Project Description

Steve and Tania are desperate to retire early to follow their dreams and wanted to know how much they need

Background

Steve (45) and Tania (43) have two children, Tori (14) who still lives at home and Demi (21) is living independently.

They have both worked very hard and have created a great lifestyle for themselves and their children, which they want to maintain throughout their lifetime.

Steve and Tania have their own successful online business, but both have accumulated several pensions from previous employers over the years, which they have lost track of and now want to review.

They currently have a mortgage on their house along with modest savings and investments.

Steve had his own simple financial plan, which was to pay off their mortgage as quickly as possible. Then once mortgage free, he intended to save as much as possible from the profits of the business between 45 and 55. So he could retire early at 55.

Steve, didn’t feel he needed any advice to achieve his goal and was reluctant to seek advice as he had a dislike for financial adviser because he had a bad experience with one many years ago.  However, his accountant recommended that he spoke to us to crunch the numbers to see if he was on track to achieve his goal.

So, we arranged to meet Steve and Tania to get to know and understand their dreams and current situation.

Key Considerations

Following a meeting with us, Steve and Tania accepted they needed help to work out at what their current savings and pension plans were going to give them at 55 and compare this to what they will need to retire at 55 in order to achieve the lifestyle they want throughout retirement.

It was also important to them to work out whether they would be able to fund Tori going to university, as they did for Demi.

We also discovered why retiring at 55 was so important to Steve.  He wanted to escape the long hours he worked and pursue his passion for sailing whilst he was still young and fit enough to take part in it.  He had a dream of cruising the Mediterranean and crossing the Atlantic Ocean. They both wanted to see the world and do stuff before it’s too late!

But why 55? Steve told us that he saw his father working straight through to 65, only to suddenly drop dead at 67 without fulfilling his own dreams.  Steve could not bear the thought of that happening to him. He has seen how short live can be and so he lived his life accordingly and the reason why he worked so hard now, so he could escape early with Tania to have adventures and explore the world.

They were both unsure whether their current pension savings and other savings would be enough, but hoped their business to provide any shortfall’s.

Approach

When we met Steve and Tania, we acquired a thorough understanding of their current expenditure and work out how much income they would want once they are both retired.

  • We confirmed that the mortgage would be paid off before retirement at 55.

  • We used a retirement modeler to show them a number of different scenarios of how they could adapt and improve their existing pensions and savings plans and the positive impact this had on their income in retirement.

  • We were able to factor in providing additional sums of money to give Tori financial help towards her university fees.

  • We were also able to show them how consolidating their existing pension pots, plus making additional pension payments through their business in a tax efficient way will give them a much bigger retirement fund and enable them to have more choices around the age of 55.

This was all helped by explaining the new flexible benefit options available to them under the “Freedom and Choice in Pensions” introduced in April 2015.

Outcomes

Both Steve and Tania are now very confident they will be able to retire at 55 and enable Steve to follow his dream of sailing and Tania of seeing the world, safe in the knowledge that their retirement income will be enough and will last at least as long as they do, even when allowing for inflation.

We agreed to meet with Steve and Tania annually to check their progress and to ensure that their plan remains on track to retire at 55 and to fine tune any plans along the way.

If you have started thinking about your retirement and would like to review your own ‘Pre-Retirement’ situation, simple click the button below to get in touch.

get In touch