Mr Johnson, aged 55, is employed in a high paid executive role – retires at age 65
Mrs Johnson, also aged 55 is employed as a Teacher – Wants to retire now
Mrs Johnson has recently inherited £300,000 in cash, land and property
Capital expenditure of £215,000 (in today’s terms) planned over the next 7 years

Background

Challenges

1. Early Retirement for Mrs Johnson at age 55
   • Capital expenditure of £215,000 (today’s terms)over the next 7 years
   • State Pension not available until age 65
   • Teachers Pension not available until age 60
2. Retirement for Mr Johnson at age 65
   • Mortgages to be repaid
   • Maintain current level of expenditure in retirement
3. Lack of Investment Knowledge
   • 13 bank accounts all paying poor rates of interest and 40% tax
   • Investment in share portfolio inappropriate for attitude to risk
4. NoBudget
   • The Johnsons had no idea of their cost of living

What We Did

1. We created a Lifetime Cashflow Report to establish that:
   • Mrs Johnson could retire now
   • Planned capital expenditure of £215,000 can be met
   • Mortgages can be paid off at age 65
   • All without effecting retirement needs to maintain current expenditure
2. Adopted a simple cash management strategy to cater for capital expenditure over the short term (all accounts in Mrs Johnson’s name to reduce tax)
3. Tax efficient investment of spare capital (with reduced risk)to meet longer term retirement needs (following the sale of high risk share portfolio)
4. Changed the ownership of a property half owned by Mrs Johnson to ensure proceeds were paid back to Mr Johnson on Mrs Johnson’s demise.
5. Recommended life assurance to cover shortfall should Mr Johnson die
6. Wills were rewritten and Lasting Powers of Attorney registered

The Results

• Peace of Mind! – We removed the stress associated with Mrs Johnson’s
  work life by proving that she could afford stop teaching
• We established a clear budget and a plan to achieve financial independence
• We simplified the management and reporting on cash and investments – creating clarity in the Johnsons mind and reducing tax
• The new investment strategy provided improved performance and reduced risk
• Security via Wills, Lasting Power of Attorney & Life Cover

Background (at Outset)

Challenges

1. Administration
   • Mr A had 4 pension providers
   • A coherent investment strategy did not exist and therefore unsure of the level of risk and asset allocation
2. Income
   • Mr A was retiring and consultancy income would only replace £60K pa.
   • Mrs A did not have significant pensions in her own right
   • Mrs A is 15 years younger and income from Mr A's pension was a long term concern
3. Capital
   • Required access to capital to repay mortgage and carry out home inprobements

What we did

1. Simplified and restructured pensions into a SIPP
2. Maximised tax free cash of £375K
3. Repaid mortgage on overseas property
4. Sufficient cash on deposit to carry out home improvements
5. Developed a bespoke investment strategy for the SIPP within risk tolerance to fund ongoing income requirements
6. Pension arrangements made subject to a specialist trust to secure his wife's financial position and that of family in the event of his death
7. Regular reviews quarterly to monitor performance of investment, evolving the investment strategy, tax planning and capital requirements

The Result

• Maximised the amount of tax free cash drawing £375K
• Paid off mortgage on overseas property, funded home improvements and retained £330K in cash
• Created an income stream of £60K pa from SIPP to maintain standard of living
• Simplified the management and reporting of SIPP and investments whilst moving to passive institutional pure asset class funds, which both reduces the risk inherent in holding direct equities and reduces the expense ratio allowing a lower risk approach to achieve the same level of return