Retirement is one of the most popular topics of conversation for our financial planners. We’ve spoken to Devin Smith, a financial planner from our Portsmouth office, to find out how he helps clients make the most of their pensions and achieve the retirement they want.
My clients are usually aged 50 to 70 but they’re all very different. They have different expectations and plans, mixes of investments and tax situations. Some want to retire completely at 65, others carry on working well into their 70s.
And for a lot of people, retirement doesn’t happen overnight – they actually carry on working a few days a week. I’ve seen guys do everything from becoming driving instructors to working at the local B&Q. Some people also start up home businesses, like making handmade jewellery to sell at festivals. I think they do this because they realise their days of golfing and cruising won’t last forever, and it gives them some structure until they’re ready to retire fully.
A lot of people have a broad understanding of their pensions when they arrive – perhaps not the exact details, but some idea. Many people want to know how much income their pension could give them or how much extra they need to save to get the amount of income that they want. Others want to know how much income they’ll need to make their retirement plans a reality.
We sit down with them to find out exactly what they already have and what they want from retirement. We’ll look at their current pensions, savings and investments against their expected outgoings – their regular expenses and any extras like holidays or a new car. Then we crunch the numbers.
Once we have the results we can then say to them – “these are best and worst-case scenarios and this is what your retirement could look like.” Playing around with these different scenarios is where we can really bring things to life for our clients.
Lots of people want to know if they could retire now, or what would happen if they carried on saving for a few years. Some want to see if they could spend more in retirement. A simulated market downfall is also quite popular – everyone remembers 2008/09 when the markets fell about 30%. They want to know what could happen to their portfolio and income if the same happened again.
Fortunately I don’t come across too many people who are up the creek without a paddle! But sometimes I have to manage people's expectations. Some have unrealistic expectations about how much money they can take without running out.
Others don’t realise the investment risk they need to take to get the returns they want – they’re tearing their hair out because they remember 10 years ago when banks were paying 5-6% interest! And some people want to take extra risk for higher returns, but they simply can’t afford to. So I have to push back a bit and we usually find a meeting point.
There are two fellows that I’m helping to retire at the moment, and they’re from opposite ends of the spectrum. One has a tight budget – his expenses are around £21,000 a year but his pensions only add up to £20,000. We’re working out the best way to make up the £1,000. At this point he can’t afford to take much risk to potentially earn the extra – he needs to preserve his capital at all costs.
The other has a decent teacher’s pension that covers all his costs. He’s planning to take a lump sum to do up his house. He doesn’t need the income so he’s using his pension as an opportunity to enhance his lifestyle rather than just maintain it. So these are two very different conversations.
Why not book a free initial consultation with a financial planner like Devin Smith? You can discuss your retirement plans and find out how they could help you make the most of your pension. Book your consultation today by calling 020 7189 2400, emailing firstname.lastname@example.org or completing this online form.