I’m usually asked a broad range of questions by customers who are looking to retire. More often than not the key questions are simply 'Can I afford to retire?’ or ‘Can I afford to maintain my lifestyle in retirement?’. Within this Case Study I will provide an overview of Alan’s financial position and his choices. However, everyone is different, if you would like advice about your pension options, please get in touch.”
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Pension Planning Case Study
1. Is Alan currently utilising all his tax allowances?
2. Can Alan afford to maintain his lifestyle in retirement?
3. How can Alan pass his wealth to his daughters tax efficiently?
Alan’s
Financial Position
56 years old accountant earning
£80,000 per annum.
No mortgage on his home.
Defined
benefit pension scheme £45,000 p.a. from aged
60. Savings and investments £350,000.
Dependents – three daughters aged 28, 25 and 23.
Freedom & Choice in Pensions
On meeting Alan, I would explain how the ‘Freedom & Choice in Pensions’ legislation would affect him, and his pension options in retirement. I would review his current income and expenditure, and understand what his potential retirement expenses are likely to be. All this information would be used to prepare a Lifetime Financial Plan.
Lifetime Financial Plan
The Lifetime Financial Plan would show Alan how he could benefit in retirement if he currently took advantage of his full tax allowances. By reviewing his current savings, investments, and his pension I could provide advice about other products that offer a higher return for a similar amount of risk. I would review Alan’s options for estate planning and discuss gifting income to his children now to potentially avoid inheritance tax costs.
Conclusion
By fully utilising his tax allowances and switching his investment portfolio into better performing assets, Alan could potentially increase his retirement income. Now Alan has set up his Lifetime Financial Plan he is confident he can maintain his lifestyle in retirement, even if he starts gifting income to his daughters earlier than he expected.
Need similar pension advice?
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