MTS CASE STUDIES

Choosing a Retirement Income

retirement-planning-header

Brian (Aged 59) is the owner of a family run business. He is planning on retiring from full-time work at age 60 and is keen to find out what his options are for taking income from his pensions. His son will take over the day to day running of the business but as Brian has spent his whole working life in the business he would be keen to stay involved while he is still able to do so.

Main Objectives

  • To understand the advantages and disadvantages of both Annuity and Draw down income options.
  • To ensure that he will have enough pension to sustain his lifestyle throughout retirement.
  • To have security that if he passes away his wife will have sufficient income, as she has no pension provision.
  • As he has saved hard for retirement his is concerned about his pension fund passing to the pension provider on his death.

Brian’s Strategic Wealth Plan

After meeting with Brian we undertook a strategic planning process and completed a planning report illustrating the different income options and which would be right for him.

Recommendations:

  • MTS felt that the best course of action for Brian was to phase his retirement over 5 -10 years from 60 while he continued to be able to work part time in his business.
  • His income from the business would meet around 40% of his income needs, and therefore he needed to supplement this with a further 60% from his Pension.
  • This income would be drawn by an income drawdown pension plan, which allowed Brian to select how much income he wished to take within a limit set by the scheme.
  • By doing this Brian would preserve his pension fund, and allow it to continue to grow, until he decides to finish work completely.
  • We would review his income needs annually and ensure the pension is sustaining its value.
  • Once Brian decides to retire fully we would recommend that he considers purchasing an annuity to ensure the fund remains secure and he will never run out of money in retirement.
  • MTS also constructed an investment strategy that targeted the appropriate return to fund Brian’s Income so the capital would not be depleted.

Implementation:

  • We agreed with Brian to implement this plan for him to ensure it was set up in time for his retirement and to save Brain the time and hassle involved.
  • We meet with Brian on an annual basis to review his income and decide what level of income he needs to draw meet his needs.

Read our Guide to Preparing for Retirement to understand what you should be aware of when preparing for retirement.

MTS Case Studies

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Choosing a Retirement Income

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