Mr & Mrs N - taking retirement


Mr and Mrs N were in their late fifties, with grown up children. Mr N had recently been made redundant and retired early. Mrs N was also considering early retirement. The couple had £50k in cash in the bank, Mr N had four defined contributions (DC) pensions and Mrs N had one defined benefits (DB) pension. While the thought of them both being retired seemed an attractive prospect, they wanted to be sure they could afford to take the plunge.

The challenge

The main issue for this couple was that they weren’t in the habit of reviewing their finances regularly so they didn’t have a clear picture of what their pension plans were worth, for example Mr N’s DC schemes hadn’t been reviewed at all in the last ten years. They needed to be sure he could get £15k per annum in the most tax efficient way. They were also concerned that inflation didn’t eat into their savings.

The solution

We gave Mrs N advice on her DB scheme and advised her to take her benefits from that scheme, enabling her to retire early. With Mr N, we looked at the four schemes he had and checked the options for each to see if it would be better to put them into a flexi access drawdown arrangement. We also checked the whole annuity market to see if he could buy one for the level of income the couple required.

In the end, we consolidated the four plans into one drawdown plan. It became clear that Mr N didn’t need a tax free lump sum so instead of advising him to take the money out of the pension and investing it, we advised him to leave it in the scheme and just withdraw a proportion of it as income. This meant some of the income he was drawing from his pension was tax free and the lump sum was still in the pension gaining growth. The combination of tax-free and taxable withdrawals resulted in an income for him of £1,250 per month. We also proposed an investment strategy in line with the couple’s risk profile and ran a cash-flow forecast to highlight different scenarios.

With a mixture of income from his pension and his savings, Mr N was achieving his target of £15k a year and paying no tax at all. The couple have also received a 24.77% return rate on their investments over the first two years. We managed all the paperwork and transfers for them over a six-eight week timeframe. Another marked difference is that the couple are now having annual reviews and are enjoying being involved in the financial planning process.

VouchedFor Asked: 'How did your advisor help you?'

November 2018

"Simon took on board my situation and delivered exactly what I expected."

November 2018

"Initially Simon RIchards provided me with easily comprehensible information on my options for investment while making it clear that the choices were mine. He also explained the costs of the service which I feel are very fair and for me totally of value. With great patience he sorted out the chaos that was my starting point with him. The ongoing support and information provision has been excellent."

November 2018

"Gave me advice, helped me understand in plain English , was very helpful, very professional and calm."

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Telephone: 0191 716 0009
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* Please be aware that by clicking the above button you are now leaving a regulated site. Bailey Richards Wealth Management are not responsible for the content on VouchedFor.