In your 60s: Retiring early to enjoy life

Both Neil and Susan had been teachers but had now taken early retirement; both were five years away from being able to draw their State Pension.

Why did Neil and Susan come to us for advice?

Neil and Susan were recommended to us by family friend who had been a client of ours for several years.

Both Neil and Susan had been teachers but had now taken early retirement; both were five years away from being able to draw their State Pension.

As former teachers, they both had excellent final salary pensions. From these, they had also taken lump sums, some £150,000, which now sat in building society accounts.

However, they soon realised that their teacher’s pensions weren’t sufficient to meet the cost of their preferred lifestyle; they needed to create an additional income from their capital until their State Pension was available.

What did we recommend?

Perhaps unusually for people in their early 60s, Neil and Susan had never invested any money. However, they were aware that with interest rates lower than inflation, holding money on deposit meant a ‘real-terms’ loss.

We spent a considerable amount of time with Neil and Susan to understand more about what they wanted this money to do for them and the additional income they needed.

Firstly, we recommended that they leave a lump sum of money in the building society to act as an emergency fund and pay for their additional expenditure over the next 12 months.

Next, we turned to the balance, which they wanted to invest.

Naturally, we discussed and explained the fundamental concepts of investing as well as working through a risk profiling exercise. Unsurprisingly, Neil and Susan had a cautious attitude to risk, a fact reflected in the portfolio we recommended.

We recommended that they invest £80,000 into Individual Savings Accounts (ISAs) over the course of two tax years. This will allow Neil and Susan to withdraw an income each year until their State Pension commences, at which point they can reduce or stop the income as it will no longer be needed.

How did Neil and Susan benefit from our advice?

Neil and Susan now have a strategy in place for the next five years, until their State Pension kicks in.  They now know that they can live the life they want.

The regular reviews and quarterly updates afforded by our investment proposition will also provide reassurance to the two novice investors.

Please note:

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The Financial Conduct Authority does not regulate tax advice.

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