How to afford a good retirement - 9 levers to build wealth

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0:49The retirement that our parents had probably is not going to be the same shape of retirement that we have. If you're relying on auto-enrollment and you want a retirement which might be similar to what you'd expected, you're probably going to fall short. George Agan is a chartered financial planner who's helped thousands of people to plan for their financial future. If you're a regular listener to the podcast, you will have heard me say that we will likely need millions to retire. Will you have enough? If not, how are you going to get there? There's little things like that sound minor and they do take some discipline, but they can have an enormous impact on how much you actually can save over your life.

1:25What's a young person got that somebody who's 65 doesn't have time?

1:32one thing that makes you quite unique is the fact that you're of our age so you're our generation but you deal with people in the main that are near retirement or of previous generations and what we want to explore today is the challenges that face younger generations and why that might be different to say your typical client and what they can do about it can we start really broad and maybe just talk about what do you think the differences are between the people that walk to you and sit down near retirement and the people who are just getting started on that journey? Yeah, sure. And the differences are enormous, frankly.

2:05There's no two ways to get around it. If you think about a simplified thing, house price to earnings ratios are eight, nine times. So it's very difficult for people to get onto the housing ladder. In relation to our relationship with our employer, going back to baby boomers, and I want to say not all baby boomers, everyone's individual, but as a generalization, you know, baby boomers had a much more secure relationship with their employer, much more consistent job for life. You know, kind of people literally could have a job where you'd get the gold watch at the end of 30, 35 years work. We millennials and Gen Z have a much more transactional relationship.

2:42We don't have as much security. As far as a pension system setup, defined benefit schemes were generally available for quite a large cohort of baby boomers. They're fundamentally not from millennials, with the exception of people who might work in the public sector or be very lucky in the private sector. So what that has meant is it's meant that there's been a fundamental change onto what retirement is going to be like for somebody of millennial or Gen Z age. And the key thing that I would kind of like to articulate with that is that it really is up to you as the individual. The onus has gone from potentially having quite a lot of security through an employer to potentially being all on to the individual.

3:26I don't want to, like you said, we don't want to generalise. And I think it's 10 % of boomers have like nothing, essentially. It's not everyone stepped on. But do you think that it's, as in generalisation, that it was easier then for those people to have a comfortable retirement without thinking about it? I think the word easier can do a lot of heavy lifting and I think you're absolutely right in relation to the fact that we can't really generalize for an entire population what we can say though is that what we've got now in relation to um you know our retirement for millennials if you think about kind of the things that are affecting us we are going to live longer which is a good thing you know longevity is a really key element we have auto enrollment which has been a huge success, but it's going to get us nowhere near the type of retirement that we might want.

4:17You know, I did some research recently for a video, and it basically assumed you had someone who got the median wage consistently all the way from age 23 to 60 at retirement. And assuming they invested aggressively, the money ran out if they wanted to retire at 68 to 69. What you've done there is a cash flow model, right? Yeah, yeah, effectively. So what it assumes is somebody from day one, from 23, earns the median wage, which is around£31 ,000. It assumes they get the auto-enrollment minimum based on qualifying earnings, so it's 8%. And it assumes that they don't make any bump-ups. They literally just contribute.

4:53And then the return they get is 5 % real. So that's after inflation and charges assumed as well. Now, just for some historic context, it's 5.3 % real as far as 1900 to 2022, as far as global equity. So it's not an unrealistic return expectation. What that assumes, if that individual then retired at 60, is the money would run out at 69. And the key conclusion is, if you're relying on auto-enrollment and you want a retirement which might be similar to what you'd expected, you're probably going to fall short. So you're basically saying, because I do think that a lot of people listening, maybe not listening to this, but a lot of people out there, the only retirement saving they're doing is auto-enrollment.

5:32Yeah. And you don't think that that's enough? I think it's important to recognize that it will depend on expectations and one of the things we're going to be touching on a little bit later is perhaps what enough is because it's so individual it's literally one of the next questions

5:49taking my shine yeah yeah enough is is frankly why I'm in a job you know my my job for my clients is basically to find out what is enough for you and that is the key thing and it's so individual You know, when I did a video and I used the retirement living standards data just as a guide, and one of the first comments was, this is total bollocks. Why are you using this? Because you're scaring everyone. And he's right. You know, the person I'm saying here, I'm just unconscious biased there, was an angry person. I'm assuming it's a guy. But I was like, yeah, it's true. But what the retirement living standards do very well is they put a stake in the ground and someone has to put a stake in the ground.

6:31but ultimately yeah it's going to be in it's going to be highly individual as far as what your expenditure is and that's going to really impact your retirement planning but now we're all living longer so does that mean we're going to be working longer retirement age is going to be later and then like damien said how much do you need in retirement now because if you're living longer your retirement's not going to be maybe 10 15 years anymore might be 30 30 years so how do you know how much you need well not if you party like me and damien but most people will have a long retirement hopefully yeah yeah exactly and i'm sat here with an abba t-shirt on me i don't think anyone's believing that i party hard anymore you don't see the socks either i got the abba socks on oh you got a sock on as well i saw them on instagram yeah mix matching ones yeah just so i can bring two of the crew to the party anyway sorry yeah how do people know how much they'll need i think that you can use some simple heuristics just to get the ball rolling that's the simplest thing uh shortcuts mental shortcuts okay i can even pronounce heuristics yeah heuristics i don't get to hit that very often so you were quick with that yeah yeah you can just use some simple you know they saved like the four percent rule um and they say the best way i've heard that described is saying it's a terrible rule but brilliant guideline i think that's true i personally prefer the rule of three seven five which i took from a guy dimensional and basically the problem is with the four percent rule is no one has a single idea what they spend every year You don't have a clue.

7:55The rule of 300, if you times your monthly income by 300, that's basically the 4 % rule. But what the rule of 375 does is it basically facts in taxation. Because one of the things everyone does with the 4 % rule is they assume that taxation and charges don't exist. And they do. So what 375 does is effectively factoring 20 % inflation on withdrawals. So you're multiplying your monthly gross income by 375. Yep. And that gives you a total pot figure. Correct. And then you would draw 4 % from that as a... Well, just remember, this is a savings guide, not a withdrawal strategy. So if you think about it, okay, how much am I generally going to need?

8:27The best place to start, and this is what I would do with a client, if they don't really follow their finances really closely, let's just start with the basics, which is, okay, how much money do you have left over? Really simple question. You know, what do you get paid? How much money do you have left over? It's like, left over? What is this? What is this concept? Yeah, yeah, exactly. But that's the case, fine. But then obviously we need to factor in, especially if we're considering retirement planning, there may be things that don't exist in your retirement. You might have mortgages now that you're potentially going to be paid off.

9:00There's going to be other changes. But that's going to give you, if you think about what money is spared minus the savings versus what you're getting in, that is a reasonable guide. Times that by 375. So just to give you an idea, that's two grand net would be 750 ,000. Three grand would be 1 ,125 ,000. So it's going to be a really big, scary figure is the truth. But that assumes that you're then going to never need to work a day in your life. And I believe that the structure of retirement for younger people is going to be completely different. And I think that's, I kind of, I hope that's an empowering message because I think that does give opportunity.

9:40But I also do kind of want to really acknowledge when we're talking about this is everything I'm going to say is using my expertise as a planner. It is not going to be a solution to everyone's problems. I also acknowledge that a lot of people are genuinely really difficult situation right now financially. I kind of hope that the things that we talk about are going to be useful even just to think about as a framework but I'm not suggesting at all that they're answers to everyone's problems No I think what from reading the notes and things and listening to you talk what you're just trying to do is say these are the things that you can the levers and the things that you can do to try and have a better retirement and I think what people forget about retirement is that really it's a modern day invention in the format the Romans introduced like a payment for soldiers to get them to go to war But I think the industrial revolution was when basically factory owners said, this guy here is 70, still working on the line, and he's very unproductive.

10:34We need to put a younger person in there so that they work harder on the machine. And the guy who was 70 was like, I can't afford to stop. I work till I die. So they basically incentivized them to leave. And that's the retirement. And those individuals were broken physically. So they were stopped at retirement. They didn't do any more work. and I think we had this big boom in the 50s with economic output that led to people having retirements where golden years that kind of branding and I think it a lot of people hold on to that idea and they think they deserve that but I actually think if you look at people in retirement my granddad is an example my mom who recently retired they go back to work because they desire something and I don't think I think if we say to ourselves I might be flexible I might work it might not be this idea of golden years where i stop but it's you know that that can be a positive thing i don't think it's negative yeah i think you're absolutely right and and also i think one of the things that maybe people haven't articulated but i am seeing a lot from like younger individuals i speak to i've got a few younger clients and so forth is that we do i think everyone the idea of waiting 30 years to enjoy your life i think is something that most people We've rejected that.

11:46I think we've rejected that. That was old school thinking. And if you think about that and why we would reject that, well, basically it's very, very hard for people to get onto the housing ladder. They're having to make serious trade-offs. So live for today, but not at the expense of tomorrow. And I think that's really important because at the end of the day, you don't want to be in a position where you're working all your life. This is what I fundamentally disagree about, the FIRE approach, is the financial independence, retire early thing, is a lot of it is born on frugality. And of course, if that's your bag, enjoy it.

12:14of course you know i'm not going to tell you how to live but i don't think it makes as much sense i think i would much rather use a combination of tactics so that i'm enjoying and i'm crafting my life around as much as maybe i can afford to put away but i'm not then thinking oh no i can't wait till i'm 50 55 and i can you know give up work you sent me a meme earlier before this conversation where it's like an old guy was like the young guy filling his pension then it cut to him as old he's like great i've got billions in here but what the fuck am i gonna do my knees are broken we should spend it when you were young and i think i i have to check that like honestly i'm always encouraging him to blow his money on me and the dealy we spoke to the plain bagel guy yeah did you richard coffin and he was talking all about frugality and i was just i just think a lot of people are raised delayed gratification isn't really something that comes with our generation it's a lot like instagram immediate likes like I want to raise now.

13:11I want this now. Everyone wants things like yesterday. So the concept of just living a frugal life so you can enjoy later in life, I don't think. But we're constantly told, you're not saving enough, save more, save more. So I think there's that kind of contradiction. Exactly. Basically, everyone's in this kind of juxtaposition where you've got people vomiting their wealth over you 24 hours a day on TikTok, Instagram, going to these incredible restaurants and all the rest of it. And then you've got idiots like me coming on to podcasts being like, oh no, 16 % saving rate, just do that. So you've got to customize it for you.

13:43I think kind of my, one of the things I always try and do, especially if I speak to anyone younger on a planning sense is that, okay, you might not be able to save 16 % of your income right now, but do you know what's really valuable? Your financial habits. So if I can get you operating and basically adopting really solid financial habits, that compounds, you know, Damien, with your savings rate, you didn't start day one with a really high savings rate that's probably something that improved over time and that's exactly it and then one of the things on the video that i did where it started as you know the person's running out of money age 69 this is dreadful one of the most powerful levers was basically they just every time they got a bump on their pay uh pay scale they put a percentage aside so it's little things like that sound minor and they do take some discipline but they can have an enormous impact on how much you actually can save over your life so from for my personal example i started say like 20 pound 50 pound a month or something back went back in my my 20s and i beat myself up because it wasn't 50 60 but like you said i established a habit and and as my income's grown the saving rates grown with it a lot and it's about having that faith in your own ability long term to earn more money and to improve the situation and it doesn't mean that you shouldn't start today you know so i want to now look at i think most people listening to this understand that retirement planning is important but i think the way you've created these or you might have created them or you might have stolen them but we'll give you credit borrowed from a friend plagiarized adapted standing on the shores of jones a true artist well you've you've put together these kind of frameworks and different ways of thinking about things that might flesh out how people can approach this in their life if they're just starting i want to start with the three ways that you look at building wealth sure we'll go through each one if that's okay and just have a chat about them and when people might use them the first one is asset focused so do you want to just tell us what that means yeah so so this is the traditional kind of financial industry financial planning personal finance whatever tactics which is basically um financial planning can be really complicated but if you think about it as effectively like four quadrants sort of earn spend own and owe they're the four quadrants which dominate your life and money effectively very simply one day that earnability is going to go away at some point it will it's going to be very difficult to earn throughout your entire life now in your normal working life what you're earning is paying for what you spend and also maybe what you owe if you have like a mortgage at a certain point though we ideally need to be in a position where what you own the other part of the quadrant can pay for what you spend.

16:24And that in a nutshell is what we need to do with financial planning. We need to make sure that you're investing over time so that you have the ability so that one day if you decide to maybe reduce your hours or maybe you're not in the ability to earn as much, your assets can potentially pay for that. And that's the asset focused approach. So how can we do that? Well, basically there's a ton of options. And the way my preference as far as what I tend to do for clients. And I want to acknowledge that, you know, you can buy by to let's, you can do all sorts of things, but you know, something that is going to generate you, something that generates a rising income and a rising capital value over time, that's an ideal asset.

17:04So my personal favorite is global equities because at the end of the day, they never call you at 4am in the morning. I think it's a wonder class of, I think it's the best asset class in the world is the truth. It comes with volatility, but you know, it's completely hands-free. and then once we've done that we can consider okay let's invest in assets property bonds equities all the kind of stuff the typical financial kind of planner or the personal finance guru would say how can we then leverage the tax position so there was some research from the taxpayers alliance which indicated that in direct and indirect taxes an individual household sorry i should say will pay over 1.2 million pounds in their lifetime in taxes.

17:45That is a lot. And that's things like VAT, that's things like taxation and so forth. So how can we use the tax system to our advantage? And this is very simple. This is, you know, I acknowledge it's really difficult for like a 20 year old to be like, put some money into your pension. But when I'm speaking to someone who's younger, what I will tend to say is, okay, do you care about being financially free at some point? the answer normally would be yeah actually yeah I do I'd really like to be in a position where I have the freedom to choose whether to work or not if that's the case then okay it's one of those sections where you're going to be financially independent it's going to be in later life and pensions are incredibly incredibly tax efficient because your employer puts in but also if you think about the fact you've got a pound of extra earnings today well you don't get the full pound so depending on your tax rates you might be in a position where If your basic rate, you'll get 20 % income tax, 8 % national insurance.

18:40So you're down to 78p. If your higher rate, you'll get 40 % tax, income tax, and 2%. So now you're going to get 58p in the pound. So if we think about that trade-off between, okay, so I've got money that I can spend today. And if you enjoy it, and it's something that helps you live your life, you absolutely should do. But if we then frame that another way and say, okay, well, what happens if I contribute to a stocks and shares ISA? What happens if I maybe contribute salary sacrifice into the pension? So you now save on the income tax and the national insurance. So your pound that was maybe if you're a higher rate taxpayer going down to 58 now remains at a pound.

19:20The difference between that 58p versus what you could maybe invest and get a 5 % real return over 30 years is 6.3 times. put very simply to get five thousand pounds into your pocket if you use salary sacrifice you theoretically could get 25 30 grand yeah and that's a year of your life marshmallow study yeah and and what i'm trying to what i try and encourage my younger clients or all my clients but it works specifically well with younger clients because it's it's uh harnessing compounding is let's try and think about this as buying time because you really care about your financial freedom and when you're making that trade-off let's not try and ignore the fact that it's going to be really difficult to make those sacrifices today but let's try and reframe it because my job as an advisor is basically to make these little behavioral things so i can get a good outcome we want to let's try and interpret in a way that if you are going to give up that five grand net it's going to be giving you a year of your life later and things like that i think can be really powerful instead of saying to someone took 10 grand in your pension and let it run you're basically saying for every pound you give me the pension they'll give the pension it'll give you five six back and and that can equate to your life a year of your life or whatever and of course it's not guaranteed and five percent real is you know so the history is um from 1900 to 2022 global equities have done 5.3 real that's from the dimps and marsh and staunton data so it's you'd have to invest aggressively and it's obviously not guaranteed but the fundamental thing that i'm mentioning here is it's just about try not to think about retirement as this kind of abstract i'm just putting money into my pension and it's just going to disappear forever actually it's just an unlock to unlock time for yourself later and time will go quick in you imagine last time we recorded to me and you were having some real dramas with your accountant so how's that been going mate they're sacked so drama sorted um they're a big corporate firm um they didn't really reply to my emails very quickly like took a week or two at times and they charged me way too much.

21:19I mean, I've got pretty simple taxes and yeah, they were charging me thousands. They saved me some money, but yeah, I had to move on. Slow and expensive. Pretty much, yeah. This is one of the reasons that we're really happy to be partnering with TaxApp. It's a tech platform that makes self-assessment simple. Whether you're self-employed like me, a freelancer or a director like Demo, big dog. Instead of sending endless emails, bills and spreadsheets to your accountant, you just connect your bank, answer a few questions that are only relevant to you and your tax return can be ready in as little as 15 minutes.

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23:30That's Vanta.com forward slash making money. There's a link in the description though, so you can just click that. yeah i mean at 25 it's it's the distant future at 35 you're like oh god that's not far away i'm chucking money in my pension now thinking i'll have that in no time you know it doesn't feel that long do you think compounding is one of these things that's it's the eighth wonder of the world as people say with einstein and stuff do you think that the narrative is oversold do you think that it's this thing that everyone can rely on long term? Well, it's kind of the closest thing to magic we have in the investing world because it does give exponential results.

24:12However, the issue with the traditional financial industry is that it's all, it is benefited by assets. You know, assets are what drive the financial industry and financial advice. But actually, the reality of the matter is, going back to that 5 % real return, if you put aside some money, it takes 14 years, generally if you get a five real return for the growth to catch up with how much money you're putting in today so for the compounding for that growth to equate to the money you're putting in today takes about 14 years you mean like 100 return yeah yeah for it to basically yes for it to basically double yeah yeah um now what's the problem what's the insight from that not the problem but the insight well actually your contributions have to do the heavy lifting the contributions are the most valuable thing in the earlier years and we're so focused on um We're so focused, especially if you really like finance, like everyone around this table does, so focused on how can I eke out that little extra percentage.

25:08The actual best advice in many cases is how can I improve my income? Which is the income focus. Yeah, which is the income focus. Let's move that. That was a smooth transition. What was the income going on? Which is the second of the three things. Yeah. So basically, I'm a big believer, you know, if you saw yourself as an asset, which is, I think is probably important, your ability to earn is the most valuable asset on the table. You know, if you think about, there's loads of people that talked about this and sort of like time millionaires and all the rest of it. But what's a young person got that somebody who's at 65 doesn't have time?

25:42And what does that mean? What are the conclusions from that? Well, your income is one of the most important things. so as a planner you know would i say that somebody who's 23 year olds should be sacrificing more money to squirrel into a pension at the cost of maybe training experience life things that are going to generate an income later i'm not sure if i would and it's another key way to build wealth because there is a direct correlation basically if you if you don't have much income it's very difficult from a planning perspective to work with that is the truth you know you can only work around the edges and you can still get very good results compared to not planning effectively but it's not going to make anywhere near the difference income does we did an episode on um how to get a raise and um the specialist i can't remember who it was they came and told us wait you're good with names uh wayne came and told us that you should like change companies often you should uh get a bit more experience you've been following that advice but you leverage your experience so if you change companies you can then get a bigger salary and then you stay there for a year or two change companies get a bigger salary whereas my parents they both stayed in their jobs for like 20 30 40 my mom's still a doctor like 40 years in the same professional same company but i feel like nowadays like damon was in debt collection and then now debt collection management sounds a lot worse debt collection he was he was a heavy i worked for an insolvency so yeah so then he changed to youtube so like i feel in our generation people change jobs a lot more frequently than our parents and therefore you can get more income by changing companies and changing directions one thing so you know whenever we talk about things like time investment putting stuff in people people always say i don't have any money and i know you've caveated before but i want to say to people that when we're talking about things like income focused time is an asset you can spend and it's one that doesn't require capital in the sense of pounds or dollars or whatever your domestic currency is and sometimes if someone's sat there going i can't invest i can't put any money into my pension but then they can spend their time on generating an income can't they and that's what i did i don't think people realize that i spent i think my youtube channel cost me about 100 pounds to get started to the point where it outran my job whereas on 100 grand a year um that was the that was the investment but the time investment was 50 hours a week you know around my full-time job.

28:05So if we view our time as an asset, like we view money, we can spend time to increase the amount of money we earn, and then we can pull that into an asset-focused approach. Yeah, exactly. And these are not mutually exclusive. These are just important to be aware of the leaves. And I did exactly the same. I used to do music, and then I kind of fell into the advice profession. And for the first kind of like five years in advice, or actually the first decade journey, one of the biggest investments I had was me, was basically getting more qualified, working my way up. And it makes things much easier if you can do that.

28:40Not obviously everyone can, but if you can, it's a lever. I know you're not an expert on this, but do you have any advice or personal experience on some of the best ways to improve earnings? Yeah, I think ultimately you should have a look at yourself being one of your biggest investments. And what you can do practically, I guess, is you can have a look at your current job and where the ceiling limit is. I think that's a really practical thing to do first as far as, okay, where is my trajectory going to be for my career? Is it likely that I'm going to get uplifts and so forth? And that probably should be a conversation to have.

29:11I know you've done a fantastic episode on how to get a pay rise. It should be a regular conversation to have with your employer if you're taking an employed route. But then that's probably going to give you a key bit of information which you can use, which is, okay, what is my likely peak earnings? What's the great outcome look like? from there you can then make a decision about whether you're in the right industry for a mixture of reasons lifestyle can really play a part and then you can consider whether you want to pivot or double down where you are yeah if you've got no money though and you're sat there saying none of these conversations for me they are and i just want to stress this point you've got time and you can use that time to increase your earnings and have that focus so do you think you know asset focus income focus will come into lifestyle in a second are these exclusive are they like separate or do they all work together or yeah so so they're absolutely not and it's just a framework to think about things because so it's with content especially online it favors people being dogmatic and just being like you should always do this you should always do this and that's just not true these are kind of to be flexed in the seasons of life so there's going to be a point in your life maybe where you can save more and that's really where to bring on good financial habits there's going to be a point maybe where you go all in on your career and trying to increase your income there's going to be a point where actually neither is really possible so it's about optimizing your lifestyle and maybe seeing if you can keep things going that way it's not mutually exclusive you know what is wealth and and for me wealth kind of encompasses health relationships time and money because at the end of the day and it's not just about financial because if you don't have health then obviously everything kind of just becomes irrelevant harvard grant study the one of the longest studies on human happiness and well-being found effectively that not having good relationships is as bad for you as drinking and smoking so that makes a huge difference money the truth of the matter is is if there's economic strain in the household you're more likely to get divorced you're more likely to have stress um and also time you know warren buffett um one of the greatest if not the greatest investor of all time billionaire 94 swap it all just to go back to 20 i bet you know we give it all away to go again exactly and and that's i think the the kind of thing for the listener to think about is that you know what is what is their definition of wealth that is just mine it's very personal you know what about you guys do you do you have a particular thought on what you see wealth as god watches for you to behave uh i like i do like god watches um the things you don't think about are actually really important being healthy um having a good relationship having a good partner having good friends so i think for me that's more wealth and obviously you'll want to have some money to go to a few chalets and you know a few holidays now and again a few boats but you know generally i think you can be really boats a few boats not buying them just like go on a couple of yachts now and again just a few yachts i think it's kind of california i went on some cool crypto yachts and they were really they were really fun so yeah i might i want to go on some more yachts they're fun you must be a nightmare to palm for me there is no plan yeah yeah go with the flow enjoy yourself carpe diem carpe diem okay cool that's what don't fuck him with me don't fuck him with this or carpe noctum sees the night carpe omni sees it all or sees it all yeah is it only i don't know but i would add purpose to that so like you know health money whatever but i would i would add purpose in terms of i i generate a lot of happiness now out of having a career that i feel is impactful and meaningful versus you know i think a lot of people can have all of those other elements and then be unhappy about their day job which i think is what you said about the whole giving up 30 years to finally live i think a sense of purpose and meaning is is something that makes me very happy yeah yeah and and the reason why all that is so important is because you know my expertise is planning and what should we be doing we should be working with the end in mind and you know one of the things i'd like the listeners to take from this conversation is that the big scary kind of things you see on the headlines as far as you know you'll never retire whatever you do have the ability to to cater things um there is just something before we move on from income focus i do want to mention because i know this is a topic of um of conversation a couple of weeks back as far as on the podcast but it's so essential to ensure yourself and i just want to kind of double click on that because ultimately i know there'll be a lot of people who probably aren't and you know you always feel like you come across like grim reaper when you say stuff like that's what the comments are like grim reaper um but the stats are shocking i always never wanted to kind to be like the hard sell on anything like that but it was it didn't take very long for you to realize that if you look after 100 clients the reality of the matter is if you don't push for them to protect themselves you will have five six maybe ten of those individuals who something serious will happen and the difference between them being okay and their family being okay and not could have been you having a proper conversation about it that's why i'm going to we made the video on on this channel i'm going to do a main channel video and stuff and i'll probably get called you know a harbinger of doom and all of this but i think if if if a few people go out i mean i got smacked in the face by a complete stranger on a night out if i'd have fallen an inch to the left or right i probably wouldn't be in the state i am now which is you know doing okay um and i didn't even see it coming you know like i didn't i didn't see that coming there's nothing i could have done to protect myself and then you're not even talking like cancer and things which is the it's gone in my lifetime it's gone from it will touch one in four to 50 % of people are getting it you know you're paying the premiums hoping that you never claim yeah which is such a weird setup but you know think about the other way around imagine just put yourself in a second in that headspace the difference between going okay this is going to be really tough but financially I'm going to be okay that's enormous do you think there's a point in your life where it doesn't make sense so say in your 20s and 30s when you don't have much in assets probably you're quite sensitive you know to to something bad happening but if you're approaching 50 and you've got a couple million oh yeah do you think i don't need to be insured i've got loads of like clients who are at retirement who are at financial freedom where i'll have a conversation i'll say you know you could do maybe you've got an inheritance tax issue whatever but you don't need it you're financially independent and your kids are no longer dependent so absolutely as you get older that's the whole point of like the insurance especially income protection which is like a real wonder product you know people really should consider getting that because ultimately if you especially get it early things will happen to you over that time and it's basically what you're doing is you're ensuring the most valuable asset which is your human capital having an income focused approach it's all nonsense if you then suddenly get some unexpected illness and can't build your income there was another one so which is the lifestyle focused this is the one that jermaine's going to want to hear yeah i'm very anti this one but yeah go ahead anti isn't this all about living no it's all about saving saving money like downsizing a little bit a little bit frugal no actually there's it wasn't it so the interpretation of this is basically just to acknowledge that there are going to be some people who don't want to kind of go on on assets and maybe might not be able to build up their their income and therefore there is another option which is that we just go okay we might not be able to build huge assets we might you maybe be in a job that you love but just doesn't pay that well and to be honest if you're in a job you love, you're kind of optimizing, you're nailing it.

36:18Loads of people hate their job. So it's just to say that there is another way where you can consider how can I craft my lifestyle in a way that I might be reliant on my income, I might need to maybe even work longer. But if I can potentially do that in a way which does at least build some wealth, then that's ultimately my focus is going to be on maximizing my lifestyle now. And another example might be there might be times in your life where it's you need to drop a day to look after the kids or whatever so you're going to take a step back from maybe an asset focus or an income focus and you're going to be really optimizing on your lifestyle these things are not mutually exclusive but i just kind of wanted to throw that in there as an additional lever additional option because i speak to people about their retirement all the time and there have been cases where it's like you know you can't retire at 62 you just don't have the money or whatever it may be but you can if you do three days a week and you're happy to go to 70 you know you've got some savings what about a career change because if you can do that and if you're happy to do that then you're going to be absolutely fine and sometimes people just don't think about that they don't think about okay how can I adapt my lifestyle so that it potentially fits around maybe needing more income for a period um but yeah that's really key and it's just another lever yeah I'd you know a lot of the narrative online that I see is you know work out your hourly rate and price how much your time's worth and then any task that is below that, outsource it, get cleaners, blah, blah, blah.

37:46And I did this for a time. And then I started to look at tasks like hanging out with mates. It's like, oh, I should invoice these pricks. Yeah, yeah. Do you know what I mean? It's important to kind of define the life you want and what's important outside of just earning money. Otherwise, in a cost-benefit analysis, all I should ever do is work. whereas you know spending time with my son and one day two days a week i'd give up any ability to earn money to sit with him and have a good time with him and as i look back on my life i don't remember the days i work i remember the time with him and i think that kind of lifestyle one is i think it's really important for people to to have that conversation with themselves yeah work with the end in mind that that's the key thing i mean i like the whole enjoying the journey as part like not just of a time.