When is Retirement Possible?
|Client||Senior Executive in an Irish Multinational married with 3 grown up children.|
|What they needed help with||Understanding when he could afford to retire.|
|Service(s) we provided:||WealthPlan® - Invesco’s comprehensive Financial Planning service.
Review of pension portfolio to ensure consistent investment strategy
Estate Planning advice on transfer of assets to the next generation.
|Results achieved||Client can retire on his own terms. He has the confidence that having come through WealthPlan®, he can afford to retire at any point which provides him with a great sense of security and comfort. He now has the choice to continue working should he wish. He has passed the financial freedom finish line.
Gifting programme in place to reduce tax liability via the Small Gift Exemption as well as assistance with education costs for grandchildren.
DETAILS OF OUR APPROACH
Our client is a senior executive within one of Ireland’s most successful multinational organisations. He is in his late 50’s and has had a whirlwind career. Travelling worldwide for business, he has had little time to focus on his own personal financial situation. He has been accumulating wealth in the form of his pension, share options as well as property but has no real understanding of if and when he can afford to retire. He and his wife have many places they would like to travel on their “bucket list” which, heretofore, they have not had time to do.
We really wanted to try and understand what was most important for this family. We did this by having an open conversation on some of their overall goals and aspirations both now and into the future. Some of their key objectives were to:
- Understand if and when they could afford to retire
- Travel more in retirement
- Assist with education costs for their grandchildren
- Reduce the inheritance tax bill which will fall due on their children at some point in the future.
There were many moving parts to their financial situation, and they were very busy with work and other commitments. This client family found it difficult to truly understand what options they would have and if they were being optimal in their decision making.
On bringing this couple through WealthPlan® and on gathering all of their financial data, we were able to illustrate their current Income v’s Expenditure, as well as their Net Worth Statement.
Following that, we looked at Cashflow projections using our illustrative financial planning software. This was based on their current employment income but also what income they could expect when the employment tap was turned off. When we illustrated the various building blocks of retirement income over their lifetime such as the State Pension, income from their company pensions, rental property income: the penny started to drop. For the first time, this couple could now visualise how their retirement might look based on some prudent assumptions.
We conducted some “What if” scenarios such as retiring early or allowing for bucket list trips to Australia and New Zealand (Flying 1st class). All of this was thankfully affordable. This provided an incredible sense of relief knowing that the hard work over 40 years had paid off.
We knew with a high degree of probability that no matter what happens this couple will be financially okay. We went on to discuss some of their other key objectives such as assisting with education costs of their grandchildren.
We advised the couple to establish a Bare Trust for each of their Grandchildren and to contribute to these trusts annually utilising the Small Gift Exemption.
With our illustrative cashflow forecasting tools, they could see the potential estate that they will leave behind as well as the substantial tax bill that would be liable to their three children. In this instance, we also advised this couple to take out a Section 72 Insurance policy to reduce the tax liability on their children in the future.
Through a deep understanding of this couple’s financial situation as well as understanding their goals and aspirations, we were able to tailor a Financial Plan that ensured they could live for today, have the freedom to work on their own terms but also plan for the future with their children and grandchildren.
This brought a great sense of relief as well as excitement for the future for this client family. The husband in this scenario will continue working for a further three years and retire at 62. He plans to get involved at an executive level with his local GAA club and spend real time with his grandchildren.
The Perfect Solution for Your Situation
Financial planning is an appropriate discipline for all age groups – whether you are starting your career, whether you are looking for direction on your retirement provision or if, as in this case, you are retired and are looking for clever ways to manage your assets.
At Invesco we have an experienced team of financial professionals, who can assist you with your portfolio and your financial planning, no matter where in the life cycle you find yourself. We think long term, we use sound investment principles, and we are always conscious of the impact of tax.