About Jack & Sarah
In Jack and Sarah’s situation it was paramount that we were able to help them to create a stable financial future. In their early sixties, Sarah suffers from a chronic illness and Jack was working a senior job commuting to London, whilst also trying to care for Sarah. Jack wanted to find a more local, lower paid part time role to allow him to look after Sarah. In the short-term their savings would bridge the gap, but how long would their savings last?
How much income would be enough?
Cashflow modelling was invaluable in helping Jack and Sarah to estimate their income needs now and for the future. With the income from their state and private pensions, the couple’s income would suffice. However, if Jack took the local job there would be a deficit of around £5,000 a year.
Flexibility, guaranteed income and potential for growth
Firstly we were able to draw Sarah’s private pension early on account of her ill health, which secured a high rate of immediate income. This provided a guaranteed, tax free monthly income.
Reviewing Jack’s private pension revealed that he could access it from age 55, but there were no flexible retirement features and he’d be forced into buying an annuity. This would have potentially meant giving up the possibility of future growth and as Jack was relatively young and Sarah was not in good health, this was not going to be an option.
The solution? We moved Jack’s pension to a more modern and Flexible Drawdown scheme allowing him to access 25% tax-free cash entitlement in instalments. This ensured that Jack could also draw the £5,000 shortfall per annum without cashing the bulk of his pension. He could then take a part-time job near to their home, spend more time caring for Sarah and all without committing his pension fund to an annuity too early. Due to the nature of the Flexible Drawdown plan, Jack could rest assured that should he die before Sarah, then she would receive the remaining value of the scheme, tax-free.
As Jack and Sarah’s income needs change, we are on hand to help them to manage their pension investments and plan their next steps.
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