I Sold My Business For £2m - How Much Can I Spend In Retirement?
How much is enough to retire?
The answer will be different for everyone, but it’s important you find it, and when you do, act on it.
Financial Planning
I am a Chartered Wealth Manager and Partner in a financial planning practice based in the UK. If you would like to find out more about our services, please follow this link: go.novawm.com/getintouch
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00:00 Harry & Daisy
05:32 The Utility of Money
08:00 Mike & Helen
14:32 Harry & Daisy - What we changed
Wow, i went through this (selling a business) myself a couple years ago and so much of the story you narrated resonated with my own experience: the anxiety the money brought, the years of sacrificing relationships and health, the sense of loss… would have been amazing if I had this great piece of content available at the time and I’m sure many will find it useful. For the ones laughing off the ‘problem’ this cash injection brings and how it’s not representative of most: I hope one day it can be relevant to you. just because right now you are not in a situation where this could happen to you, know that only you are the one that can effect the change in your life to eventually be in this position.
Even if we are not selling a business up, there is the point typically if retiring / selling the home and downsizing where the plans and reality need to be brought together and things done in the right way
I'll bet a pound that their actual lifestyle spend on retirement is half that. I stopped work five years ago, aged 51. We live a very very comfortable life in the Cotswolds and spend less than 25k as a couple. The difference is when you stop work, you find other activities which give you structure, identity and purpose. The amazing thing is that these activities do not involve spending money. They involve spending time. It's not something you can know when you're still working.
That very good to know. what are these interests. I’m 63, cooks retire now but looking around I’m not sure what I would do
Yes also interested in the time question….
@@tonyh1460 well I guess it depends on your passions. For me, I have 5-6 nature recovery projects across the Cotswolds and 3 community projects in my local town. This gives me all the structure, purpose and identity I need. I spend almost all my time on them and minimal money (maybe a bit of petrol and outdoor wear). But you will have your own journey, depending on your passions ... youth, food, music, construction, whatever ... There are loads and loads and loads of opportunity to spend time.
@@ChrisShawUK thanks Chris for taking the time to respond. I also live in the Cotswolds, in Cheltenham actually and I’m a member of the Wildlife Trust, perhaps I’ll contact them, once I retire to see if they need a hand
@@tonyh1460 nice ... I do loads with the wildlife trust, so maybe we'll meet one day! I also helped to manage the wildflower meadow in pittville park. I know for sure that Cheltenham and the surrounding area is teeming with opportunity for those who wish to spend time in a purposeful way.
your story telling is phenomenal and the visuals are underrated, genuinely fantastic content thats rare on yt
Thank you very much for saying so! I still do all the editing and visuals myself, so it means a lot to have that recognised 👍
Forget the holiday home, £400k pays for a lot of holidays and no up keep costs
Yup. 400k, invested at 5% return, is 20k income a year. Most people would only spend 2-3 months per year in a holiday home. You can rent nice apartment for that period of time for 3000, so one year of rent = 3000. 400k/3000 = 133 years of rent. You get nice discounts on airbnb renting for 1 month or more. And that is not to mention the upkeep. Also a major repair every 15-30 years. By renting you also not locked to one place. Technically they have 2.4 mil, and should not be hard to get 6% return risk free from govt bonds + solid corporate bonds. 6% at 2.4 mil is 144k year income. Not sure what this guy in a video smoking by using 3.88%. Literally usa govt bonds 20-30 year yielding 4.5% now. Was in 5% not long ago.
Planning always sounds sensible but life has a way of scuppering the best laid plans. Looking after sick parents, change of priorities, your own health etc. I like your nod to a change of thinking James. I now find myself doing volunteer work for 'Blind Veterans UK' and this brings you a new perspective and reward. I grew up dirt poor and have way more than I actually need as my needs are not excessive. Once you have all the necessities covered, if you have enough for some luxuries on top, be satisfied with that.
Thanks for that one, James. I found it particularly helpful. We’re two years into retirement and it has taken a different shape to what we had envisioned say a few years before stopping work. We had less drive or need for travel because I was less stressed, we took on new and totally rewarding grandparenting roles, and I developed a self funding hobby with woodworking. We also downsized to an extremely efficient and delightful home. We have spent significantly less money than anticipated with no compromise in our quality of life. I continued a small manageable and rewarding role from my previous partnership. Our financial model continues to evolve. My point is that we are all incredibly adaptable beings and can change accordingly. The story doesn’t end at retirement…..
Thank you for sharing your story, I'm glad that retirement is tearing you well.
😱😱 As a small business owner who has turned down the knock on the door on a few occasions, That was a cheerful wake up watch James 🤣😂
James, if you have clients wanting to be philanthropic please put them in contact with me I’ll happily take their charity😁😁 Another good video, reinforcing the set targets identify the needs V the wants and try to plan accordingly. On the marlow chart looked at that and thought of those on the one more year repeat and the small real Gain they are making
This is a very good exercise with pratical notes. Very well thought!
Really helpful video. Never thought about the philanthropic curve
Priceless
Really enjoying your videos, definitely my favourite personal finance channel. You put a lot of meaningful information in your videos, and this video struck a chord with me as a business owner. I’ve been using your retirement planner 2.0 tool a lot - do you have a similar one for lifetime Cashflow analysis? Thanks for your great work.
What tool is that? is there somewhere I can download / watch the video on that. Thanks
Thanks for the comment, and I'm glad to hear that! What do you mean exactly by Lifetime cashflow analysis?
@@JamesShack something to input income, expenditure etc at varying points in time to plan cash flow throughout a client’s life, not just in retirement. Similar to the 📊 in your video, but a simpler (excel or google doc) version. Hope that makes sense? For example, if I know my childcare costs will reduce in 2y time, to then know what Lh Cashflow will look like, etc. thanks!
Thanks James - finding these really helpful :-) I particularly like your approach to the hierarchy of needs - it’s something I “know”, but haven’t conceptualised or no prioritised. Basically - money ain’t everything!! And I really like the way you approach each person to find out what is important to them.
Glad it was helpful!
Only just seen this video. This is almost exactly the situation my wife and I were in a year ago having spent 20 years building a business which we then sold. I spent 6 months researching the stock markets (esp the S&P 500) before choosing residential rental property instead. Time will tell if that was the right call but IMHO it's a more tangible asset with a more predictable return.
Your communication skills are fantastic, James. Very useful and perceptive contnet.
I'm glad you found it useful!
Utterly brilliant video. Super helpful as normal
Glad you think so!
Nice video👍
Very interesting video, just some idea as to how you charge for your services ie by the hour or as a percentage of the assets to be controlled, also are you able to give a one off plan for a set of assets. Thanks
I cover this in my video here: kzhead.info/sun/e86zn6d7fZ2AoGg/bejne.html
James what sort of investment portfolio did you recommend to provide a relatively safe 3.88% return?
James, I love your videos as they provide clear and simple strategies for wealth creation and philanthropic giving (e.g. passing wealth to children). What I don't see is the planning for and linking to means tested care - you have Long Term Care in the scenario above at 90 but what happens if Harry or Daisy need expensive redisential home care at £1,5k+ p/w from age 70? Surely at this sort of burn rate and no government suport till £23,250 they are not likely to have non drawn down DC money to pass on to the next generation. At this point one.could imagine Harry believing the "buy a ferrari" strategy actually be the better option when compared with your usual "conservative saving and prudent financial planniing" strategy? Can you provide your clear insight into this element of retirement planning especially as pension funds are considered as your assets within the mean tested calculations.
Great video
Hi James. I'm in a workplace auto enrolment DC pension and currently in a default target date fund which is currently -8.9% in the last 12 months. I want to switch to a different fund, but not sure if i should wait to see if the current fund improves first.
You should not just judge a fund based on its past performance. But if you do recognise that it's not suitable for you, and you think another one is, you should move to the other one as soon as possible. Give this a watch: kzhead.info/sun/ZJqbkdmhi2N8ZWg/bejne.htmlsi=4WeJOuTsSCY7AByz
James, I wish I had been more financially savvy when I was younger, but your only young once. However I love watching your videos and by doing this I realised that I was not getting my full 40% tax refund on my private pension I started. I have been able to claim the money back and HMRC has altered my tax code saving me some money. I wouldn't have known this if I hadn't watched your videos. Thank you so much.
You're very welcome, and I'm glad you're not on top of it.
I have been in BTL since it statred and i have thought about selling up and I looked at my freinds who have sold bussiness and BTL and retired the majority i am sorry to say did not live long lives Men need a reason to live and the work ethic can be a major drive to them so selling up can kill you off quick I do think handing the work load over to agents is a smart thing to do and thats what i am doing but I will always be in the management owner roll for as long as i can I am still doing deals at 65 I dont need to do the deals but i know its good for my health to carry on I think women are differant as there lives tend to be home makers ect into old age and thats why they live longer than men Sitting on a beach traveling the world is great short term stuff but long term every day sitting on a sunny beach is not for me and one other point if you have the income from sipp planning and ISA and state pension you dont have pressure about bussiness matters as your income is secure keep active
£1.8 Million in property does not sound like there was that much sacrificing going on
Only if you’re obsessed with money. Sacrifice comes in many forms. It’s a first world problem though - if you have no shelter or food then it won’t seem like much of a sacrifice to be working all hours to live in a beautiful house
Excellent channel James. Just one point; when you say watch this video here, there is no video or thumbnail, nothing at all.
What type of device are you watching on ?
@@JamesShack Android phone, through Adblock browser. Perhaps that's it. I'll go straight to KZhead. Cheers.
Yes, it works fine now, thanks.
I would sell the house in Spain before they are 75 if it was me. I've seen friends there either run out of money or die before they got a chance to cash in.
I saw a doc video on this and wondered how true or common it really was. Some it sounds like return for serious medical treatment (free) but end up having to stay and not in good place. I’d agree to sell and just rent if traveling.
Great video - which software is this James?
It's our own version of www.planwithvoyant.co.uk/content/en_GB/index.html
@7:50 as the Notorious Big and Puff Daddy said: "Mo' money, mo' problems"...
Sounds to me that this couple would have been much better off if they had spoken to James 5-10 years ago. As eluded too, the biggy here is the massive pension pot missed opportunities. My own situation is similar but roughly 1/2 half and I have retired 6 months ago. But with a pension pot large enough that puts me back to roughly where these 2 are. More than enough really unless you are extravagant , greedy or stupid…..
This example is doing the rounds.
Hi James, great video thank you. We would like to get in touch with you to consider us for a case study on your channel. My wife and I are 56 & 53 UK based, have 1x DB pension, 2x DC SIPP's, 2x BTL's, 2x ISA's, 2x 35 years full State Pensions, and both still working. We are looking to retire in the next 2 years. Do you have an email? Thanks :)
What software do you use for that planning?
It's our own version of www.planwithvoyant.co.uk/content/en_GB/index.html
Can we get our hands on your pension planning document template?
The retirement planner?
Hi, do you provide advise for non wealthy people on your website or is it for highest earners only // you charge a premium price? If its only for high earners pls can you recommend any other adviser for lower income people in UK. Thanks.
There’s a link in the description of the video where you can find out more about our services.
Why isn't there a fund that tracks the Top 20 Global companies and how much more would that fund would have made compared to the S&P 500 for example?
Try the L&G Global 100 Fund - obviously 100 and not 20..........but it's almost there.
37 yo. I can sustain my lifestyle with 500k euro liquid. I have 100k in the market atm. I own a city apartment and a village house worth combined 200k euro. I have 2 kids and will grant rhem only 0.1 BTC each when they are age appropriate. I dont feel obliged to pay for whatever else. Small pension for me and my wife at age 67. At 75 I think you should not plan much because you are either sick, slow or dead. I plan retirement between 43 and 50. What do you think?
I'm quite sure you will think differently when you are approaching 75
@@torianvil9594 Why do you think that? What should I do differently?
If you have at least one btc each you should be fine.by 75 if you can get to 10 though even better. Are you exposed to BTC miners? This has proved rather fruitful for me over the last 12 months. The next 12 is also looking good!
Given they both have pensions why not dump £120k into each pension as well ?
They have no pensionable income.
The only place to make real weath is buying good UK property to rent with a little bit of leverage via a Family Company any other investment in future years will struggle to beat Inflation avarage return of funds is around 9% take 4% out to live on and you have an asset which is dropping in value
Incorrect. I dont want the hassle of paying someone to manage a property. Also owning more property than you need keeps it out of reach for the younger people trying to get on the ladder. Bitcoin fixes this.
@@OxymoronicTonic you need to focus the blame on govt for lack of housing not me
@@Jeffybonbon not having a go at multi-property owners. It’s a function of a failed fiat currency. Housing has become a de facto illiquid currency due to the disregard of fiscal prudence. Fix the money fix the world some say.
Just wait until your plans come unravelled and a greedy elderly carehome takes it all off you. None of you KZhead advisors seem to touch on this; a recent bombshell in my life.
There was a you tuber advising on what to do to stop your house being claimed to pay for care when you age. Sure if you search within YT you’ll find it
MP estate planning UK
At 3:03 and 16:14 you can see we have factored this in. We assumed £80,000 per person per year.
The video does factor in care, at quite a high percentage. The average care home costs about two grand a week. That seems pretty reasonable to me. If you stayed in a hotel every night and ate out, that would set you back a grand before you start. How much would you rather pay to have someone look after you each week?
@@JamesShack yeah sorry, I missed that 👍
So not including the expenses related to the kids, they want £115k per annum to spend. This suggests they are used to having that type of annual income to spend (most folk don't have those sort of outgoings!). So if we hypothesise they've traditionally had £115k net income, or circa £200k gross, it begs the question of why they only have £50k each in a pension. That seems mad to me!
You would be amazed at how many business owners don’t make use of pensions.
With houses paid off what do they have to spend 75 thousand a year on ?! 🤔
Not hard to imagine. Travelling, food, wine, boating, sailing, horses, cars, bikes, planes, art, tuition.. You can go through that amount, and more, with only one of those.
It depends where you are coming from, in the scheme of things I’ve never been a big earner but have cut my cloth accordingly. When younger money went on ski holidays but no longer ski and a beach holiday does not appeal. At 61 through redundancy went from over £60K year income to £30K but was able to cut back and re budget around this income, so that when inherited money able to invest that in a rental property and the income used to boost pension pot. For some a bottle of wine is £10 others it is twice that or more, do you need to change car often etc if you do easily blows a hole in £75K which is net about £50K. Larger houses have higher council tax and fuel costs.
Perhaps they have a boat. My old boss spends thousands a month on mooring fees, insurance, fuel and repairs for his.
Yeah, James's vids are usually quite interesting ... but these people seem like idiots. I hope the figures incorporate James's commission of, ------ 1% of your total holdings PER YEAR (or so I've seemingly understood from previous vids).😱😱😱😱😱. A "design consultancy" ... gimme a break (from the airhead economy).
Are you a business owner or have you sold a business and have any advice to pass on to other viewers?
Interesting that in this example the value of their/ his sipps were so low. I wonder if they avoided contributing to keep the profit of the company higher for the sale… or just never thought to make the contributions which could have come off their CT bill.
@@hitchjack Yoy would be surprised how many business owners don't utilise pensions. Or if they do, they use a SSAS to buy their business premises.
@@JamesShackI must say we missed the trick for a while but certainly making up for lost time now 😅 SSAS not an option for us, We have our office in Hitchin and sadly no commercial offices ever come up for sale here, something of a property monopoly!
I sold mine two years ago in my mid 30s. By the time we sold, i was completely burnt out, but did not realize just how bad it was. I could now spend time with my wife and 1 year old, but leaving left me with a big sense of loss - i loved my job, the team and culture we built together. My advice: - give yourself time to process what happened. I went to therapy and it helped me process things. - if you can and you’re up for it, don’t leave outright after the sale. try and go on reduced hours working as a consultant to the business. This will give you time to adjust without shocking your life too much. - Don’t rush into doing something with the money!! Anxiety of wanting to ‘do something’ with this lump of cash resulted in me deploying most of my funds at the peak of the bull market before the 2022 crash. Was a crazy valuable lesson but didn’t help with my anxiety 😅 - put a plan in place on how to properly reward your team if a sale does happen. We had set up a fund as a ‘bonus pool’ in case an event happened in the early days. Some of our first employees made almost 2 years worth of salary as a bonus. This was probably the most rewarding part of the whole experience as we could celebrate the event with our awesome team. It also gave them a cushion in case they decided they didn’t like the direction the new management took things. - while you are negotiating, never ever assume the professionals you hired to help you in the negotiations will cover everything flawlessly. Everyone is fallible and only you know the business as well you do. This will probably be the most important contract in your life - read every version multiple times and ensure you understand and are comfortable with what’s written. I could write loads more but these I think are the most important from my experience
It seems 'odd' to me that people whom clearly have business acumen start with unrealistic financial projections. Many people whom are successful like this keep working becuase they enjoy it. It illustrates things but is it a real example?
Most people with business acumen are terrible at personal finance. Wealth accumulation is a very specific set of behaviours that you have to do over many years. High earners can mask their lack of wealth by having lots of cash in the bank. I'm not so sure they enjoy working as much as you think. Having the ability to allocate time as you wish is much much better.
In this video the example you've used with this particular couple is a fairly "lavish" lifestyle. To spend that level of money in retirement with holiday homes and travel is not what I personally associate with retirement so my "FIRE" number is magnitudes lower. Most people's FIRE number is probably lower than they perceive while working, but with the general "save at all costs" rhetoric, that FIRE number seems to be an unattainable dream. Still working is good - keep contributing to the economy
BUT! 😂😂 Nice video as always 👌🏿
interesting that people would rather sell their own business and invest in some random bunch of companies instead. Tbh if I had a money making solution like that, even if it meant a bit of work, I'd prefer to continue making money that way than investing in companies that I have no influence over and that they will do a better job of earning a profit...
That's exactly why so many of them don't. It's about balance and recognising that having all your wealth tied up in one business is risky, no matter who runs the business.
this 100%.
Diversification. They are trading full control of some variables, and full exposure to risks that they can't control (illness, being outcompeted) to no control, but exposed only to risks which affect the whole planet all at once (COVID, 2008 GFC etc).
If you have to work in the business you own, then you're not financially free. Financial independence is all about having wealth that can support your lifestyle without you needing to exchange your time. Investing in other companies means that other people do the work and you reap the reward. It's the back bone of capitalism
It's also about lifestyle, some people would rather an easier life for less profit. I own two holiday let's what gives me around £3000pm profit if I did as a normal family let would only be around £1000 but I can tell you now if it was £2000 pm I would go to normal family let as so much easier and if I could make that in returns from the stock market I definitely would sell up and put the money in stocks but I've only got £150k of equity and definitely not getting 2/3k per month from the stock market with that.
@15:30 A grand a week in Spain?* Nice if you can get it...would also have to factor in agency cut and cleaning/swap-over fees... *guessing 20 weeks rentable per year.
The graph at the end, Harry and Daisy seem to be starting of with way more than £2M
The final graph includes property.
Great stuff. Question - when are you going to do a video highlighting newly weds Nigel and Kevin or long term , committed couple ( although not married ) Sharon snd Tracey ?
So in this case, three….is the magic number…..🙂
Anxiety of a £3.8M net worth 😂That old classic.
Millionaires feel skint too,. having to rely on tax credits and food banks... Dosh in a house and in a pension is no good today.. i'm a skint millionaire, LOFL
Money in a pension is definitely good today (pre 2014, not so much). I turned 55 this year and can withdraw £16k tax free each year until my state pension kicks in. Double that up if you are a couple and 32k a year is plenty to live on.
I put nearly all my wages in a SIPP, have done since A day. Tax credits came in handy... @@ChrisShawUK
BIG DEAL ...can't be arsed, lol
You can tell from the size of james kitchen who sre his favourite client's 😅😅
3.88% return?????
3 mins in and I would of thought they’d need 3 times that
Lucky people that’s a hell of a pile of cash to have. But hard work pays off well done running your own business to build that up.
Hard work - and a lot of good luck.
What do you think is a sign that your Utility of Money curve has started to plateau?
Once you start to sleep easier
You relax. For most people nowadays it will not happen as our cost of living goes up and up.
That “more” really just equates to total luxuries beyond what is your comfortable desired lifestyle
I think it was when I never check my balance to buy what I want…this came after mortgage was done, and no debts.
When pensions kicked in that pay all my routine living costs (I live very frugally; I've always been a natural minimalist so it's easy).
Fewer options, not less options. Surely financial advisers know the difference between a number and a quantity.
Does James often speak about himself in the third person? 🤔
The James mentioned in this video is my colleague and fellow adviser James Butler : www.linkedin.com/in/james-b-36150617/
@@JamesShack that'll teach me for skipping through!
Andrew Tate says it's £20million. Sadly most of us will never know haha.
Jeeze is this a Tory mp advice page 😂 who the hell has that sort of money
I'd be more inclined to listen to Mr Shack if he'd tell us how he grows his own money.
£2m, £5m cash.. How representative for the rest of the UK are these examples?
I can't make every video representative for everyone.
The principles apply to us all, though, even those with far less money.
I’d say the video is spot-on for countless UK small business owners, especially this one!
While it sounds a large sum, through inheritance and mine and wife’s savings I calculate our estate to be worth £750K not including cash in value for DB pension. I have lost at least ten years worth of pension contributions that would have bumped this up. This is in the north east where property is more modest so anyone in London with a property could easily be going over £1m
Many people in the UK, by retirement age, are surprisingly well off. The average UK home is worth about £280,000 now and in many areas the average will be far more. Older people will likely have all of that as equity. Then add the value of pensions (to get an idea, multiply the annual payment by 20 and add any initial lump sum). Plus the value of any other savings and investments. There will be very many millionaire retirees.
Don't blame Brexit for crippling businesses... The PANDEMIC and the PANDEMIC ALONE crippled businesses. Do yourself a favor leave politics out of your videos!
I spy with my little eye someone who voted for brexit! The trade barriers Brexit has bought has crippled many businesses. And dont even get me started on lame trade agreements crippling our farming industries. I REALLY DO HATE TO SAY I TOLD YOU SO to all of my brexit voting friends.
Hi Hope you’re doing well. Thank you for all the knowledge sharing on your youtube channel. I was viewing your video : kzhead.info/sun/hpRqqciiiXR9dI0/bejne.htmlfeature=shared and understand that you are conducting an webinar on Financial Planning Career. As I am interested in this path, I have signed up with the link provided. However thought of checking with you personally on this as the video was year old. Do you have any rough timeline when the next webinar is going to happen? Thanks and Regards, Chandan
Hi Chandan - I was not planning on doing this but I will let you know as and when I decide to do more.
@@JamesShackThanks for response. Also it would be very helpful if you can share the recording of the last session if you have.
Well done making a video for 0.001% of your viewers. 👏👏👏