Someway off:

You are likely to be over 50 and/ or have between 10 – 15 years still to go until your selected retirement date (SRD) or the age when you can draw your state pension.

Nearly there:

You have around 5 years until your selected retirement date (SRD) and are much more interested in your retirement options.

Some way off

You may need help to think through?

• the age you may want to retire at
• working out how much income you might need to live a comfortable life or the life you want in retirement
• understanding the amount of savings required to create the income you want or need
• building confidence in the steps you need to take to make sure your money will not run out
• before you die
• reviewing existing retirement plans and identifying any savings gaps
• understanding the different options open to you regarding your retirement
• maximising your savings and taking full advantage of your own
• protecting or de-risking the investments you have built up.

Some way off – Case Study

Background

Peter 52 and Jane 54 have two children, aged 22 and 24. Both children are married with their own children and are currently renting where they live. Peter has a good job with a decent salary and he is a member of his employers defined contribution pension scheme and he also has money in a previous employer’s final salary scheme. Jane is a nurse and is contributing to her NHS final salary scheme. They currently have a small mortgage on their house along with some modest savings and investments.

Key Client Considerations

They needed help to work out what age they were likely to retire at and the level of income they may need to support their planned lifestyle in retirement. It was important to them to work out whether they would be able to help their children getting on to the property ladder and even make some provision to help their grandchildren go to university. They also wanted to continue their passion for holidays abroad as long into retirement as they could. They were both unsure whether their current pension savings and other savings would be enough.

Approach

We met with Peter and Jane and built a thorough understanding of their current expenditure and to consider how much income they would want once they are both retired. We confirmed that the mortgage would be paid off before retirement. We used a retirement modeller to show them a number of different scenarios of how they could adapt their savings just now and the impact this had on their income in retirement. We were able to factor in providing additional sums of money to give their children help towards deposits for their homes and some help with university fees for their grandchildren. We were also able to show them how making additional pension payments may help give them more choice around the age they may retire at. This was all helped by explaining the new options available to them under “Freedom and Choice in Pensions” introduced in April 2015.

Outcomes

Both Peter and Jane are now much more confident they will be able to retire safe in the knowledge that their retirement income will last at least as long as they do, even taking account of inflation. We agreed to meet with Peter and Jane annually to check their progress and to ensure that their plan remains on track. We will also review and update the retirement modeller giving them confidence that they are doing the right thing and peace of mind that their money will last.

Nearly there

You may need help to think through?

• maximising your contributions to your pension ensuring you don’t exceed your annual or life time allowances
• modelling different income requirements in retirement so you can take your income in the most tax efficient way as well as building in some flexibility in the amount of income you take from your pension pot
• maximising death benefits for you and your spouse, partner or family
• utilising all tax allowances available to you
• increasing your confidence that your money will not run out during retirement
• factoring in any special spends for holidays or another car etc.

Nearly there – Case study

Background

Simon is aged 56 and is a senior partner in a successful firm of Solicitors. He is looking to retire at age 61 and currently owns his own home outright as well as a holiday home near the coast. He is divorced and has no children. He currently holds a wide range of different savings and investment vehicles to the value of c. £450,000 and he is a member of his firm’s final salary pension scheme which is likely to pay him around £65,000 p.a. when he retires. Simon has no dependants but is close to his three nephews and niece.

Key Client Considerations

Simon was unsure if he was using his full tax allowances and felt he was paying too much tax. As he had only around five years to go until retirement he wanted to make sure he was best placed to continue his current lifestyle into retirement. His passion for classic cars and foreign travel is a considerable cost each year as was keeping his sports car on the road. He felt unsure around the risk he was taking as he approached retirement and sought clarification he was not taking any unnecessary risk. He was also ready to consider the best way to pass his wealth on to his relatives.

He wanted to be confident that he would not run out of money

Approach

Simon came to our offices for an initial chat to see how we could help him and to make sense of the recent changes under “Freedom and Choice in Pensions” and how these might affect his retirement provision. In addition we started to look at his incomings and outgoings to see how much he needed both now and in retirement. We used our cash flow planner to help build a clear picture of how Simon could use his full tax allowances to save more money just now and building in flexibility as to how he might take an income and pay for his holidays and cars in retirement.

We then developed a comprehensive financial plan for Simon which included simplifying his investment holdings whilst at the same time making his money work much harder for the next few years before his anticipated retirement date. The plan included helping his niece and nephews with university costs as well as ensuring he left what may be left of his estate to them tax efficiently.

Outcomes

As a result of our work together Simon can now retire when he wants to and he feels confident that his money is very unlikely to run out during his lifetime. He also knows that further down the line he has a robust plan in place which will allow him to support his brother’s children as he wishes. We will meet Simon every year to check on progress and to ensure that his plan continues to deliver against his objectives.