I first met Keri when my late husband sold his company shares and we turned to Broadway Financial Planning for investment advice. Keri quickly impressed us with her vast knowledge and understanding of the financial marketplace and global economies.
Retirement Planning Case Study
Philip and Anna came to see BFP because they wished to explore the options available to them if Philip stopped working prior to his originally chosen retirement date of 65. In their late fifties, Philip had recently suffered a minor heart attack and they both recognised that it was necessary for him to either reduce his working hours or stop working altogether if he was going to live long enough to enjoy their desired retirement.
Philip had worked for a number of firms during the course of his career and, when we met, held a management role that could offer flexible hours if required. Anna had not worked as she had been raising their family. Through his various jobs, Philip had accrued a number of pension plans and he struggled to understand the benefits available to him following all of the pension changes and legislation. They still had a mortgage on their home, savings and investments of approximately £200,000. Their children were self-sufficient and keen to see their parents enjoy a long and happy retirement.
Challenges facing Philip and Anna
Philip and Anna were unsure what income might be available from the pensions if he took early retirement now and whether this would be sustainable in the future.
Philip was aware that annuity rates remained very low and wanted to know what other options were available to him, particularly in light of “pension freedom”. He found the number of pension plans he had accrued were difficult to keep track of and was not sure whether the investment strategy remained suitable in light of their revised objectives.
Philip and Anna were keen to repay the mortgage a soon as possible although they wanted to try and maintain considerable savings if possible for that “rainy day”.
How BFP helped
We reviewed Philip and Anna's income and expenditure requirements on the basis that Philip reduced his working hours considerably.
We explained the various income options available to Philip and Anna including drawing down on their savings for the short-term, deferring the pension benefits for as long as affordable and taking a more flexible approach to receiving income from the pensions at a time that was right for them.
We advised Philip to consolidate the pensions into one plan which would then adopt an investment strategy better suited to his requirements and reflected the amount of risk they felt comfortable in taking.
We showed them that the tax-free lump sum potentially available to Philip on his retirement was sufficient to repay the mortgage.
We helped them rearrange their mortgage on a fixed rate basis and demonstrated that the repayments were affordable until Philip's retirement.
Benefits of working with BFP
Philip and Anna had the peace of mind that the various sources of income available to them were sufficient to cover their expenditure for their lifetimes.
They had a much greater understanding of how their finances would match their expenditure and liabilities.
They were happy that the investments were more carefully suited to their requirements and that they understood the pension benefits much more clearly.
Philip was able to reduce his hours considerably and continue to enjoy his job knowing that he could stop work at any time if he wanted.
The names in this case study has been changed to protect our clients’ identities.