Our society is changing. People are living longer largely because of advances in medical science.
In turn, this means that your money in retirement has to last longer than ever before.
Retirement is changing too, as more and more people look for a flexible retirement where they can continue working for longer but perhaps on reduced hours.
Our role is to help our clients plan for their retirement and guide them through the complex choices they face. Some decisions, once made, can't be changed, so it is essential that you understand your options and make the right choices.
One of our clients, John, was 66 when he retired. He had just sold his business for £325,000.
His property was worth around £750,000, and he still had a mortgage of £200,000.
John also had pension funds of around £900,000.
He had married for a second time, and both he and his wife Carol had children from previous marriages. They wanted to leave their respective estates to these children.
Our starting point was to take the sales proceeds from the business and invest them in such a way that they remained outside the estate for Inheritance Tax purposes.
We then triggered the tax-free cash sum from John's pension fund and used this to pay off the outstanding mortgage. In effect, we used untaxed money to pay off this substantial debt.
We also organised his pension to maximise his income under the 'drawdown' rules rather than buy an annuity. At that time Annuity rates were at very low levels, and as Carol is 15 years younger than John and had a period of bad health, buying an annuity would have been poor value.
Finally, we helped John and Carol to organise their Wills so that they each had a 'life interest' when inheriting from the other, which then enabled their estates to be passed down directly to their children.