|Step one||Tax efficient gifts made to children||
We made gifts to all our children.
Whilst this has tax benefits, in terms of potentially reducing the Inheritance Tax due on our estate, the real benefit is seeing the funds being put to good use.
Matt used the funds to move his family into a bigger house.
Callum and Jude bought into the family business.
Amy paid down her mortgage which reduces this debt and also increases her monthly disposable income.
|Step two||Consolidation and simplification||
I had 4 different pensions, each associated to a past employer
Norman explained that there is no need to have this fragmented structure, and in fact there are many downsides. If nothing else, why have 4 companies writing to you when you can have just one!
So, we moved all of my pensions into a new SIPP which immediately simplified my affairs, whilst also giving me that all important access to flexibly drawing down my pension. I wish I'd done it years ago.
|Step three||How much income do I want in retirement?||
I don't see this as "financial advice": I should be able to work this out for myself.
However, it was helpful to sit with Norman, partly to have someone to bounce thoughts and ideas off, but also to listen to his suggestions for how our future life might be different. Do we really still need two cars? How might our holiday spend change? Do we want a higher income in the early retirement years whilst we're still young and active?
|Step four||Do I have enough?||
This is a difficult question to answer, especially without professional input.
It is fair to call the decision "scary" when you decide to stop putting more into your bucket, and rather to turn on the tap and hope that money will keep coming out for as long as you live!
However, all the scenarios Norman ran for us showed a healthy surplus beyond any reasonable life expectancy for Ellen and me.
|Step five||Don’t forget about annuities||
Annuities may have fallen in popularity in recent years (The Sunday Times seems to tell me that every week) but Norman explained to me how they are still the only route to secure lifelong guaranteed income in retirement from a personal pension
So, I used a portion of my pension to buy an annuity, sufficient to cover our regular living costs, safe in the knowledge that it will keep paying as long as Ellen or I are alive.
|Step six||I finally know what a SIPP is||
I'd often heard talk of a "SIPP", this mythical pension beast that I somehow suspected could help me if only I knew what it was.
I now know it isn't elaborate or complicated. It is "self invested personal pension" that allows me to buy and hold a huge range of investments within my pension, and also flexible access to those investments as and when I need.
|Step seven||Keep on top of your state pension||
Norman sent me the link to get an online illustration of my state pension.
Thankfully I didn't need to top this up - I'm all set to get the full flat rate state pension.
It is easy to grumble about the UK state pension: it doesn't look very valuable when compared internationally. However, I'm still pleasantly surprised about what Ellen and I will receive, and it is a valuable building block of our financial security.
|Step eight||I now know my attitude to investment risk||
Psychometric testing! Capacity for loss! The power of compounding!
Norman explained how important it is to understand how much risk to take with your pension investments. Too little and the growth may not be sufficient to meet your needs, but too much and when the market tumbles (as it will) then the pain may be too much to bear.
A questionnaire, some number crunching, and a lot of discussion, all helped to narrow down where we should be on the risk scale, and Norman then helped guide our investment manager in constructing a portfolio to suit us.
|Step nine||Tax still matters||
I was obsessed about tax when I was working, and could tell you every allowance that was available to me and whether or not I'd used it.
I'm somehow surprised that nothing really changes when you retire: most of the allowances are still available, and my annual review meetings with Norman are scheduled for every February so we can discuss these in the run up to the tax year end.
I also have a small amount of tax free lump sum left and I'm phasing this over the next 10 years to give us a bit of extra income but without increasing my tax liability.
|Step 10||I'm retired!||
Putting all of the above together allowed me to see what I really wanted my future to look like.
And then to realise that, with some careful management, I was in a position to make that dream a reality not just earlier than I'd hoped, but now.
I consider myself fortunate in my current circumstances, as I didn't really have a "plan" to get to this point, it just happened. But I get considerable peace of mind from knowing that I do have a plan now, and that Morton Fraser are helping to make sure that plan stays on track in the years to come.