With busy work and family life, our clients knew they were nearing retirement but wanted to understand how they could achieve this. Naturally, both having careers spanning multiple decades, Sarah and Tim had built up various pensions and investments but were at a loss as to how these could translate into providing a liveable income in retirement.
The client
Having both had successful careers in finance and advertising and now in their late 50s, Sarah and Tim were looking for guidance as they began to consider when and how they might retire. They had both worked for multiple companies over several decades and amassed a collection of pensions and individual direct holdings worth c. £3 million in addition to cash savings of £750,000. Whilst they were based in London, they had a second property in Cornwall that they visited often with their children and grandchildren and planned to spend an equal amount of time between the two when they finally stopped working.
Their needs
With the aim of retirement on the horizon and having precious little time to give it proper thought, Sarah and Tim wanted to simplify their current position and gain a better understanding of what they already had and then how much they would need to retire and when this would be possible. Despite Sarah’s career in finance, they had always accepted default investment strategies of their pensions and never actively engaged a wealth manager for advice but felt that given their position the time was right.
The planning
Having met several times to discuss Sarah and Tim's current position as well as their expectations for retirement, the first stage was to complete a full analysis of their existing pensions, some of which were defined benefit, to evaluate the true value of these and the options available to them. Once we had a better understanding of their financial position, we arranged a further meeting and using cashflow modelling were able to illustrate various scenarios (adjusting the timing of their retirement, their income in retirement, and major expenditures) to agree a suitable starting point. An essential part of this planning was helping Sarah and Tim understand what their income needs were. The key to this was understanding their current expenditure and how that might change in retirement.
Next, and where appropriate, we consolidated their pensions onto one platform to simplify their situation and ensure these were invested in line with their risk profile, attitude to risk and objectives. It also ensured these were ready to be efficiently drawn upon at the point they retired.
Keeping enough back for emergencies and initial planned expenditure in retirement, we used a portion of their cash savings to fund ISAs and made tax efficient pension contributions, utilising their income whilst they were still employed and maximising unused pension allowances from previous years.
We then set a timeline for future planning. This included reviewing significant milestones such as reaching state pension age, when they wanted to revisit their inheritance tax planning which might coincide with when they decide to sell London to relocate to Cornwall on a permanent basis.
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