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Why make a Financial Plan? - news article image

Why make a Financial Plan?

2 Mar 2022

2 minute read

Money can be a great source of angst and anxiety for people – some have “too much” and tax is seen as a problem; whilst others have too little and just living their lives is a constant battle; many just don’t know where they are with their money. 

I met a client recently who was in the last category and I thought it would be a great case study to share to encourage people to: 

  • Take control of their money and not let it control them
  • Never be reluctant to take proper advice
  • Take proper advice sooner rather than later. 

Emma is not far off 64 and approached me to look at her pension provision as she was quite concerned about how she was going to make ends meet in retirement. This had been a constant source of anxiety for some time for her. She also wanted to see if she could draw some funds from her pensions to pay for some home improvements.

Emma had a number of personal pensions totalling £150,000, but also a pension that she didn’t really understand or know what it was worth. She had joined this pension with one of her earliest jobs and in fact had delayed joining it for some years as she wasn’t sure how long she was going to be there. Having left the firm, the paperwork for this pension was essentially put in a drawer and forgotten about. 

This unknown plan happened to be a defined benefit pension scheme and to Emma’s absolute astonishment was worth £21,000 per annum to her. A life changing amount of income in retirement for her. We also discovered that this was a plan she could have started drawing nearly four years ago on her 60th birthday. 

What we were able to do for Emma was to explain clearly what she had and show her that with her State Pension on top she would have a guaranteed index linked lifetime income of £30,000 per annum and given this foundation of security we were able to arrange a drawdown of some tax free cash to fund the home improvements from the personal pensions. 

Most of all however, we were able to provide Emma with peace of mind. 

Whilst we cannot guarantee an ending like this for everyone, if you take advice early you have a real chance of making a big difference to your own long-term financial security.
Why make a Financial Plan? - news article image

Author:

Tim Davison

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