Planning for your retirement is one of the most important aspects of your financial life.
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 ConsiderationsThey 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.
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.
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.
Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
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.
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.
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.
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.
Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
As Bill and Wilma approached their desired retirement age they were keen to ensure they maximised their retirement income and made the most tax efficient use of the assets they had accumulated. Bill and Wilma held a number of pensions, assets and buy to let properties which they planned to use to fund their retirement.
They were however not too sure what all their assets could deliver in terms of income and how long it would fund their retirement for. They also wanted to know more about the recent changes to pensions legislation which they had read about in the papers and how they might leave something for their two grandchildren. Bill leads a very active life and felt he did not want to stop work completely but wondered about how a part-time job might affect his tax position. As they both had been reasonably cautious they also wanted to be sure they were not taking an unnecessary risks as they moved towards their retirement.
During our initial meeting we spent some time answering their questions and explaining the changes under “Freedom and Choice in Pensions” and the potential choices and opportunities for them at retirement.
After our initial meeting we sat down with Bill and Wilma and agreed some goals around their lifestyle in retirement before drawing up a cash flow forecast which focused on their long term retirement plans. This helped demonstrate how continuing to work / stopping work and the different levels of income associated with each scenario affected the amount of income they could receive and also the legacy they might leave their family. We were also able to factor in the cost of taking a 6 month round the world holiday early in their retirement. We were able to reassign some of their assets to improve the tax efficiency of their savings as well as utilising some of Bill’s tax free cash from his pension to fund the holiday.
Working together meant that Bill and Wilma could take their dream 6 month round the world holiday as well as helping them both take a retirement income of over £20,000 per annum and remain basic rate tax payers. Bill and Wilma now have annual meetings with us where we update and review their lifetime cash flow forecast and financial plan, providing them with financial peace of mind, to live the life they want, secure in the knowledge that they won’t run out of money and they have the flexibility to provide for their grandchildren as they wish.
Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
Cathy retired three years ago and was previously employed as a marketing manager earning a decent income. Today her income mainly comes from her defined benefit employer’s pension which pays her around £19,200 per year in addition to her state pension. When we met her sadly she had been recently widowed and now that she was on her own she really wanted to “make the most of her retirement” and do some of the things she had always wanted to do. She now has c. £250,000 as a lump sum from her late husband’s various Life Assurance plans which she wants to put toward her retirement provision. Cathy has no mortgage or dependants.
Cathy’s recent loss has made her more aware of her own mortality and she wanted to make the most of her current finances. She wanted to know what her options were and whether the new pensions changes affected her in anyway. She wanted to spend more on travel and visit some of her relatives who live in Australia and New Zealand. As she was now on her own she had some concerns around her own care needs in later life.
To begin with we spent some considerable time in order to really get to know Cathy and understand what she really wanted out of the rest of her life. Following on from this we then took the time to outline some of the recent changes under “Freedom and Choice in Pensions” and how they affected her own retirement. We used a retirement modeller to demonstrate how her £250,000 could be invested to supplement her retirement income and provide flexibility to draw varying degrees of money to fund her trips as well as contributing to future care costs if required. We also provided further reassurance that if required she could access money from her house to further support any care costs she needed.
Cathy now has a comprehensive financial plan, incorporating a lifetime financial planning forecast, which has given her the confidence to travel and visit her relatives who emigrated a number of years ago. She has complete peace of mind knowing that she will always have enough money. Cathy meets with us every year to review her progress and to adjust her plan where necessary to ensure she remains on track to achieve what she wants in her retirement.
Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
Having been retired for over 9 years George and Elizabeth felt that they wanted to review their finances with a view to simplifying matters. They felt the amount of paperwork they had to deal with every year was an unnecessary burden. They had built up significant funds over the years with a number of different companies. Their financial adviser had retired recently and they were now looking for a new adviser to review their plans. They wanted someone to help them bring clarity and simplicity to their current financial position and for the future. They were also starting to “take things steady” due to a health scare that George had recently experienced.
George’s recent health scare made them both want to ensure all their affairs were in order. They had not had their will reviewed for quite some time and had not organised an appropriate Power of Attorney. They felt overwhelmed by the amount of paperwork they received from the various investments they held and felt if anything happened to them it might be quite difficult for their children to work out what was what.
We arranged an initial meeting where we got to understand George and Elizabeth’s financial situation, their lifestyle and their future plans. We also took the time to explain the changes under “Freedom and Choice in Pensions” and the potential implications for them in later life. We reviewed George and Elizabeth’s financial and life style goals and produced a future cash flow analysis to help simplify their finances. This incorporated understanding their attitude to risk as well as their capacity for loss and the results helped us to balance out the level of risk with the expected investment returns when designing their investment portfolio. We were also able to considerably simplify their investments by aggregating some of them into a single investment platform and some into another provider offering appropriate solutions. We also simplified the number of tax wrappers used. We achieved this over a few years to ensure we maximised the tax allowances available to both George and Elizabeth. We also arranged for them to visit their solicitor to review their will and put in place a lasting Power of Attorney. Their cash flow also included provision for future care costs.
George and Elizabeth now have a much more streamlined financial plan in place which involves far less work and a much reduced “paperwork burden” which they are delighted with. Since we started working with them their finances are much more straightforward and there have also been significant savings in annual charges and transaction costs which have been a welcome bonus for George and Elizabeth. They now have peace of mind that their finances are in good order and can continue enjoying their retirement doing the things they had planned. As well as having all the paperwork in place to enable their children make both financial and health related decisions for them.
Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
Michael and his wife Anna stopped working many years ago and have in the main enjoyed a fairly relaxed and trouble free retirement. Unfortunately in recent times both of them have started to experience some reasonably significant health issues and they are now much more dependent upon others than they used to be. Given this deterioration in health and the recent legislative changes related to pensions, which they have read about, they have a number of different conflicting priorities and concerns. They are uncertain about how best to provide for themselves in later life whilst at the same time they wanted to create a plan that allowed them to help their grandchildren with university fees, getting established in their careers and their first homes. They also wanted to help their own children by way of loans if required. They were also looking to simplify how they managed their money.
Michael and Anna were worried that they may run out of money if they both ended up in a care home and that this may have a detrimental effect on what they could do to support their family.
The process took a few months to build a complete understanding of Michael and Anna’s requirements. It was important to provide Michael and Anna with information enabling them to make informed decisions about their own financial future and their legacy as well as showing them the impact certain decisions would have on their future cash flow, tax status and crucially long term care provision. As part of this we took the time to outline some of the recent changes under “Freedom and Choice in Pensions” and how these might impact upon their own finances. We then worked with a number of different professionals during this time to ensure the plan was fully aligned to their wishes and delivered what they wanted. Using our cash flow planner we were able to demonstrate the impact care costs might have on their plans as well as showing how utilising some of the new lifetime mortgage products might help them ensure they can live comfortably in retirement.
We were able to meet all of their objectives, significantly reducing their income tax liabilities in the process and they were delighted with the results. We ensured an immediate and ongoing reduction in inheritance tax as well as putting in place a robust long term care plan for both Michael and Anna. We were also able to cap the IHT liability on a further substantial portion of their wealth. Our advice enabled Michael and Anna to have peace of mind that they would be cared for as appropriate, their money was being well looked after and that they had provided the legacy they wanted to for their family.
Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
Resolute Financial Advisers is a Limited Liability Partnership, Registered in Scotland, No: SO304424. Partners are Stuart Alexander and Kevin Orr. Registered Office: 10 Sullivan Way, Cumnock, KA18 1UH.
Resolute Financial Advisers LLP is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register https://register.fca.org.uk/ under reference 708063.
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