Why an Antarctic Expedition and Saving for your Pension isn’t Poles Apart

Like an expedition to the ‘last continent’ of Antarctica, setting aside enough money to build a pension pot that will see you comfortably through your retirement can feel like the ‘final frontier’ of financial planning – so it might not surprise you that the two aren’t poles apart.

While saving for your future might not be as dramatic as an expedition to the South Pole, it has many of the same features. Mapping out a careful plan is essential, unexpected setbacks and bumps in the road should be expected, and you will need to seek guidance along the way. What both feats have most in common, however, is that success is best achieved with small steps, taken consistently, over a planned timeframe, like saving every year in a sustainable and disciplined way.

‘Ordinary things, consistently done, create extraordinary results’ 

Slow and steady wins the race

So, why am I likening financial planning to an Antarctic expedition? Well, today (Tuesday 25th January 2022) marks the 110-year anniversary of Roald Amundsen's safe return to Framheim, 10 days ahead of schedule, having traveled to the South Pole and back in 99 days. Most of us have only heard the story of the race to the South Pole from Captain Scott’s perspective, rather than from the perspective of the Norwegian explorer Roald Amundsen, even though he beat Scott to the South Pole.

The #AmundsenMethod

The story of their race gives us a relevant insight into how we should look after our finances. When Scott, a Naval officer, and Amundsen, an explorer, set off on their expeditions to the South Pole they left at the same time, but they went about it in very different ways. Amundsen had wanted to be an Arctic explorer from a very young age and apparently as a boy he’d slept with the windows open every night so that his body would get used to the cold. He’d clearly been planning for his expedition for a very long time!

Amundsen even went to live with the Eskimos before he started his expedition and learned how to live in the freezing cold. He looked at how they used sleds and dogs, he looked at the furs they wore, and he trained both himself and his men to eat raw fish before they left because you really don’t want to be eating raw fish for the first time at the South Pole.

Planning is key

He took only a very lightweight team with him, and each man carried his own supplies on lightweight sleds that were pulled by dogs. Amundsen also set up kites on the sleds that would pull them along when it was windy to help the dogs and increase their speed. Amundsen had a plan that he stuck to. He knew he had to march over 1000 miles and decided that he was going to travel 12 miles every day. Whether it was good weather or bad, he would stick to the 12 miles and not deviate from the plan.

Trying to get off Scott Free

Scott on the other hand, acted very differently. Instead of taking dogs and sleds, he took mechanical snow machines which looked impressive but had never been tested in Arctic conditions. He also took ponies, which are not designed for moving in snow, and masses and masses of supplies.

Poles Apart

Scott didn’t have a plan and so on a good day when the weather was fine, he would march 40 miles but, on a day when the weather was bad, they would all stay in their tents and Scott would write his diary. Their progress was haphazard, and Scott’s men ended up exhausted from trying to do too many miles in a single day and not having enough time to rest.

Ordinary things, consistently done, create extraordinary results

So how does this story relate to financial wellbeing? Well, it’s clear that Amundsen had a plan and travelling 12 miles a day every day was a big part of his success. When the weather was good and Scott was out doing 40 miles, Amundsen stuck to the 12. Why didn’t he do more? Well, he was sticking to his plan and choosing a more sustainable method of taking smaller steps, consistently and over time, to hit his goal.

The incredible thing with Amundsen is that he travelled, over 2,000 miles, all the way to the South pole and back 10 days sooner than he planed. Scott got to the South Pole late and he and all his men died on the way back.

Keep consistent

Amundsen knew he needed to keep his men fit and healthy and he didn't want to push his men too hard on the good days. They could easily have done more than 20 miles, but instead they rested, checked their supplies, and made sure that everyone was fit and mentally well enough to continue the journey the next day. When Scott was in his tent and not moving at all due to the bad weather, Amundsen and his team were marching on slowly. It might take them the whole day to make those 12 miles, but they did it. Even when the South Pole was in sight, they stuck to the same pace instead of speeding up.

When Amundsen finally got to the Pole, he put up his camp, took some samples, took some photographs, and then started on the return journey. When he went back, he did the same 12 miles a day. He stuck to his plan, and he was consistent, and he and his men reaped the rewards of that forward planning and that consistency. Scott and all his men died before they reached their base camp. They were ill prepared, malnourished, and exhausted whereas every single one of Amundsen’s men made it back alive and astonishingly had even gained weight during their expedition.

If you consider these expedition approaches to the way you save for and invest in your future, you’ll understand that it’s not a good idea to put thousands into your pension one year and then nothing the next. This is what Scott did and it didn’t help him in the long run. Instead, its far more beneficial, to apply the #AmundsenMethosd to retirement, and think in 'decades not days' and make consistent, sustainable steps towards a comfortable retirement for your future-self. It’s this method that will preserve your financial resilience in the short term and build long term financial wellbeing. Have a plan. Slow and steady always wins the race.

Five steps to help you map your route to retirement: The final frontier in financial planning

‘How much money do I need to retire?’ is perhaps the most important question you should be asking yourself about your finances, yet 1 in 3 Brits don’t know how big a pension pot they'll need, and 1 in 5 don't even know how much they have*. I’m asked this question a lot and I always advise getting clear on when and how you want to retire so you can work backwards to calculate how much to save – just like Amundsen did, with his expedition plan carefully mapped out right down to the number of miles he and his team should march each day, to reach his destination on the desired date.

‘Changes that seem small and unimportant at first will compound into remarkable results if you’re willing to stick with them for years.’ – James Clear, Atomic Habits

I’m going to show you how you can apply the #AmundsenMethod to saving for your pension, in five steps:

1. Map your route

If you knew you were going to live to 100, would you save more money? The average man runs out of money 10 years before he dies, and woman 12.5 years** so you need to regularly check how much is in your pension. A good rule of thumb is to have a pot worth ten times your annual salary by the time you retire, which sounds like a lot, but is achievable by starting early and breaking it down into simple steps.

By the end of your 30s, you should aim to have a pot that’s equal to three times your annual salary. At this time of life, you may be tempted to postpone pension saving – especially if you have kids and a mortgage. But if, like Amundsen, you don’t deviate from your route and have the discipline to stick to your savings plan, you will have more chance of creating your dream retirement.

In your 40s your savings goal should be six times your annual salary by the time you turn 50. Earnings often peak in this decade, giving you the opportunity to take advantage of greater financial resources to make bigger strides towards your retirement target.

2. Expect the unexpected

Having a clear financial plan is not enough. Before you set off on your money saving expedition, you need that base layer of financial resilience in place which you will build on over the course of your lifetime, setting you up for when you stop work.

Those bumps in the road ahead, are in fact, the road, so we need to be financially and mentally equipped to deal with these setbacks and the simple solution is to be prepared for the unexpected, by creating a separate ‘emergency fund’. This is not a savings pot for long-term goals. As cliché as it sounds, it’s your ‘rainy day’ fund.

If this already feels challenging, don’t worry - you’re on the same page as over half of UK adults, with 51%* not having an emergency savings pot. However, getting into the habit of saving is simpler than you may think with a few lifestyle adjustments. Unlike Amundsen, temporary lifestyle adjustments won’t be as extreme as training your body to survive on raw fish; but like so many of us have become accustomed to since the pandemic, a couple of cut-backs like eating out less, pausing your gym membership or cancelling a subscription or two that you could live without – Netflix or Amazon Prime – you can build up a cash buffer quickly, to help build resilience and deal with setbacks on your money-saving expedition.

3. Be consistent

With a plan in place and your emergency fund topped up to ensure you can weather the storms on the expedition ahead, you’re ready to set off on your journey. For a comfortable retirement, you want to be putting away 15-20% of your salary, which at first glance can feel like a challenge of Antarctic-expedition- proportions, but if you think like Amundsen, you’ll be pleased to know that this is achievable with one small step – or change in behavior – done consistently, over decades, like swapping what you’d spend on your daily coffee bought on the way to work, which can make a latte difference to your future self.

Contributing £100/month to your pension (roughly your daily coffee habit), including NI equates to an annual personal pension contribution of £1,320, or £13,200 over a decade - or £20,000 if invested with the long-term in mind. If you are a high-rate taxpayer, the benefit is even greater. Keep up this good habit over a 40-year career and through the magic of compound interest and tax relief, that £20,000 could grow to over £300,000.

4. Learn from the Eskimos

Unless you’re an experienced polar explorer, setting off on your expedition with a guide is a far better idea than going it alone. Amundsen succeeded in his mission to the South Pole because he went to live with the Eskimos. He learned from them and followed what they did when making his own journey.

It’s important that you also go and find an Eskimo and learn how to manage your financial journey, which is particularly important once you’ve hit retirement and are no longer earning. If you’ve got a company pension, you’ve retired and discovered that you have a lot of money, then you really need to get some guidance to help you understand how long you might live for, what might happen to inflation and how much you can afford to take out of your pension pot each year.

Think about how Amundsen approached his expedition: Even with the destination in sight and on his return home, he didn’t speed up or get carried away, he stuck to the same number of miles per day. You need to plan your return journey in the same way you mapped the route to your destination. Seeking out expert help will help you to review, plan and adjust to your changing financial situation to ensure you live prosperously after you retire.

Without a guide, you risk running out of money before you die which will have grave consequences for you and your family. The financial planning equivalent is Amundsen following what he had learned from the experts – in his case, the Eskimos – meaning he not only reached the destination, but was able to safely and steadily make the return journey home, i.e., your rate of spending once you stop earning.

5. Respect the environment

Did you know your money can be a force for good? Money makes the world go round and when you invest in your pension, you are investing alongside side millions of other people. This amounts to billions of pounds. Your pension is being invested in companies around the world and how these businesses behave has a huge impact on the wellbeing of our planet.

Investing your pension in a sustainable and responsible way is 27 times more impactful for the environment than flying less, eating less red meat, or cycling to work. So, for a comfortable retirement in a world worth living in, be a good explorer and leave the path in a way that future generations would like to find it, by asking your HR department how your pension provider invests your money, and if they’re not already, ask that they invest it responsibly.

So, what can we take away from applying #TheAmundsenMethod to financial planning?

Successful financial planning means taking a long-term approach to your goal and is less about the external factors – how much you earn and the challenges you face on your route – and more about how you respond to these challenges, all of which of course is easier when you’re planned and prepared.

Scott and Amundsen experienced the same weather, the same terrain, and the same challenging external conditions; but in the end, it was the decisions they made, in extreme polar conditions, that led to their success or failure.