MTS CASE STUDIES

Preparing for Retirement

preparing-for-retirement

Andrew (aged 50) is a Director in a local company. He has two pension plans, a group personal pension from previous employment and a second from his current employer, who is also paying in contributions. He is married with two children, both of whom have moved out, are completing university and working part time. He has recently paid off the family mortgage, and he is in his highest period of earnings to date.

Main Objectives

  • He wishes to retire at 60 and to spend more time at his holiday home in Portugal with his wife.
  • He wants to know how close is he to doing this or what further action is required.
  • He would like to review the investment strategy of his pensions and savings, to ensure this is cohesive and focus on his retirement goals.
  • He would like to have a plan for retiring at 60 that will examine what he needs to invest and how it should be invested between now and then.

Andrew’s Strategic Wealth Plan

We undertook a strategic planning process based on our initial discussions with Andrew and completed a planning report to guide him to meet his objectives.

Plan Presentation and Recommendations:

  • We met with Andrew to present the findings of our analysis and what action should be taken.
  • We projected what income his current plans would achieve based on the current contributions and their investment strategy.
  • This showed a shortfall between what income he required and what would be produced from his current plans.
  • MTS calculated what he should contribute to his pensions and what return should be generated from the fund to ensure he could retire comfortably at age 60.
  • He had recently cleared his mortgage and had a spare £550 of income per month, from which is additional contributions would be taken.
  • We suggested an annual growth rate of 6% in his fund would ensure his fund could produce the required income in retirement, we then constructed an appropriate investment portfolio for his pension’s to achieve this growth while managing the level of risk taken.

Implementation:

  • As the current pension plans were not suitable, and did not offer an investment strategy to match Andrews’s goals, we agreed to consolidate the plans into a SIPP (Self Invested Personal Pension), which offered flexible investment options to meet his needs.
  • Agreed to implement the recommendations to save Andrew the time and hassle of managing the paperwork required, and to ensure it was complete as quickly as possible.
  • We now meet with Andrew on a yearly basis to review if he is still on track to retire at 60 or if any further changes and adjustments are required.

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

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