When I received a referral to a Consultant Surgeon, with a rather lucrative private practice, wanting to sort out his retirement I was excited to say the least. Vince was 55 and wanting to cease work full time by the age of 60. He had called me because most of the articles he had read stated that you need 2/3rds of your income when you retire and as he had not started work until age 25, and had some time out, he was not going to have 2/3rds without additional contributions being made. Also, his private income was more than his NHS income and he had not made any private pension contributions to this point.
I learnt a valuable lesson in my dealings with Vince when the outcome of my research found that his main objective for retirement was to potter about in his garden with his wife and go on long walks with their dog Ruby. They both prefer not to fly, so were not interested in expensive holidays, travel or any extravagant pastimes that cost excessive amounts of money.
A basic cashflow model showed that his current/projected income, along with capital already accrued, was more than sufficient for their needs and if Vince wanted he could have retired there and then. Any further pension contributions would have just meant an increasing capital balance throughout retirement, leading to a substantial inheritance tax liability. There was also little need to save capital as they had sufficient already and retirement income was more than enough to cover long term care fees.
The outcome of our meetings was to provide his three children with financial assistance now. The cashflow model showed that a contribution of £70,000 to each child would not impact on their future lifestyle needs and, even though there was little work for me in future capital management, the clients were satisfied and so were the children.
A key lesson I learnt from advising Vince is that it does not matter how much a person has, it is more about what he/she wants to do with their life that matters most.
Financial Planner & Director