In this case study, the Earnshaws got a rude surprise when they were aged 74 and had to make an important decision at speed – which is how an independent financial adviser came to find an ideal solution.
At age 74, former teachers Bob and Marion Earnshaw needed to make big retirement decisions quickly. They had left one significant pot alone as they had enough retirement income from other investments that had matured. Then, Marion’s provider alerted her that if she’d not chosen how to access her savings by 75, they would decide for her.
The couple had used financial advisers all their lives, starting with the purchase of their home. They now wanted advice around pensions to ensure they were making the right decision with one of their most important assets. However their original adviser had retired and his partner wasn’t moving with enough urgency, so they looked for someone new.
A combination of personal recommendations and research led them to find a new financial adviser wihin their area. Bob and Marion say a crucial factor was finding someone who was independent, and with whom they could form a relationship.
Marion says: “It’s not advisable to look for a new financial adviser at 74. It’s difficult; you’ve got to have your wits about you and do your homework. But we couldn’t have had a better outcome. Lee is professional, moral and trustworthy.” Bob adds: “The lack of urgency from our previous adviser forced us to negotiate for an extension directly with the pension providers and begin the search for a local independent adviser.”
After gaining an understanding of the couple’s long-term goals, their financial adviser recommended a joint lives annuity that provides a guaranteed income for life. The couple will use a 25 per cent tax-free lump sum for discretionary spending, crucial home improvements and a car. Their adviser described how “We started with a cash flow. We drilled down into their expenditure and how much income they needed. We used an impaired life annuity to deliver that income. They’re getting almost 10 per cent return guaranteed, which you could never hope to achieve in a drawdown.”
An annuity is when you use the money in your pension fund to “buy” an income. In contrast, a drawdown pension is where you leave the money invested and take an income directly from the fund. Bob says: “The chance of us going together at the same time is remote, so whoever outlasts the other would need the same standard of living. A lifetime annuity suits us down to the ground “
How we can help
Don’t ever be forced into making important financial decisions, especially at speed, without obtaining professional, impartial advice. Here at Logic Wealth Planning we offer independent, unbiased, friendly help and guidance, to help you to fully understand all the options open to you at every stage of your life, and enable you to form a strategy which carefully manages your finances, and reflects your circumstances and aims. We’re here to help – to arrange an initial no obligation meeting give us a call on 0808 1234 321.
Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.