Once upon a plan: Marie and David

Once upon a plan: Marie and David

Life is a journey. We may not always know the destination or take the same route. We start at different points and navigate a unique path. However, without a map, it will take all of us longer to get there. And the same can be said about finances.

As part of our ‘Once upon a plan’ series, we shine the light on different financial planning journeys. In our previous articles, we met Kathy and Thomas who wanted to know when they could afford to retire and Linda and Robert who were after a clear and structured plan that would support them for the rest of their lives.

But now, let’s meet Marie and David.

Marie and David

Marie and David came to us because Marie wanted financial planning support following the sale of her business. She’d put the proceeds into a savings account, but wanted advice on what steps she should take next.

Together, they wanted a financial plan to help organise their finances and ensure they were spending their money wisely. They were looking for peace of mind that they’d be able to live comfortably for the rest of their lives and support their children financially along the way.

Vision and goals

Our planners aren’t just financial planners, they’re also trained in life planning, so it was easy to get to the bottom of what mattered deeply to Marie and David:

  • Support family

A key priority was to support their children. They want their children to receive all assets upon death, minimising inheritance tax.

  • Enjoy their money and spend it wisely

They enjoy the finer things in life – going on short breaks, visiting nice restaurants and generally enjoying life. So, they wanted to make sure that that could afford to sustain their current lifestyle.

  • Manage and invest money carefully

Marie and David wanted enough to live comfortably for the rest of their lives, without having to worry about money. Minimising costs, taxes and making the most out of every penny.

  • Retire in the next five years

After selling the business, Marie still worked for the company as an employee. Marie wanted to know that she was on track to be able to gradually reduce her working hours with the aim of retiring over the next five years. David wanted to continue working for the next two years, and then either work part-time or retire.

  • Invest in the house

They wanted to also do some work on their house, paying for a new extension and garden makeover.

Is there enough?

So now we understood what Marie and David truly wanted from life, and we also had a picture of their current position, it was time to put a plan to the test.

Using wealth-forecasting software we stress-tested their situation, and we were able to see that Marie and David had enough to live comfortably for the rest of their lives. Here is what we concluded:

  • There was no reason that they wouldn’t be able to sustain their current lifestyle
  • They could carry on enjoying their lives without having to worry about money
  • They could give £50,000 to their daughter to put towards her first house and have enough to do the same for their two other children
  • They could gift an additional £10,000 per year to each child
  • Marie could stop work within the next five years
  • David could retire in the next two years or continue working part-time if he so desired
  • They could afford the work on their house

Plan of action

With the proceeds from the business, taking into consideration their risk appetite, here are a few of the actions we suggested:

1. Make the most of their annual allowance by contributing the maximum amount into their pensions

Benefit: This would allow them to benefit from tax relief, and the savings would be considered outside of their estate for inheritance tax purposes

2. Make the most of their ISA allowance each year

Benefit: This would allow their money to grow tax-free while also giving them the flexibility to make withdrawals free of tax if needed

3. Consolidate and transfer their multiple pensions together

Benefit: This provided a cost-saving and improved the benefits available to them

4. Ring-fence savings for the work on their house and garden and provisions for the children

5. Make investments into a tax-efficient bond

Benefit: As this doesn’t produce a taxable income, this will save tax and benefit from tax-efficient investment growth until withdrawals are needed

6. Taking out an insurance policy that would offset the inheritance tax if they died

Benefit: This would mean that their children wouldn’t have to pay tax from the assets they inherited

Then it was time to make it happen. Our team implemented the changes necessary to start bringing the plan to life.

Keeping on track

Financial planning is like setting sail on a voyage; without careful preparation, navigation and flexibility as the wind changes, the chance of reaching the final destination dwindles. It needs work, and regular tweaks to keep you on course. That’s why we treat financial planning as a long-term relationship and provide regular check-ups as part of our ongoing service.

“Rebecca gets in touch whenever she feels the need to change anything and always explains these changes to me so that I fully understand the reasons and implications prior to making my final decision.”

If you have any questions, would like a sense-check on your existing plan, or need help realising your own goals, please don’t hesitate to get in touch and speak to one of our professional financial planners.

*This client story has been prepared by Balance: Wealth Planning using a combination of different experiences with names changed. This article should not be taken as financial advice and is for information purposes only.