James McIntyre, director in our financial planning team, firstly took time to fully understand our clients’ requirements and the lifestyle they wished to lead in retirement. James then worked with our clients to then determine what accessible cash was available and how much was required for a contingency fund, using cash flow modelling, whilst keeping in mind whether this position would be likely to change in the future. James also considered what investments were already in place, as well if there was scope to target further investments and long-term growth.

Following this exercise, our team prepared a cashflow forecast which confirmed to the clients that it was likely that their finances could be sustained comfortably through retirement, and in fact, highlighted that there could be scope to increase spending and still maintain sustainability. Our team also discussed with the clients the option to test sustainability again in the future and consider whether small gifts to grandchildren could potentially be made, as the clients expressed an interest in contributing towards higher education in the future.

In terms of investments, the cash flow exercise highlighted £40,000 which was available to invest over the long term. We recommended the use of stocks and shares ISAs (prior to the end of the approaching tax year end), and carried out a full risk profiling exercise, considering our clients’ investment experience, growth needs and aspirations, as well as their capacity to ride out a negative market cycle, subsequently agreeing an appropriate risk approach for their ISAs and pensions. We also recommended that the stocks and shares ISAs were held within PM+M’s Managed Portfolio Service, to ensure the investments were in line with the clients’ appropriate risk profile, allowing us to manage them within a proactive solution.

James also recommend utilising a method called ‘flexi access drawdown’, in order to ensure our clients’ retirement income was structured in a tax efficient manner. This involved the client making use of their personal allowance by taking an income from their pension. In this case, our team recommended that, as Mrs Smith was able to earn £3,000 more than Mr Smith prior to paying any income tax, that she could commence an income of £3,000 per annum from their pension, tax free.

Following the extensive financial planning undertaken, our clients can now take comfort in the knowledge that they have a sustainable plan, proactively managed investments are in place and they are utilising all available tax allowances, meaning they are now able to focus solely on enjoying their retirement.