In this vlog we discuss retirement planning with our model couple, Andy and Sarah to ensure they don’t run out of money. Andy and Sarah are now in their late 50s – they have a joint income of £140k, they have savings in stocks and shares and investment ISAs and are lucky enough to have paid their mortgage. Jointly they have approx. £720,000 in private pensions and will also get the full state pension.


We have considered their outgoings and expenses, including travelling to work, household spends, discretionary spending for holidays, weekends away etc, as well as a legacy gift of £25,000 to help get their son Sam onto the housing ladder.


Using our financial planning software, we can see that Andy and Sarah are covering their expenditure right up until their 90s, however, to get them to the end of their financial timeline (age 100) without running out of money, there is a shortfall. In this vlog we therefore demonstrate some strategies to overcome this.


Firstly, we ensure that Andy and Sarah are using all their tax allowances, which is relevant when starting to decumulate wealth to extend the length of their savings and investments.


A strategy we then discuss is deterring their retirement until a later age, however they are quite adamant that they would prefer not to do this.


We therefore look at another option, which is the risk that they take on their investments. We use our software to see what investment return they would need to avoid this shortfall. This drives out a percentage rate, and we can then use this to facilitate a conversation about increasing the volatility scale on their stocks and shares. We often use stress test scenarios to model the effect of a downturn – as 2022 has been a trying year for investors, this is more appropriate than ever!


A further final option to consider is downsizing their home. If they do this when they are 75 and buy a replacement home for a lower cost, the surplus money could be put into an investment portfolio, which they can draw down from giving them extra income to get to their financial finish line.


There are other options regarding taking a fixed guaranteed income from a pension which we didn’t model in this case but would normally discuss with clients and in addition,- some people use equity release to stay in their homes.  This just emphasises the need for advice appropriate to your own situation and why regular reviews are so important.


Retirement planning key takeaways

  1. The importance of understanding how much you need and when
  2. How you might take your income from a variety of sources i.e. cash, investments and pensions to maximise the use of tax-free allowances
  3. Understanding what level of return is needed to achieve your goals
  4. How you might factor in a downsize if the above is not achieved


View this vlog here:


These are just some of the strategies we would typically use with our clients to stimulate thought and discussion. If you want to know about our financial planning process, please talk to us.