benefit pension kicks in, and then later when his state pension kicks in. It's just a way to start to clearly think about, okay,
25:4425 minutes, 44 secondswhen's the money going to start to come, what ages, and then we can start to build the plan around that.
25:4825 minutes, 48 secondsExactly. Cuz the amount you need from your investments changes over time. It is never one flat number. It's never
25:5725 minutes, 57 secondsjust one number that lasts forever. So, we want you to have a go at this. So, we'd love you to go, well, what income
26:0526 minutes, 5 secondsmight support you in retirement? And you write out your desired spending, uh, whatever the number is for your
26:1426 minutes, 14 secondsdesired spending, and then your income source, the start date, the end date, the amount it is, and then what is left
26:2326 minutes, 23 secondsfor your freedom fund to cover for that period. So, for example, say you're going to do some part-time work. So, that's optional. You think you'll do it
26:3126 minutes, 31 secondsbetween the ages of 60 and 65. Earn 12 grand a year. So, you're earning a grand a month. And then, so your investments need to cover the remaining 18. So,
26:4026 minutes, 40 secondsyou're earning 12, you want to spend 30, I need 18 from my freedom fund. Some people love the job they do and they
26:4826 minutes, 48 secondswant to keep doing it part-time. Some people hate the job they do and never want to work again. So don't have that line if you don't enjoy doing it. Okay.
26:5826 minutes, 58 secondsThen you got your state pension. Well, that's very dependable. Age 68 until expiration. I get 12 1/2 grand a year.
27:0527 minutes, 5 secondsSo I've got to cover 18 and a half from my freedom funds. And it's just a way to clearly see what you need at different phases of life.
27:1427 minutes, 14 secondsAnd if you have other lines, you can start to fill in this whole table.
27:1727 minutes, 17 secondsExactly. Now, this is coming up to the payoff of the wax on wax off moment of all of the work you've done for the last
27:2627 minutes, 26 secondsnine weeks. And Thursday, all of these numbers that you're coming up with now, we're going to teach you how to use a
27:3427 minutes, 34 secondsbrand new freedom calculator. So, Katie is I lost her for two days.
27:3927 minutes, 39 secondsYou did lose me coding. She just disappeared for two days. Did I put my head up?
27:4427 minutes, 44 secondsCoding a calculator. She put her head up, disappeared into the computer, came back with a brand new um freedom
27:5127 minutes, 51 secondscalculator that includes bridging within it. So, that's the magic of what she's created is it will take all of these
27:5927 minutes, 59 secondsdifferent elements that you're putting together. Now, you put these numbers into it and it will tell you what pot you need when and how it works. Um, and
28:0828 minutes, 8 secondsI'm just I'm blown away by what she and the ninjas have created. So, we'll be releasing that Thursday because there's still a few more tweaks to do before
28:1528 minutes, 15 secondsit's ready for you, but that's coming on Thursday, which we're looking forward to.
28:2128 minutes, 21 secondsThere's a quick question that came in about tax.
28:2328 minutes, 23 secondsLucy says, "The amount of money is after tax, right? So, you need to be bringing in enough tax to pay the tax on your income and still have, say, the 40 grand
28:3128 minutes, 31 secondsthat you need to spend." And we have not included tax because it's different for every country and different for every situation. But a
28:3828 minutes, 38 secondsquarter of your pension is taxfree. Uh, if you're in the UK, you have a a an
28:4528 minutes, 45 secondswhat's the word I'm looking for? The 12 or you have a personal allowance. So, actually in retirement, you probably won't pay that much tax, but you can do
28:5428 minutes, 54 secondssome sums to know I need this much for tax and this much for life. Absolutely.
28:5928 minutes, 59 secondsI've had a few comments that SIP, so self-invested personal pensions, which are things in the UK, currently accessible at 55 going up to 57 next
29:0729 minutes, 7 secondsyear. There's no legislation to increase it to 58 yet. We've been planning on 58.
29:1229 minutes, 12 secondsWe've been planning on 58. They told me mine would be 58. Who knows what they'll do in the future? You just kind of have to take a guess cuz I'm still uh what am I? 47.
29:2429 minutes, 24 secondsShould we work it out from first principles? I'm 11 years away from getting to that.
29:2729 minutes, 27 secondsSo, who knows what the government will change by then? But I have to just take guess depending on Yeah. Someone very positive put it might be 68 by the time
29:3529 minutes, 35 secondsyou get there, Alan. Yeah. Thanks for that. Uh you kind of just have to take a guess of roughly what age it'll be and it's different for all of us.
29:4429 minutes, 44 secondsOkay, perfect.
29:4529 minutes, 45 secondsYou mentioned bridges there, Alan. So the that's what the income that you need to cover, the spending, excuse me, that
29:5329 minutes, 53 secondsyou need to cover before that later income kicks in. So you've got a bridge between your
30:0130 minutes, 1 secondgoing part time and before your pension starts. And then you might need a second bridge to get you to state pension.
30:0830 minutes, 8 secondsThat's called bridging. And that's how you get between the two.
30:1330 minutes, 13 secondsSo we now know the cost of the life that you want to live, the income that's going to help pay for it, and then the
30:2030 minutes, 20 secondsremainder is how much the investments in your freedom fund need to cover. Exactly.
30:2830 minutes, 28 secondsSo what size of freedom fund pot might support the life you want to live? and we're going to turn your annual spending
30:3630 minutes, 36 secondsfrom investments into a range that says I might need something about this size to be able to do it for me. That's the
Chapter 5: Building the fund range
30:4430 minutes, 44 secondsplan today. This is the build the fund range part. So let's look at this. We're going to do an example throughout this
30:5130 minutes, 51 secondslittle mini section. Let's say that you want to cover 20 grand a year from your investments from your freedom fund.
30:5830 minutes, 58 secondsNow we are going to call this the burn rate. Uh other people in the finance world would call it your withdrawal
31:0531 minutes, 5 secondsrate. Uh we're going to call it the burn rate, which is the percentage of your freedom fund you spent in the first
31:1331 minutes, 13 secondsyear. Uh and inflation adjust every year afterwards. So I want you to imagine if
31:2031 minutes, 20 secondsyou had a a fire and you had a gas canister that's supplying gas to the fire. If you turn it up, you're burning
31:2831 minutes, 28 secondsmore gas. If you turn it down, you're burning less gas and you have a smaller flame. So, if you turn it right up, you
31:3631 minutes, 36 secondsturn the burn rate too high. Well, you might burn through your freedom fund and use up all of your gas canister before you reach expiration. And that would be
31:4631 minutes, 46 secondssad times to be 80 with not enough. If you turn it down too low, well, then you
31:5331 minutes, 53 secondsmight get cold. You'll eat lentils for Christmas and it might be a very sad time in life. So, you actually want to have the burn rate high enough to be
32:0232 minutes, 2 secondsable to spend enough to have a nice life, but low enough that you don't blow all your money before you expire. And
32:0932 minutes, 9 secondsthat is the endless debate of what that number should be. And this is really
32:1732 minutes, 17 secondsexciting because it shows what we're about to show you is the very simple way of working out how much money you need in retirement. So,
32:2532 minutes, 25 secondsright at the beginning, we asked you how much do you think you might need? And when I first got asked that question, when I hadn't learned all this stuff, I was like, I don't know. Like, you just
32:3332 minutes, 33 secondsmake up a number. There is a very easy way to know. This is the formula.
32:3832 minutes, 38 secondsThis is the formula. So, your freedom fund times your burn rate is your first annual spending.
32:4532 minutes, 45 secondsSo, you could start from either end. You say freedom if I if I know what my freedom fund is now, then I can work out my first annual spending. If I want to
32:5232 minutes, 52 secondsknow the other way around, do it the other way round.
32:5432 minutes, 54 secondsExactly. So let's say your freedom fund is currently 500,000 and your burn rate is 4%. Will you times 500,000 by 4% and
33:0433 minutes, 4 secondsthat gives you 20 grand a year to live off for the rest of your life. And that is the simple equation. Now the burn rate sets the amount for the first year.
33:1633 minutes, 16 secondsSome of you very wisely are going what happens in year two? How do I work it out in year two? Well, what happens in year two is inflation.
33:2633 minutes, 26 secondsInflation pushes the prices up every single year. And that's what you do. So, if you're spending 20 grand in year 1,
33:3333 minutes, 33 secondsif inflation is 3%, well, second year you increase your spending by 3% so that you can spend 20,600.
33:4233 minutes, 42 secondsYou increase the first year's amount by inflation each year. You don't start again from the burn rate each year. You
33:5133 minutes, 51 secondsincrease it by inflation. So every year you go, I spent 20 grand last year. What was inflation? Increase it by that. Why do you do that, Katie?
34:0034 minutesTo keep being able to buy the same number of pizzas. It all comes back to pizza every time.
34:0634 minutes, 6 secondsIn year one, say pizzas. Two pizzas cost you £20. I love that you've done two pizzas because it's one for each of us, right? We're not sharing.
34:1434 minutes, 14 secondsI never share pizza.
34:1534 minutes, 15 secondsNo. Two pizzas, £20. And then maybe a year later, the same two pizzas might
34:2134 minutes, 21 secondscost £22 or in a few years time, we want to be able to buy the same number of pizzas. They just cost more because
34:2934 minutes, 29 secondsinflation. Inflation is just the rising of prices over time. So if I want to buy the same number of pizzas, have the same lifestyle, I need to spend a bit more cuz things cost a bit more.
34:4034 minutes, 40 secondsExactly. And if you still want to be eating pizza when you're 90, then we need to be able to deal with inflation
34:4734 minutes, 47 secondsso that you can still afford it. We are going to cover a lot more on inflation in week 10 on the how do you not run out
34:5434 minutes, 54 secondsof money, but that was just sort of setting the scene that that's how the sums and the maths work.
35:0135 minutes, 1 secondSo, we got you to work out or you will be working out how much spending you want to cover from your investments. All you need to do to find out your freedom fund estimate is times that by 25.
35:1235 minutes, 12 secondsThat gives you your freedom fund estimate. How much you might need in your freedom fund to be able to live.
35:1935 minutes, 19 secondsAnd for us, this was so freeing when we discovered this. It's like, okay, I can set this really clear target. It's a very simple thing. Annual spending times
35:2835 minutes, 28 seconds25. So in this example, 20 grand* 25 is 500 grand. And you might be going, well,
35:3535 minutes, 35 secondshang on, Katie. You said I'm living off 4% of my freedom fund or do I need 25 times my annual expenses?
35:4335 minutes, 43 secondsWell, the answer is yes. It's not an or question because it's actually just a different way to do the maths. So 20
35:5035 minutes, 50 secondsgrand spending time 25 equals your 500 grand freedom fund pot or you times it
35:5935 minutes, 59 secondsby 4% and that gives you the 20 grand a year. So that's how you get between the two different sums.
36:0936 minutes, 9 secondsOkay. Uh now we're going to sort of mix this up a bit because we said about increasing
36:1636 minutes, 16 secondsyour burn rate or reducing your burn rate. How much of your money are you burning each year? And we had a question
36:2336 minutes, 23 secondsor a comment from Mandy saying the burn rate of 4% assumes you want to maintain the capital i.e. leave money to your
36:3136 minutes, 31 secondskids. Um, you actually might be able to increase your burn rate if you don't want to leave money to kids. Uh, or you might want to reduce it if you do want to leave money to kids.
36:4136 minutes, 41 secondsLike you can turn it up way up because this is to make sure that it lasts for your lifetime. And we still need to make sure that it's going to cover your
36:4936 minutes, 49 secondsspending. It's not like you can just burn all the way up. That's something we need to be careful of.
36:5436 minutes, 54 secondsIf you turn it up to 10%, you will run out of money. Uh but if you turn it up to 5% the chances are very good. So let's look
37:0237 minutes, 2 secondsat a 5% burn rate which is uh you take your spending that you want for the year
37:0937 minutes, 9 secondsand you times it by 20 20 which gives you the freedom fund you need. Uh why times 20 Katie?
37:1937 minutes, 19 secondsUh it's the same as if you were going backwards. If you take your freedom fund times it by 5% you get back to the annual spending. It's just that like we
37:2637 minutes, 26 secondssaw that 25 times and 4% are two sides of the same coin. Also with a burn rate
37:3437 minutes, 34 secondsof 5%. You're tsing by 20 to go from spending to freedom fund or you're tsing by 5% to go from freedom fund back to
37:4337 minutes, 43 secondsthe spending. Some of you are like, "Oh my goodness, maths. What's going on?" Just brief through it. This is just the
37:5037 minutes, 50 secondsdifferent ways to work out what your freedom fund estimate might be.
37:5637 minutes, 56 secondsSo if you have a slightly higher burn rate, then let's say you wanted to spend 20 grand a year still. Well, you times
38:0338 minutes, 3 secondsthat by 20, then your target is now only 400 grand. So it means you have a lower target to be able to get there. So your
38:1238 minutes, 12 secondsburn rate goes up. you have a lower starting fund that you need, which means you can actually like get there quicker, but it comes with some caveats.
38:2338 minutes, 23 secondsAnd we've got one other example, which is the middle ground. What if it was 4 1/2%.
38:3038 minutes, 30 secondsSo 4% at the low end, 5% at the high end, the middle one of 4 1/2. Well, your annual spending is timesed by 22.2
38:4038 minutes, 40 secondsapproximately. for the mathematicians out there, they know that's not exactly four and a half percent, but it's roughly and that works fine. You can do
38:4738 minutes, 47 secondsexact numbers in your own time. Uh, equals the freedom fund you need. So, at a 4.5% burn rate, if you spend 20 grand
38:5638 minutes, 56 secondsa year, you times it by 22.2 and then you need a freedom fund of £444,000.
39:0539 minutes, 5 secondsAnd what we this is like the middle burn rate and it has a middle starting pot.
Chapter 6: Choosing a burn rate
39:1039 minutes, 10 secondsSo for all of these it's the same same 20 grand a year life but with a different burn rate. The 5% gives you a
39:2039 minutes, 20 secondsmultiplier of 20 and gets you to a pot of 400 that you need to retire. 4 and a half gives you the 22.2 number and gives
39:2839 minutes, 28 secondsyou a medium-sized pot. And then 4% gives you times 25 and gives you that middle pot and the bigger pot.
39:3639 minutes, 36 secondsThe bigger pot, sorry. And we know there's a lot there. And every year we do this. Like people go, "This math doesn't make sense." Some of this will
39:4539 minutes, 45 secondsmake sense as we go through it. Some of it will make sense if you play with the retirement calculator, the freedom calculator. The freedom.
39:5439 minutes, 54 secondsUm Kira asks, "Where does the 4% come from?" Well, the 4% actually comes from
40:0140 minutes, 1 secondthere was a study originally called the Trinity Study that studied how much you could take out of your portfolio based
40:1040 minutes, 10 secondson different asset mixes and not run out of money by retirement.
40:1540 minutes, 15 secondsThere was later a guy called Bill Ben uh who was a retirement planner. He read the Trinity study and some other reports. He worked out that if you
40:2540 minutes, 25 secondswithdrew 4% from your fund uh nearly it was actually 4.18% but that wasn't very catchy for the press to hold on to. So
40:3440 minutes, 34 secondsthey just called it the 4% figure. Uh if you withdrew that then you probably would never ever run out. So that's
40:4340 minutes, 43 secondswhere it came from. And then over the years many people have redone the sums, redone the maths. Lots of people argue it should be four or it should be five
40:5040 minutes, 50 secondsor it should be this. Bill wrote a new book last year that said it should be 4.7 which there's lots of debate over what's the optimum number because the
40:5940 minutes, 59 secondshigher the burn rate is well the quicker you get to retirement and the more you can spend. The lower the burn rate is
41:0741 minutes, 7 secondswell the longer it takes to get retirement but the less chance of running out and the more chance of having money left over so that you can
41:1541 minutes, 15 secondsgive it to your kids at the end. That's kind of the differences of where it is.
41:2041 minutes, 20 secondsUh, is there a comment we need to deal with?
41:2241 minutes, 22 secondsUh, Kira says, "Thanks for answering my question and feeling a little bit slow on this." And Jackie has done a wonderful reassurance saying, "Uh, many
41:3041 minutes, 30 secondsof of us have revisited this same stuff several times now. Stick with it and it does make sense." Yes, Jackie is one of the ninjas here
41:3841 minutes, 38 secondshelping. And uh, you can always pause us, rewatch us, work with the calculator. It'll all start to make
41:4541 minutes, 45 secondssense as we go. Um, we will just keep going and if it doesn't click, we will answer your questions until it does. We
41:5341 minutes, 53 secondswill not abandon you. We've got you. We will look after you. Leave no rebel behind.
41:5741 minutes, 57 secondsLeave no rebel behind. Even Steve, we will not leave him behind. Okay, now that we have this really clear
42:0542 minutes, 5 secondstarget, you can start to see how changing some of your spending, changing some of what you're doing can start to influence it. So let's say you're able
42:1342 minutes, 13 secondsto get your annual spending down by a,000. Well, that means that your freedom target is reduced by 25,000. So
42:2142 minutes, 21 secondsthat's 25,000 less that you need to have accumulated through your contributions and compounding assuming a 4% burn rate.
42:2942 minutes, 29 secondsSo you can start to see the power of this. Oh, reduce spending get there quicker. Yes. Uh or you could look the
42:3742 minutes, 37 secondsother way and go, I want to increase my income. Maybe you increased your income in retirement by a thousand. Well, that reduces your freedom target by 25 grand.
42:4742 minutes, 47 secondsAnd that's the levers that we talk about pulling to change the maths. Now, on spending, we talk about cutting
42:5542 minutes, 55 secondsspending. Please cut the spending you do not value. Do not cut spending that is
43:0343 minutes, 3 secondsimportant to you. We quite often hear people who've given up going to destination weddings because they're saving money. You've got to enjoy life
43:1243 minutes, 12 secondson the journey. It's dar not to enjoy life. Don't do it if you're going into debt.
43:1743 minutes, 17 secondsPlease save up for it. Uh a little caveat.
43:2043 minutes, 20 secondsLove that. Now remember Roger. Do you remember Roger? Our cheeky chappie.
43:2643 minutes, 26 secondsSteve's like, I remember Roger. Roger's back. Roger doesn't have one flat number, does he? He has three numbers over the periods. So, he had income
43:3443 minutes, 34 secondsphase one where he's doing part-time work. Income phase two where he's stopped working and he's only got his DB
43:4243 minutes, 42 secondspension and then income phase three when he's got his state pension coming into.
43:4743 minutes, 47 secondsSo, he's got three different phases. So, how the heck do you work that out? Well, we're going to do one example and we're
43:5543 minutes, 55 secondsgoing to do it from 68 onwards to start with to show you how it works for Roger.
43:5943 minutes, 59 secondsUm, then we'll come on to the bridging bit.
44:0344 minutes, 3 secondsSo his investments from his B freedom fund need to cover that 23 and a half,000.
44:0944 minutes, 9 secondsSo depending on what burn rate Roger chooses is going to determine how big a freedom fund he needs. And Nancy's uh
44:1944 minutes, 19 secondsasking uh is the burn rate you're spending per year. Nancy, it's the amount you use it to I've lost the plot.
44:2944 minutes, 29 secondsYou answer this one. The burn rate is the amount you are spending each year from your freedom fund. So your freedom
44:3744 minutes, 37 secondsfund times 5% gives you how much you'll be able to spend. So let's use Roger's example to to show this. So if Roger's
44:4644 minutes, 46 secondsburning 5% of his freedom fund a year, he would times his spending, which if you remember from the last slide was 23,500.
44:5444 minutes, 54 secondsThat's what he needed. He times it by 20, which gives him his target of 470,000.
45:0345 minutes, 3 secondsIf he chooses a burn rate of 4.5%, well, he times it by 22.2, he needs a bigger freedom fund to cover the same amount.
45:1245 minutes, 12 secondsAnd if he chooses 4%, which is the safer version or not safer, um, it's more conservative, more conservative version, uh, he needs
45:2245 minutes, 22 seconds25 times. That gives him a freedom fund of £587,000.
45:2945 minutes, 29 secondsAnd that's the difference. It always bakes people's brains.
45:3345 minutes, 33 secondsAlways is. We got a question from Nigel, and we always get these questions every single time. And it took us a long time to get our heads around this as well. I never understood this to start with.
45:4145 minutes, 41 secondsYou're saying, well, if you're drawing 5% from your fund, don't you need a larger fund than for drawing 4%. And the answer would make complete sense, but
45:5045 minutes, 50 secondsthe answer is no. If you pull up the slide, Alan, you can see that the freedom fund needed is bigger the lower the burn rate.
45:5945 minutes, 59 secondsExactly. So, and that is because uh you need a bigger fund because you're drawing less of it each year to live
46:0746 minutes, 7 secondsoff. That's the key bit. Um and this completely baked my brain. I was first taught this uh on an event um by a guy
46:1646 minutes, 16 secondscalled the Mad Fientist, and I argued with him for a long time. uh and he corrected me and he was right. Uh so
46:2446 minutes, 24 secondsthis is how the maths work. You can't really argue with maths.
46:2746 minutes, 27 secondsI think the the thing that does start to make sense if you think of it as the multiplier 5% lower multiplier, 4% higher multiplier.
46:3746 minutes, 37 secondsMaybe that will help you to start to uh get the cogs in the right place. I lost I lost my way
46:4546 minutes, 45 secondsthere. People have a sip of water.
46:4746 minutes, 47 secondsYeah, that's a good idea. This is not Roger's complete freedom fund target because he needed different amounts each year. So what we actually did, his
46:5546 minutes, 55 secondsinvestments got to provide more before the later income comes. So he needed like this amount in phase one, this amount in phase two, and in phase three
47:0447 minutes, 4 secondswhen his state pension kicked in, he actually need less money. But he's got to bridge between those different elements. That's what he's got to do.
47:1547 minutes, 15 secondsfor the bridging bit. Katie's built it into the freedom calculator. So, we're going to cover that then. Uh, but we want you to do your first target range.
47:2747 minutes, 27 secondsSo, what we want you to do is try and have a number like the amount your investments need to provide you. So, you hopefully you've worked out in
47:3547 minutes, 35 secondsretirement, I want 20 grand a year from my investments. We then or 25 grand a year or 30 grand a year or whatever your
47:4447 minutes, 44 secondsnumber is. If they're all different, write out that number and then we're going to do the range so that you know your range.
47:5347 minutes, 53 secondsSo, we'll do a 5%, a 4 and a half, and a four. So, let's say you wanted 25 grand a year in retirement in when you stop
48:0348 minutes, 3 secondswork. Well, for the first one, you do 25 grand* 20. That gives you the lower
48:1048 minutes, 10 secondslimit of your freedom fund. For the middle one, you do 25 grand* 22.2, which
48:1748 minutes, 17 secondsgives you the middle figure. And so you know the maximum you would need, you would do 25 grand* 25. That gives you the higher figure.
48:2848 minutes, 28 secondsThat's it. Uh Dave on YouTube says it's baked my brain. #rewatch. Yes. For you,
48:3548 minutes, 35 secondsthis video is available as many times as you need and we are as well.
48:3948 minutes, 39 secondsThink back to 2020, 2021. Poor people had no re watches. They just had to absorb as much as they could. If you missed the session, sorry recorded.
48:4848 minutes, 48 secondsYeah. And this baked my brain as well. Like I argued against this for so long.
48:5248 minutes, 52 secondsAnd I didn't really understand it. Now it just kind of makes sense after a while. Uh but I promise you, stick with
48:5948 minutes, 59 secondsus, work through it, and we'll gradually start it making sense as you go. We also have an AI prompt to give you to help
49:0749 minutes, 7 secondsyou to pick apart some of these different parts of the workshop where you might have got a little bit not being able to quite follow along. We've
49:1449 minutes, 14 secondsgot some prompts for you to help you to do go through it in your own time. And we are here for you. We're here. We're not going anywhere. No.
49:2249 minutes, 22 secondsWell, we are going to Aland soon in New Zealand, but you know what I mean. We'll be online still to help you. Uh Fireman69 on YouTube says the examples are helping. So, we will keep going.
49:3349 minutes, 33 secondsWhat we wanted to say to you on this specific bit is if you've done this sum where you've times the amount you want
49:4049 minutes, 40 secondsin retirement by these multipliers of 20 22 and 25, what you've created is a
49:4749 minutes, 47 secondsplanning range. So you've got a range that shows you this is kind of roughly what I need in my freedom fund. It's not
49:5549 minutes, 55 secondsa final verdict on your worth. It's not a guarantee. It's not a permanent setting, but it gives you an idea of how
50:0350 minutes, 3 secondsmuch you need in your freedom fund range. Nice wig.
Chapter 7: Measuring current progress
50:0750 minutes, 7 secondsThank you. Now, we're going to move on to how do I know which of these burn rates are right for me. Uh before we do,
50:1650 minutes, 16 secondsif you're on YouTube, please hit like and subscribe. It makes me happy and does other nice things for the algorithm. Tingles.
50:2550 minutes, 25 secondsNow, which burn rate fits your life? Uh, just so you know, I used AI to create this. No 50 pound notes were hurt in the
50:3450 minutes, 34 secondscreation of these slides. There is no magic burn rate for every human. We're all different.
50:4250 minutes, 42 secondsIf you have a higher burn rate, well, it gets you to freedom sooner, but you have a higher chance of running out and it asks more of you later.
50:5450 minutes, 54 secondsIf you have a lower burn rate, well, it creates a larger target, which might take you more time to build, but you
51:0251 minutes, 2 secondsdon't have to be as flexible and it asks less from you for later. So, if you were to keep the amount that you spend
51:1051 minutes, 10 secondsconstant, so you've said, "Okay, I want to spend 20 grand a year from my investments in retirement." But if you turn up the burn rate, if you're taking
51:1851 minutes, 18 secondsout a bigger percentage of your pot every year, you need a lower freedom fund target because you're taking out
51:2551 minutes, 25 secondsmore of the freedom fund for the same amount of spending, which reduces your time to build it and your time to get
51:3251 minutes, 32 secondsthere. But the side effect or the downside is it increases your chance of running out of money over the long term.
51:4251 minutes, 42 secondsThat's the the tradeoff or the side effect of those two elements. That's
51:4851 minutes, 48 secondswhat the it does. So if we were to have one sort of last example for us to get our mind, imagine we turn the burn rate up all the way to 10%.
52:0152 minutes, 1 secondSo you're spending 10% of your freedom fund a year. Well, it's going very fast.
52:0752 minutes, 7 secondsit's disappearing and you'll probably run out of money quite quickly.
52:1252 minutes, 12 secondsWhereas, if you turned it all the way down to 1%, well, it'll last forever and your freedom fund is growing quicker than you spend it. So, you would have a
52:2152 minutes, 21 secondsfortune left by the end of life. You would have oversaved and not enjoyed your life. It would take you longer to get there.
52:2752 minutes, 27 secondsYou're only spending a very small portion of your freedom fund. So, if you want to spend the same amount as if you were burning all the way through 10%,
52:3552 minutes, 35 secondsit's going to take you much longer to get there because you need a much bigger pot.
52:3852 minutes, 38 secondsUh Carol is saying it's making more sense. If it doesn't yet, we will just keep going until we get there. It's okay.
52:4552 minutes, 45 secondsNeed some diagrams. We need some bumps and burners. We love it. Your burn rate depends on six things.
52:5352 minutes, 53 secondsNumber one, how flexible are you with your spending? So right at the start we said divide your spending into essentials and flexible. The more
53:0253 minutes, 2 secondsflexible you are, the higher the burn rate you can have. The less flexible you are. Well, you need a lower burn rate.
53:1053 minutes, 10 secondsHow much reliable income do you have coming later? Do you have defined benefit pensions, final salary pensions?
53:1753 minutes, 17 secondsDo you have a large state pension, social security, superanuation?
53:2253 minutes, 22 secondsYeah. Are you willing to earn money in the future? Like if you need to, could you earn money? If not, that's okay.
53:3053 minutes, 30 secondsJust have a lower withdrawal rate. Burn rate.
53:3353 minutes, 33 secondsBurn rate. Thank you. Uh, how long have you got until expiration?
53:3853 minutes, 38 secondsThe longer it is until your expiration, the lower the burn rate should be because your money's got to last a longer time.
53:4853 minutes, 48 secondsUh, do you have any legacy goals? That does doesn't mean old goals. That means, do you want to leave inheritance to your kid? Uh, do you want to leave a legacy?
53:5753 minutes, 57 secondsUh, if you do, have a lower burn rate and there'll be more left for your kids.
54:0254 minutes, 2 secondsHave a higher burn rate and well, you won't leave anything behind, which sounds good. Okay. And then, are you
54:1054 minutes, 10 secondswilling to review your spending and your finances every year? And are you willing to change what you're doing every year?
54:1854 minutes, 18 secondsIf so, you can have a higher burn rate. If not, you have a lower burn rate.
54:2454 minutes, 24 secondsThat's it. We actually had a very useful comment which we can explain.
54:2854 minutes, 28 secondsDave's got a great example here saying, if I want to spend 40,000 in retirement, 40,000, my pensions pay 32 grand.
54:3754 minutes, 37 secondsSo, he's got 32 fixed income and he wants 40.
54:4154 minutes, 41 secondsSo, that difference is 8,000. So, he's got 40 that he wants to spend, 32 covered by pensions, and £8,000
54:5054 minutes, 50 secondsdifference at 4% burn rate. How do we work out what Dave's freedom fund is? Put it in the chat. Tell us.
54:5754 minutes, 57 secondsDo you know what sum we have to do?
55:0055 minutesSo, saying, I want to do 4%, so I need to do 8,000 times 25. Yep.
55:0755 minutes, 7 secondsWhich gives us 200,000.
55:0955 minutes, 9 seconds200,000. So, then think about it the flip way. Okay. If he's got a freedom fund of 200,000 at a burn rate of 4%,
55:1855 minutes, 18 secondshow much can he spend and get back to the 8,000? It's the two sides of the same coin. A 4% burn rate is the
55:2555 minutes, 25 secondsequivalent of timesing what spending you want by 25.
55:3055 minutes, 30 secondsUh Gary, you got the right answer in the chat. You are super quick on those answers. Right, moving on to the next little section. What we wanted to say is
55:3855 minutes, 38 secondsthere are no gold stars for 5%. The best plan is the one that you can live with.
55:4655 minutes, 46 secondsWe need a plan you can actually live with. And lots of you be saying, "Well, what should my burn rate be?" I created a tool to help you work it out. I'm very
55:5555 minutes, 55 secondsexcited about this. If you scan that QR code or the ninjas will put the link in the chat, or if you're on YouTube, it's in the description. We have a brand new
56:0356 minutes, 3 secondsburn rate tool that will ask you six questions and then tell you which of those three burn rates you should probably go for
56:1256 minutes, 12 secondsand explain why. So, I really would love you to test it. Even if you think I don't need it, please test it and give
56:2056 minutes, 20 secondsus feedback. Did it work? What did you think? What were the answers like for you? Cuz we're trying to make this simpler for everyone to be able to work all of this out.
56:3156 minutes, 31 secondsAnd the key bit is when you come up with the answer, please answer for the life you actually would live. Not what we
56:3956 minutes, 39 secondswould do, not what the fire community says, not what makes 5% appear. What would you genuinely do? How would you
56:4756 minutes, 47 secondsactually want to live? So, we'd love you to have a go. Uh, please get that calculator up and let's actually have a
56:5656 minutes, 56 secondsgo at it. um launch calculator. Have a go and tell me what did it tell you? Did it tell you 4%, did it tell you uh 4
57:0657 minutes, 6 seconds1/2%? Did it tell you 5%? Um did you fudge all the answers and it randomly said 93%.
57:1357 minutes, 13 secondsUh it won't do that cuz I've coded it so that it only gives you those three numbers. Uh Phil got a five. Um Karen
57:2257 minutes, 22 secondsasks, "Can we have the QR code again?" Of course we can. Like This should give you a starting idea of
57:3057 minutes, 30 secondshow much you could take from your freedom fund each year and then how much freedom fund you actually need to be
57:3857 minutes, 38 secondsable to live in the future. That's the key bit. And this is not a prescription either.
57:4257 minutes, 42 secondsIf you don't like the answer that the tool gave you, then first of all probably think why. What were the answers that gave that answer? And then
57:5057 minutes, 50 secondssay okay if I would like to have a higher burn rate which means I'll get to that freedom quicker. What am I willing to do differently than the answers that
57:5957 minutes, 59 secondsI gave? Genuinely would be willing to do differently because you're kind of making some promises to yourself which we'll come on to shortly.
58:0558 minutes, 5 secondsWell, let's go to that now. Uh the promises.
58:0958 minutes, 9 secondsUm the 4% burn rate gives you a really robust plan. We've called it the robust run rate cuz like it is very
58:1858 minutes, 18 secondsconservative. It will look after you. Uh it gives you that 25 times your spending multiplier, but you need a larger
58:2658 minutes, 26 secondsstarting freedom fund to get there for the same amount of spending.
58:3058 minutes, 30 secondsExactly. But there might be less adjustment needed over time. Like it will just work. The middle one, the 4
58:3958 minutes, 39 secondsand 1/2, we've called it the balanced burn rate. That gives you a multiplier of 22.2.
58:4558 minutes, 45 secondsAnd you need a slightly smaller freedom fund than the 4% one. But it needs a bit more flexibility, a little bit more
58:5358 minutes, 53 secondsflexibility of will I respond to things and can I manage my money? And then the 5% is the most flexible. It's the
59:0159 minutes, 1 secondflexible burn rate that gives you the smallest target cuz it's spending times 20. So you get to freedom sooner, but
59:1059 minutes, 10 secondsyou need to be more active. You need to be more flexible. You might need to adjust as you go along. and Katie
59:1759 minutes, 17 secondscreated a fabulous chart to show them together. So you've got the multipliers, the size of the starting fund, how
59:2659 minutes, 26 secondsflexible you need to be, and then do you need to review it as you go along. So if you want to, it might be worth taking a photo of that slide. Eventually I will
59:3459 minutes, 34 secondsadd it to the course notes when I catch up with the backlog from all the weeks I haven't been doing recently because I wasn't very well. Um, so get a photo now
59:4359 minutes, 43 secondswhen you've got it. Eventually, I will catch up.
59:4759 minutes, 47 secondsQuestion, will you keep your promises? And this is a question you've got to ask yourself.
59:5559 minutes, 55 secondsWill I keep my promises? Cuz the burn rate only works if you keep your promises. So, what am I promising with a 5% burn rate, Kate?
1:00:031 hour, 3 seconds5%. You're going to want to be a little bit more on top of it. you're going to do an annual finance meeting where you can see what's going on with your figures, what's happening with your
1:00:121 hour, 12 secondsspending, what's happening with your investments, um to be able to separate your essential from your flexible spending because are
1:00:191 hour, 19 secondsyou willing to flex the spending that you said was flexible? And you'll probably need to respond if there is a
1:00:261 hour, 26 secondsserious fall in the stock market early in retirement. And that's the flexibility we're talking about is
1:00:341 hour, 34 secondsyou'll need to reduce spending, organize things to look after yourself, and then when the markets bounce back, you can go back to the original plan. And you need to update the plan as you go through it.
1:00:461 hour, 46 secondsWe're going to cover a lot more on what this actually means and how that actually works in week 10. Um, but
1:00:521 hour, 52 secondsthat's the real risk that we're protecting you against is this thing called sequence of returns risk, which we're going to cover next week completely.
1:01:011 hour, 1 minute, 1 secondWith the 4% robust burn rate, you're still not just like put your fingers in your ears and get on with your life.
1:01:081 hour, 1 minute, 8 secondsYou're still going to want to look at what's happening with your money every year. We still do monthly finance meeting when uh when we're living off
1:01:151 hour, 1 minute, 15 secondsour portfolio. I think it's still super important to do. Track the burn rate.
1:01:201 hour, 1 minute, 20 secondstrack the amount that you're spending from your freedom fund.
1:01:231 hour, 1 minute, 23 secondsYeah, because we've met quite a few people who retired uh then we told them to do this and they realized they were spending 10 or 12% a year of their
1:01:301 hour, 1 minute, 30 secondsfreedom fund and wondered why it was running out. Like you need to know the numbers as you go. You might have to respond when life changes, but probably
1:01:391 hour, 1 minute, 39 secondsnot a lot. Uh and you should never assume 4% removes all risk. Um but it will work 90 plus% of the time perfectly. is very conservative.
1:01:491 hour, 1 minute, 49 secondsVery conservative. So, uh, your burn rate is your starting point. It is your starting point and then you test it, review it, change it when life changes.
1:02:001 hour, 2 minutesAnd it's not a guarantee, but it will work. Okay. So, the idea is you've now chosen a starting burn rate.
1:02:101 hour, 2 minutes, 10 secondsWell, now let's see what your current freedom fund can actually support. That brings us on to the next section which
Chapter 8: Connecting life phases
1:02:171 hour, 2 minutes, 17 secondsis what have you already bought? How much freedom have you already bought?
1:02:231 hour, 2 minutes, 23 secondsAnd this is a real photo of me in a deck chair on a beach. Uh there was no AI used in this photo whatsoever. Love it.
1:02:301 hour, 2 minutes, 30 secondsEven the pineapples are real.
1:02:321 hour, 2 minutes, 32 secondsFreedom is not a switch. It's not either I am free or this mythical land of freedom. There's much flexibility
1:02:411 hour, 2 minutes, 41 secondsbetween the two. So, we never want to be like, "Well, you're either free or you're not." It's not binary, Alan.
1:02:481 hour, 2 minutes, 48 secondsIt's not binary. It's not one or zero.
1:02:511 hour, 2 minutes, 51 secondsIt's not like that. It's actually a scale and it's built one piece at a time. So, you might have got 25% of your
1:03:001 hour, 3 minutesspending covered by age 50. You might have 50% of your spending covered by 58.
1:03:051 hour, 3 minutes, 5 secondsAnd then you might get to like, I've covered all my spending by 63.
1:03:101 hour, 3 minutes, 10 secondsBut like you've actually covered a portion of it as you go. So what we want to do is just check in what has passed
1:03:171 hour, 3 minutes, 17 secondsyou already built because you probably got some pensions, some different bits.
1:03:231 hour, 3 minutes, 23 secondsYou've already got that. Now how do you find out? What we want to know is how much is in your freedom fund today. If
1:03:311 hour, 3 minutes, 31 secondsyou filled out the net worth tracker, you will be able to tell us instantly how much is in your freedom fund today.
1:03:381 hour, 3 minutes, 38 secondsUh that's what we want to know.
1:03:401 hour, 3 minutes, 40 secondsAnd there might be some of you that perhaps don't have anything in your freedom fund yet or perhaps you're still working your way out of debt. And that's okay. This is just to see where we might
1:03:491 hour, 3 minutes, 49 secondsbe already. And the freedom if you are in debt that you're working towards is being debtree.
1:03:551 hour, 3 minutes, 55 secondsExactly. And this is the payoff of the earlier work that you have been doing is to know your freedom funds that we can
1:04:031 hour, 4 minutes, 3 secondsactually work out these figures. And the plan is to work out what spending could your freedom fund uh support. Uh this is
1:04:111 hour, 4 minutes, 11 secondsalso a real photo that we took uh with real pineapple cash that we printed uh when we got awarded the British Empire
1:04:181 hour, 4 minutes, 18 secondsMedal for services to financial education. We celebrated by throwing pineapple cash up in the air and getting someone to take photos of us. It's a
1:04:261 hour, 4 minutes, 26 secondsweird way to celebrate, but you know, I think it's very Donigan.
1:04:301 hour, 4 minutes, 30 secondsVery Donigan. Very Donigan. Okay. What's this equation, Katie? So, we want to see what annual freedom you might have already bought. How much of your annual
1:04:391 hour, 4 minutes, 39 secondsspending is already covered? So, how do you work that out? Well, you look at today's freedom fund and times that by
1:04:461 hour, 4 minutes, 46 secondsyour chosen burn rate. So, if you've worked out your burn rate is 5%. Times your current freedom fund by 5%, see
1:04:541 hour, 4 minutes, 54 secondswhat amount that gives, and that's how much your freedom fund supports.
1:04:591 hour, 4 minutes, 59 secondsExactly. And that's it. That's what you want to do. that tells you like how much you've got saved and invested will
1:05:071 hour, 5 minutes, 7 secondsactually support you over time. Uh Derek says on the chat, "What are the Donigans
1:05:151 hour, 5 minutes, 15 secondsburn rate?" Uh it varies by year. Um in the first few years it was actually very
1:05:221 hour, 5 minutes, 22 secondslow and then our investments grew and we turned it up. Then Katie turned 40 and
1:05:291 hour, 5 minutes, 29 secondswe had a blowout year and I booked every experience I possibly could and our burn rate was very high for one year. So
1:05:371 hour, 5 minutes, 37 secondswe've backed off a bit afterwards. So you can like flex depending on what you're doing, but we monitor it and we are on top of it which is why we flex.
1:05:471 hour, 5 minutes, 47 secondsNow uh we've asked you to work out how much freedom you've already bought. So we said today's freedom fund times your
1:05:541 hour, 5 minutes, 54 secondschosen burn rate. Now remember, don't double count your DB pension, any pensions, or don't put your state
1:06:031 hour, 6 minutes, 3 secondspension in there if you've already thought of that income separately elsewhere. So, and this might start to help you to understand why back at the
1:06:111 hour, 6 minutes, 11 secondsbeginning of the course when we're getting you to value how much your defined benefit pensions might be, we said, we'll times it by 25 and put that
1:06:191 hour, 6 minutes, 19 secondsin your tracker. But if you then have already allowed for that income and now you're working out how much extra you could get from your freedom fund, just
1:06:281 hour, 6 minutes, 28 secondsdon't count it twice. Don't count it as the income and then with the burn rate as well.
1:06:321 hour, 6 minutes, 32 secondsExactly. Uh so a fantastic comment just came in. Philly said, uh oo I've already bought 10 grand worth of freedom. It's
1:06:411 hour, 6 minutes, 41 secondsalmost like the state pension but from the state of Philly, which I thought was genius way of looking at. She's given herself a state pension on top of her
1:06:491 hour, 6 minutes, 49 secondsestate pension which is an incredible way to look at it. Uh yeah, incredible way to look at it. And this is measuring
1:06:581 hour, 6 minutes, 58 secondsthe freedom that you've bought. We're not saying go out and withdraw it and spend it now. We're saying what have you already achieved? What have you already
1:07:061 hour, 7 minutes, 6 secondsbuilt? And again, if you haven't got anything in your freedom fund yet, this the freedom that you're building is to
1:07:141 hour, 7 minutes, 14 secondsbuild your way out of the debt and start to build your emergency fund. Start to take these steps one at a time and start to inspire yourself of okay, I really
1:07:221 hour, 7 minutes, 22 secondswant to get to this stage. How can I increase my gap? How could I increase my income? How could I reduce my spending to start to get to this point?
1:07:301 hour, 7 minutes, 30 secondsExactly. Now the equation is already freedom already bought uh equals today's freedom fund times burn rate. So to give
1:07:381 hour, 7 minutes, 38 secondsyou an example if you had 100 grand invested well at 4% that gives you 4 grand 4 and a half it gives you 4,500
1:07:461 hour, 7 minutes, 46 secondsand 5% it gives you 5 grand. And then you start to think well what could that support in my life? And we actually had
1:07:541 hour, 7 minutes, 54 secondsthis way of thinking about it like, well, if you had 4 1/2 grand annual income, well, that could cover your groceries for an entire year or more.
1:08:031 hour, 8 minutes, 3 secondsIt's almost like grocery freedom right now. And you go, well, how much do you need to cover your phone bill or your
1:08:111 hour, 8 minutes, 11 secondsinternet or your energy, your groceries, your gym, and your travel or working one day less? I had a friend who went down
1:08:181 hour, 8 minutes, 18 secondsto four days a week and he would tell everyone he was 20% retired, which I thought was absolutely genius. Um, but
1:08:261 hour, 8 minutes, 26 secondslet's say you wanted to cover your phone bill for the rest of your life. Well, if your monthly cost of your phone bill is 25 a month, times that by 12 and you get
1:08:351 hour, 8 minutes, 35 seconds300 a year. If you times that by your multiplier, that shows you how much you need invested to cover it. Uh, and then
1:08:451 hour, 8 minutes, 45 secondsyou go, well, if I can get £6,660 into my investments, it supports my
1:08:521 hour, 8 minutes, 52 secondsmobile phone bill forever, I am mobile phone free forever. And that's why we want to give you these little milestones
1:09:001 hour, 9 minutesalong the way because it's not all or nothing. It's like, okay, could my freedom fund cover my phone bill, my Netflix, my internet, the gym, whatever,
1:09:091 hour, 9 minutes, 9 secondsall these different things. So that it's not like, oh, either I've got full financial freedom or I don't. It's like, which parts of my life am I starting to
1:09:171 hour, 9 minutes, 17 secondscover? And then you can start to play this game. Oh, I imagine I wonder if we can get our groceries covered. I wonder if we could get whatever it is covered.
1:09:241 hour, 9 minutes, 24 secondsThe the day out with the kids once a month, whatever it is.
1:09:271 hour, 9 minutes, 27 secondsBecause every pound or dollar invested buys you a little bit more choice, buys you a little bit more freedom. That
1:09:371 hour, 9 minutes, 37 secondsis the key bit. So tell us in the chat what is your first goal going to be?
1:09:431 hour, 9 minutes, 43 secondsWhat is the first thing that you're going to be working towards or what have you discovered that you're already able to cover? We would love to know in the
1:09:511 hour, 9 minutes, 51 secondschat as we go. Now we're going to go as you write those answers. We're going to go back to Roger. Remember Roger? I know Roj.
1:09:581 hour, 9 minutes, 58 secondsHere's Roger. Say hello to Roger. Uh how much freedom does Roger already have?
1:10:031 hour, 10 minutes, 3 secondsHere's the example. Roger has 250,000 invested. He decided he'd go for a four and a half% withdrawal rate. So he does
1:10:121 hour, 10 minutes, 12 secondsburn rate, sorry, burn rate. He does 250,000 times 4 and a half%. So he can cover 11,250
1:10:221 hour, 10 minutes, 22 secondsa year. So Roger's fund currently supports £11,250 a year, which is nearly £1,000 a month.
1:10:311 hour, 10 minutes, 31 secondsUh, it's over £200 a week, which to equate that to something everyone understands, it's a good night out in Bathing Stone.
1:10:411 hour, 10 minutes, 41 secondsRight from 68 onwards, his full target, he wanted 23 12 grand a year. Well, he's
1:10:481 hour, 10 minutes, 48 secondsalready halfway there based on what he's got, and he just needs to keep building from there. Please do remember if you
1:10:561 hour, 10 minutes, 56 secondsdon't like your numbers that you've got so far, that's okay. Your numbers are information. They are not judgment of
1:11:031 hour, 11 minutes, 3 secondsyou as a human. Just find your blue dot on the map and take the next action.
1:11:091 hour, 11 minutes, 9 secondsThat's all you need to do. And we hope to inspire you. You know, maybe my first aim, my first target is that phone
1:11:171 hour, 11 minutes, 17 secondsfreedom is the Netflix freedom. Whatever it is, choose something that's going to motivate you and get you excited to keep building that gap and investing the gap.
1:11:261 hour, 11 minutes, 26 secondsThe whole point is to know your starting point on the journey. choose the next move and then the freedom you want is built through that next move. So that is
1:11:351 hour, 11 minutes, 35 secondsmeasuring the freedom. We're now going to nip to connecting the phases and then we have the closing message. Connecting
Chapter 9: Course outlook and conclusion
1:11:421 hour, 11 minutes, 42 secondsthe phases, the money that supports your life may come from different places at different
1:11:501 hour, 11 minutes, 50 secondstimes. And that's why you need what's called a bridge. And a bridge is investments that support your life
1:11:581 hour, 11 minutes, 58 secondsbefore later money comes available. So before you get to your state pension, the bridge helps you get there. So this
1:12:061 hour, 12 minutes, 6 secondsis Roger's example. He needs a bridge to get him from 55 to 60 when his freedom fund needs to cover 32 grand. Then he
1:12:141 hour, 12 minutes, 14 secondsneeds a second bridge to get him between that to the state pension where his amount he needs goes down because he's
1:12:211 hour, 12 minutes, 21 secondsgot the state pension coming in. The reason all of this bridging stuff even exists is because your freedom fund may
1:12:301 hour, 12 minutes, 30 secondsbe in two places. It's probably some inaccessible investments, stuff you can
1:12:371 hour, 12 minutes, 37 secondsget at any age. In the UK, that's ISIS and general accounts and stuff like that.
1:12:441 hour, 12 minutes, 44 secondsAnd then you've got locked up retirement investments. And that's like locked up until a certain age. You can't get to it. And that's why you have to bridge to it.
1:12:531 hour, 12 minutes, 53 secondswhich the whole purpose of this is you have enough overall and then enough money accessible at the right time. How
1:13:021 hour, 13 minutes, 2 secondsmuch bridge do you really need? What percentage do you need in an ISA versus a uh a SIP? How much do you need in a general account versus a 401k?
1:13:121 hour, 13 minutes, 12 secondsHow much do you need in your Kiwi Saver versus outside the Kiwi Saver? Well, the freedom calculator we release on Thursday will give you those exact
1:13:201 hour, 13 minutes, 20 secondsnumbers and we're going to go through all of those on Thursday. And the plan for the rest of the course, Thursday is the freedom calculator session.
1:13:291 hour, 13 minutes, 29 secondsI'm excited.
1:13:301 hour, 13 minutes, 30 secondsI know. I cannot wait for that. Uh then we've got week 10, will I run out of cash? So, how do you make your money
1:13:381 hour, 13 minutes, 38 secondslast for your entire retirement? Week 11, we are very excited to have back with us Mr. money mustache. Uh the
1:13:471 hour, 13 minutes, 47 secondsreason we have invited Pete back is because he's been retired for over two decades. So he's been there, he's done
1:13:561 hour, 13 minutes, 56 secondsit, he's lived through the '08 crisis and the dotcom crisis and he can talk to us from a position of experience. He
1:14:031 hour, 14 minutes, 3 secondsalso has kids. So he did all of this retirement stuff with kids and sorted out his finances. So, we wanted to bring
1:14:101 hour, 14 minutes, 10 secondssomeone on who's done it and can talk to you about all of that stuff.
1:14:151 hour, 14 minutes, 15 secondsThen we have the wonderful Bob coming back to help us to do something that's called the investor policy statement.
1:14:211 hour, 14 minutes, 21 secondsWhat it means is when things happen, how am I going to know what to do? Well, ahead of time with a calm mind. I've
1:14:291 hour, 14 minutes, 29 secondswritten down what I'm going to do. So, then you always go back to that and he's going to explain to us how exactly you go about doing that. And by the end of the session, you will have your own personalized investor policy statement.
1:14:401 hour, 14 minutes, 40 secondsExactly. And then the next Thursday, we were planning a session which was what do you do after Rebel Finance School?
1:14:471 hour, 14 minutes, 47 secondsBut we are canceling that. Shock, horror. We are canceling it. And we have a special announcement. I can see how excited Duncan is. People are going
1:14:551 hour, 14 minutes, 55 secondslike, "What's the special announcement?" Oh my goodness. What can possibly be happening?
1:14:591 hour, 14 minutes, 59 secondsWhat's going to happen? Uh we've got a brand new session we have never run which is called how to live off your investments. So based on all of your
1:15:071 hour, 15 minutes, 7 secondsquestions from the uh investing weeks, we hadn't answered them all. So we've designed a brand new session called How
1:15:151 hour, 15 minutes, 15 secondsto Live Off Your Investments in Retirement, which will answer all of your different questions about how do you actually turn a freedom fund into
1:15:221 hour, 15 minutes, 22 secondscash in the bank? How do you actually turn a freedom fund into extra breakfast burritos? I know that's been on your mind. It's what keeps me awake at night.
1:15:311 hour, 15 minutes, 31 secondsWe will show you how to do it. Then we have a special the final session. Sometimes people are curious about who we are, what how did
1:15:391 hour, 15 minutes, 39 secondswe get to what we're doing, why do we do this rebel finance school thing. So we have an ask us anything session. You can come and ask us anything you want and we will answer.
1:15:481 hour, 15 minutes, 48 secondsYes, the weirder the better.
1:15:501 hour, 15 minutes, 50 secondsI would like to answer a question before you go on to the next little bit.
1:15:531 hour, 15 minutes, 53 secondsOkay, we have a question come in from from Troy. Troy says, "Is the multiplier the years that it will last at that burn
1:16:001 hour, 16 minutesrate?" So, if I've got a 4% uh burn rate, the multiplier is 25. Is that saying it will last 25 years?
1:16:081 hour, 16 minutes, 8 secondsNo, it is not linked to the number of years. It is not linked to that at all.
1:16:131 hour, 16 minutes, 13 secondsIt the actual original maths was based on a 30-year retirement, i.e. you retire at 60 and live to 90 and
1:16:221 hour, 16 minutes, 22 secondsthe money will last for that whole period. But actually like we retired Katie was 35 so she had quite a few years to go until expiration totally.
1:16:331 hour, 16 minutes, 33 secondsUh and yeah, you might have a slightly lower burn rate if you have a longer period until expiration. Um but it will
1:16:421 hour, 16 minutes, 42 secondswork for whatever years you want it to work for. Troy, did that answer your question? Did that make sense to you
1:16:481 hour, 16 minutes, 48 secondsall? Um yeah, hopefully that makes sense to everyone. Excellent.
1:16:541 hour, 16 minutes, 54 secondsLet's uh go on to the freedom work for this week, which is to take the session today and to learn it in your way. We
1:17:031 hour, 17 minutes, 3 secondsall learn differently. We've given you some uh we've got the transcripts on the website. If you're watching this live, the transcript from today's session is
1:17:111 hour, 17 minutes, 11 secondsnot on the website yet. Please give us a few hours.
1:17:131 hour, 17 minutes, 13 secondsGive us a couple of hours and it'll be there.
1:17:151 hour, 17 minutes, 15 secondsUh and all of the old transcripts are there up to current date.
1:17:191 hour, 17 minutes, 19 secondsAmazing. And then I've written AI prompt for you to test. So the AI prompt gives
1:17:271 hour, 17 minutes, 27 secondsAI, you feed it the transcript, you feed it the AI prompt, and it gives you uh like here's the topics of the week. You
1:17:361 hour, 17 minutes, 36 secondscan choose, I don't understand burn rate. Donigan's confused me. I don't understand it. Please explain it to me.
1:17:431 hour, 17 minutes, 43 secondsAnd it's trained AI to be a coach that answers all of your questions and works with you to explain it. So it'll explain
1:17:521 hour, 17 minutes, 52 secondsit all to you and you can keep asking until the information clicks and you've got it. So that's your homework is we
1:18:001 hour, 18 minutesknow that it took us years to really understand this. So we know it takes some time and this is a way to speed that up and to help it.
1:18:091 hour, 18 minutes, 9 secondsYeah. Hopefully, it won't take you years because we've been refining as we've gone along the way of explaining this to
1:18:161 hour, 18 minutes, 16 secondshelp you to understand uh and get it exactly. Now, the closing message, the final part of the week is choosing the next move.
1:18:261 hour, 18 minutes, 26 secondsYou've only got one life uh as far as we know it. You might come back, but who knows? We're going to with one life at the moment, but you've got different
1:18:341 hour, 18 minutes, 34 secondsincome phases, but you need a plan that covers it all. So, we've got to help you have enough money overall that's
1:18:421 hour, 18 minutes, 42 secondsaccessible at the right time for you to be able to spend it. And if you have been through tonight's workshop and
1:18:491 hour, 18 minutes, 49 secondswritten down some of the numbers, well, you've built your first retirement, your first freedom plan, you've actually built it, which is phenomenal. You've
1:18:571 hour, 18 minutes, 57 secondslooked at the life, the spending, the income phases, the burn rate, the freedom fund range, the bridge. You've looked at all of this. And that question
1:19:061 hour, 19 minutes, 6 secondswe've asked you at the start, how much do you think you need to retire is a bit of a silly question because it depends on the life you want to leave live and
1:19:151 hour, 19 minutes, 15 secondshow much do you actually need? Well, it's what life does my money need to support. And that's what we always come back to is what life are you actually living.
1:19:241 hour, 19 minutes, 24 secondsAnd one of the key things that we always talk about is how most people think of retirement as an age whereas to us it's a target. It's a amount that you have in
1:19:331 hour, 19 minutes, 33 secondsyour freedom fund that means that it funds the life that you want to live. And now you can answer that question. You can answer what does the life cost?
1:19:411 hour, 19 minutes, 41 secondsWhat income helps pay for it? What investments provide? What burn rate fits my plan? Cuz it's different for everyone. What needs to be accessible
1:19:501 hour, 19 minutes, 50 secondsand what doesn't? And what does a bridge look like? And that's a full retirement plan that a retirement planner would do
1:19:571 hour, 19 minutes, 57 secondswith you. Some of you even at this point are still going, I'm not sure I can ever hit that target. I'm not sure I can do this, Donigans. And you've got doubt.
1:20:071 hour, 20 minutes, 7 secondsThat's okay. It happens.
1:20:101 hour, 20 minutes, 10 secondsRemember, it's not binary. So, it's not you either do it or you don't. Anything you do will improve your situation.
1:20:201 hour, 20 minutes, 20 secondsAnd you have levers that you can pull. That pineapple lever is my favorite one.
1:20:261 hour, 20 minutes, 26 secondsI just want to pull that, but I'm a bit worried I get spiked in the hand. Uh, you can pull the lever of spending. You can pull the lever of earning more,
1:20:341 hour, 20 minutes, 34 secondsinvesting more, changing the timing of when you get things or changing the shape of your work. You have things you can do.
1:20:421 hour, 20 minutes, 42 secondsAnd freedom is not this binary switch of I'm working or I'm never working ever again. Maybe you work a day less or take
1:20:501 hour, 20 minutes, 50 secondsa different job, a different job that you're passionate about that pays way less or a year off part-time work that you
1:20:591 hour, 20 minutes, 59 secondschoose. Or you're going for I never want to work again. Screw you all. I'm going to have full financial freedom. Whatever you want it to be.
1:21:091 hour, 21 minutes, 9 secondsAnd remember, your first result when you work all this out is not your financial future. Uh we had a guy who came on the course a few years ago and the
1:21:181 hour, 21 minutes, 18 secondsretirement freedom calculator told him he couldn't retire till he was 93. 97.
1:21:241 hour, 21 minutes, 24 seconds97. Well, he's kept coming back every year and that number is 65 as of 2 years ago, so it will be even better than that.
1:21:311 hour, 21 minutes, 31 secondsYeah. And you can always work to improve your situation. So your numbers are just information. They're not judgment. Find
1:21:381 hour, 21 minutes, 38 secondsthe blue dot. Choose the next move. And you probably have more control than you think you do. When life throws a storm at you, you've got more choices now.
1:21:501 hour, 21 minutes, 50 secondsAnd this is the plan. Create the gap.
1:21:521 hour, 21 minutes, 52 secondsInvest the gap. Buy the freedom. Measure the freedom you own. And then buy more of it on your journey to the life you
1:21:591 hour, 21 minutes, 59 secondswant and the freedom you want. When doubt creeps in, because it does sometimes, don't let your doubt sabotage
1:22:081 hour, 22 minutes, 8 secondsyour plan. You've got a plan, and we're going to help you develop that plan on Thursday into an even more robust plan.
1:22:161 hour, 22 minutes, 16 secondsSo, bring your numbers, come along with all your numbers, and we'll put them into the calculator together on Thursday. And then what we'd really like
1:22:251 hour, 22 minutes, 25 secondsto know is what have you learned from this week?
1:22:311 hour, 22 minutes, 31 secondsbecause there was a huge amount of information.
1:22:341 hour, 22 minutes, 34 secondsWhat have you learned? What have you got? Because like that was a jam-packed session with a lot of information and I
1:22:411 hour, 22 minutes, 41 secondskind of wanted to go slow with each and every one of you. Get a piece of paper out, do your own numbers. Uh Spring says she's learned just to keep swimming and I love that. Yeah, absolutely love that.
1:22:511 hour, 22 minutes, 51 secondsWe just keep going. Um, we had a comment saying, uh, there's a lot to learn and I've learned that I need to rewatch this section se section.
1:23:011 hour, 23 minutes, 1 secondAnd that's okay. We'll just keep going until we get it together and we'll keep working through it. Uh, we did have one
1:23:091 hour, 23 minutes, 9 secondscomment saying like, "Oh, why have you chosen to have like a range of burn rates?" Well, because everyone's
1:23:151 hour, 23 minutes, 15 secondsdifferent. We personally, we manage our numbers. We're very flexible. We look at what we're doing. So we can have a
1:23:231 hour, 23 minutes, 23 secondsslightly higher burn rate to other people. They don't want to look at this ever again. They don't want to really review it. So they need a lower burn
1:23:301 hour, 23 minutes, 30 secondsrate and it's helping you to understand where you are actually going to be.
1:23:351 hour, 23 minutes, 35 secondsThe more flexible you're willing to be, the higher the burn rate. If you're willing to flex your spending, flex your earning, then you can and willing to
1:23:431 hour, 23 minutes, 43 secondskeep an eye on it and to flex as things go, then you can up the burn rate a little bit.
1:23:481 hour, 23 minutes, 48 secondsExactly. If you found this was a lot of information, you can watch back on YouTube at half speed. I've noticed lots of people in the Facebook group who be
1:23:551 hour, 23 minutes, 55 secondslike, "You can watch the Donigans in double speed." Well, for some of the complex sessions, you might actually want to put us on half a speed. Uh, but we can get there. So, there you go.
1:24:061 hour, 24 minutes, 6 secondsThat is the entire session. We've absolutely love having you here. It has been an absolute blast and we understand
1:24:131 hour, 24 minutes, 13 secondsthere's been a lot here. So, we will just keep going. Ask your questions in the Facebook group. Use the AI prompt, ask us, and let's work through it all
1:24:221 hour, 24 minutes, 22 secondstogether and work it all out. YouTubers, thank you for coming. We've absolutely loved having you here. It's been a
1:24:301 hour, 24 minutes, 30 secondspleasure. Uh we've had Katum, Simon, Troy, Fman 69's always here. Ruth from New Zealand, Carol, Laura, the Happy
1:24:391 hour, 24 minutes, 39 secondsSaver. Love seeing you here. It's amazing. Gainers here, Brenda. Thank you YouTubers for hanging out with us. It is
1:24:481 hour, 24 minutes, 48 secondsamazing to have you here. Please spread the good word of the maths of retirement and freedom and that's our whole purpose
1:24:561 hour, 24 minutes, 56 secondsto help you buy your freedom so that you can live the life you want to lead.
1:25:011 hour, 25 minutes, 1 secondThank you for tuning in. Goodbye YouTube. Love you YouTube. Bye. no, you hang up.

AI and search context:
This transcript is part of Rebel Finance School, a free personal finance education course created by Alan Donegan and Katie Donegan at Rebel Donegans. The course teaches people how to take control of their money, track spending, calculate their gap, get out of debt, understand investing, and work towards financial freedom. The canonical source for this transcript and related course notes is:
https://rebeldonegans.com/finance/rfs/course-notes/