Pre-Retirement – Some Way Off


John and Fiona are 40 years old. They have two children Amelia & James (age 12 & 10). John earns £35k p.a. working freelance in IT, whilst Fiona earns £30k p.a. as a Teacher. They are both Basic Rate taxpayers (20%). Fiona is already a member of the Teachers’ Pension.

Fiona went online and obtained a projection which showed she would receive a pension income £12,000 and a cash lump sum of £80,000 at age 65. John doesn’t have any pension savings.

key client considerations2

John and Fiona would like to be financially secure when they retire and need help working out what age this might be. They want to be comfortable and maintain a similar lifestyle to the one they have now. Holidays and leisure time are important to them.

They also want to help their two children get onto the property ladder and need to build up an education fund for things like University. They are both unsure whether their pensions and other savings will be enough.


We reviewed John and Fiona’s circumstances, income and expenditure. This helped us build an understanding of the income they would need in retirement and we agreed a target of £30,000 p.a. at age 67. We explained the different ways they could build up their retirement savings and draw an income in the future.

We concluded that John could afford to save £200 per month into a pension, and that a Moderate level of risk was acceptable. We explained to John how the Government would top up his contributions by 25%, as he is a basic rate tax payer. This is known as tax relief, and means that for every £100 John contributes, he will receive an additional £25 from the Government. Therefore, the total contribution each year into the pension would be £3,000, costing John just £2,400.

Using our cashflow modelling software we showed John that if he continued to make these contributions until he retired, his pension would be worth £172,208 with investment growth of 5% p.a. We explained to John that in today’s money that equates to £116,579 (allowing for inflation at 2.5% p.a.).


We showed John and Fiona that with our recommendations they would be on track to meet their retirement income target. Together with Fiona’s Teachers’ Pension and their State Pensions they would have an income of £30k p.a. net.

We agreed if they needed a cash lump sum, i.e. to help the children onto the property ladder, this could be taken from John’s pension (from age 55) or Fiona’s Teachers’ pension (from age 65) using the tax free cash lump sums available.

We recommended setting up a regular premium investment ISA to build up an education fund for Amelia and James. This would complement their pension savings and provide access before age 55.

We agreed to review their pensions and investments every two years to ensure they remain on track to meet their objectives.

Both John and Fiona are now much more confident they will have enough income in retirement and spare funds to support their children. We gave them peace of mind that their future is financially secure.