The situation
James and Helen, both in their late 50s, came to us through a referral. James had worked for three different companies over a 30-year career and had accumulated a separate pension at each. Helen had taken a career break to raise their two children and had a smaller defined benefit pension from earlier in her career. They had also built up some ISAs and a small portfolio of unit trusts.
Their question was simple. Could they afford to retire at 60, four years earlier than the State Pension age? They thought probably not, and had been bracing themselves for a few more years of work.
What we did
The starting point was a full picture of what they had. We tracked down every pension, including one from a company that had since changed name twice, and put the numbers together in one place. The total was larger than either of them had realised.
From there we built a cash flow model running to age 95 for both of them. We tested it against three scenarios: a 30% market fall in year one of retirement, a long-life scenario, and an inflation scenario where prices ran 4% higher than expected for a decade.
The plan we recommended consolidated two of James's pensions to reduce charges, kept the third (which had a valuable guaranteed annuity rate) where it was, and restructured their investments to take less risk in the years immediately before retirement. We also put in place a tax-efficient drawdown strategy that used Helen's smaller defined benefit pension and the ISAs first, leaving the larger pensions to grow.
The outcome
Retirement at 58, two years earlier than they had originally thought possible. The plan accommodated all three stress-test scenarios with margin to spare. James and Helen now meet with us once a year to review the plan, and the model is updated to reflect actual spending and any changes to their goals.
Two years into retirement, they have travelled to Japan, Italy and New Zealand, and the cash flow model still runs to age 95 with comfortable headroom. Their main feedback after the first year: they wished they had done it sooner.
Service areas: Pensions & retirement, Cash flow planning, Investment management
Names and identifying details have been changed. The work and the outcomes described are real, and reflect the kinds of situations we help clients navigate.