Alex and Sarah

Alex (aged 55) and Sarah (aged 50) are both in good health with two children.  Alex is a director in a local business and Sarah works as an administrator in the business.  They draw a combined gross income of £125,000.  They estimate they spend c.£70,000 per annually.

They own their main residence worth £730,000, cash and investments of £125,000 and pensions of c.£400,000 invested in line with a balanced approach to risk.

"That is the best couple of hours anyone has ever spent with us. You have truly lifted us out of the mire and helped us look at the big picture. THANK YOU!"

What were the challenges?

Alex and Sarah have set their financial planner a few challenges:

  • Will they be able to retire and stop working when Alex is 65 in 10 years’ time (or sooner if possible)?
  • Annual expenditure will reduce in future to a basic level of £56,000 for the rest of their life in line with inflation. Is this affordable?
  • They would like to pass on as much of their estate to their children when they die. How much is likely to be passed on based on these assumptions?

How did i4C solve their challenges?

i4C demonstrated that if Alex and Sarah retired when Alex was 65, they would not have sufficient income to maintain their lifestyle needs and they would run out of cash liquidity by age 75.  Their planner used i4C to model the impact of a downsizing of their main residence. Alex and Sarah felt this was likely once they retired but hadn’t considered the cash implications previously.

i4C demonstrated that the downsize alone ensured they had liquidity until their mid-80s. However, by investing the proceeds in a cautious to balanced portfolio they could retain sufficient liquidity into their mid-90s.  This was without considering a further downsize of the property or any potential reduction in expenditure over this period.

What was the outcome?

Alex and Sarah’s planner was able to re-assure them that they did have the required flexibility to stop working when Alex was 65.  They were also delighted to see that there was potential to pass on value from their estate to their children.

Their life-plan had progressed from:

  • Potentially running out of money at age 70; to
  • Achieving a consistent inflation-linked income of £56,000 per year for life; and
  • By the age of 90, they would have a residual estate of approximately £500,000 to pass to their children.

“That is the best couple of hours anyone has ever spent with us. We feel like a weight has been lifted and you have really helped us see that our lives are not just work and that is sometimes easy to forget when you are doing the daily grind. You have truly lifted us out of the mire and helped us look at the big picture. THANK YOU”

"i4C adopt a similar approach to us and a quality integration with iO that will continue to evolve."

Mandy Kemp DipPFS, Certs CII (MP & ER), Head of Operations, Chartered Financial Management (UK) Ltd

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