The Grahams were still a few years away from their planned retirement age, but Mr Graham had a couple of colleagues who had retired early after engaging with their financial planner, Simon Glazier. He wanted to find out if he could do the same. Their priority in life was to support the local church, with their time, effort and money, and they had a feeling that they could afford to stop working to do this more, but they had no way of knowing for certain if they were right.
They had already been working with a financial adviser consolidating some pensions and investments, but the question about whether they had enough money to stop working altogether had never been considered. Mr Graham also still had a Final Salary Pension scheme which the adviser had been unwilling to advise upon and two old ‘With Profits’ pension with some Guaranteed Minimum Pension benefits they didn’t understand.
The Graham’s financial model incorporated all his remaining pensions and their investments and demonstrated that they had more than enough to meet their financial needs going forward. He didn’t have to work 5 more years until he reached the company pension ‘normal retirement age’ but could afford to do so straight away. He resigned within a week.
We then used the lifetime cash flow model to help compare what their financial future might look like by leaving their various pensions as they were or by transferring out of the Final Salary and Guaranteed Minimum Pension schemes into a personal pension. The conclusion was that the Guaranteed Minimum Pensions were so generous that the pension they were going to receive from these was far higher than what they were likely to achieve by transferring to a new pension. Having established this, the Grahams now had a secure level of income in retirement which meant they could be more flexible with the Final Salary Pension scheme. By transferring this to a personal pension they were able to access the funds earlier than otherwise without penalty, could spend more in the early years of their retirement, and be more generous to their church without the fear of running out of money. Because of the level of investment risk they were able and willing to take, the projected value of their estate was now higher to well beyond age 100, meaning that more could be left behind to the people and causes they love.
The result is that Mr Graham has retired 5 years earlier than he had planned, but is now finding himself so busy with the church that he wonders how he managed to find time to work before. Mrs Graham still loves her job, and has decided to keep working, not because she needs to, but because she wants to.