“Could I retire early, and would my pensions give me the flexibility to enjoy the retirement I wanted?”
When Martin came to Reeves at 55, he wanted to understand his pension options and, importantly, whether he could afford to retire earlier than planned.
He had a defined benefit pension expected to provide £31,000 a year, alongside a £192,000 defined contribution pension. Martin also had his State Pension entitlement to consider.
He had a clear idea of the lifestyle they wanted in retirement. Martin felt that an income of around £4,000 NET a month would give him the lifestyle he wanted, with the intention of reducing this to £3,000 NET a month from age 75 as their spending changed.
The question was whether his existing pension arrangements could deliver that income when he needed it.
His starting point
At 55, Martin had a defined benefit pension expected to provide £31,000 a year and a £192,000 defined contribution pension. He and Sam also had combined State Pension entitlement of £21,200 a year at the time of their review.
They wanted an income of £4,000 a month from age 55, reducing to £3,000 a month from age 75.
What We Found
We began by looking at what Martin wanted their retirement to look like, then used his financial information to build a retirement plan and test whether it could support those goals.
The initial forecast assumed 2% inflation which is in line with the governments long term goals, so this is the number we use for forecasting and a 4% investment return, based on a medium attitude to risk which is what Martin’s investments were set to at the time of coming to us.
The forecast showed a gap in Martin’s retirement plan. Between ages 65 and 72, it was projected that there was an estimated £42,000 shortfall where his pot of money and income from pensions would not stretch.
This meant that, based on his existing arrangements, Martin’s plan wasn’t going to deliver the retirement he had in mind.
Rather than simply accepting that he would need to work for longer or reduce his retirement income, we looked at whether there were ways to restructure his pension arrangements to better match his goals.
Finding the Right Approach for Martin
A key part of Martin’s situation was his defined benefit pension.
He wanted to understand exactly what the pension would provide and how that fitted with his longer-term plans. Once all the information had been gathered, Martin was referred to a Pension Transfer Specialist to assess whether transferring the defined benefit pension to an investment-based pension could be suitable for his circumstances.
The recommendation was that a transfer would better support Martin’s retirement objectives and was sufficiently robust from a stress-testing perspective.
Alongside this specialist advice, we reviewed Martin’s defined contribution pension and recommended consolidating his historic arrangements.
We also looked at his investment strategy. Rather than simply leaving his pension invested in the default arrangements he had accumulated through previous employment, we considered his attitude to risk and his retirement objectives and recommended an investment solution designed around his circumstances and the timeframe he had available.
The aim throughout was to make sure the different parts of Martin’s retirement plan were working together rather than looking at each pension in isolation.
Hear Martin’s Story
In his video, Martin talks about his experience of working through his pension options and how the advice helped him understand what was possible for his retirement.
A Retirement Plan That Gave Martin More Choice
Following the Pension Transfer Specialist’s advice and the subsequent pension and investment advice from Reeves, Martin’s retirement plan looked very different.
By changing the structure and investment strategy of his pensions, our new projection showed that Martin and Sam could have a pot that could support the income they wanted, when they wanted it. But of course, we can’t actually predict the future, so this is depending on the markets, and it not guaranteed.
Most importantly, the revised strategy meant that Martin could retire at 55, rather than needing to continue working to bridge the shortfall identified in the original plan.
It also gave him greater flexibility over how he accessed his pension.
Since retiring, Martin has been able to take his target regular income of £4,000 a month, while also accessing some of his tax-free cash for significant purchases that have made a difference to his life.
The outcome wasn’t simply about having more money in a pension. It was about structuring Martin’s retirement savings in a way that gave him the income and flexibility he wanted.
Want to see how the numbers changed?
Watch more about Martin’s retirement plan in our webinar, where we walk through his starting position, the £42,000 shortfall identified in the original plan and how the recommendations changed the projected outcome.
Where Martin Is Now
Martin has achieved what he originally came to Reeves to explore. He was able to retire at 55 with a retirement strategy designed around the lifestyle he and his wife wanted.
He has continued to receive his target £4,000 monthly income and has also had the flexibility to use some of his tax-free cash for life-changing purchases.
For Martin, the value of the advice was not simply in identifying that his original plan had a shortfall. It was in exploring what could be changed and finding a strategy that better matched what he wanted his retirement to look like.