A couple were concerned about the financial security of the wife should anything happen to the husband. He had a number of older style pensions, but they were in his name and he’d need to take them as an annuity, a fixed annual payment, starting when he reached pension age at 65. The wife had very little savings in her name.
Before
We looked at the numbers
The graph shows what would happen if the husband died the following year. The wife would find she didn’t have enough to meet her total living costs in her mid 70s. What would happen to his pension if he dies first? Will she get much from his pension?
After
Our proposed financial plan
We suggested changing the husband’s old-style pensions to newer flexi-access pensions. These have two key benefits. 1. The pensions would go to the wife should the husband die first. 2. They could cash in some of the pensions and put the money, with any spare cash savings, into a joint investment bond (the pink section ??) – giving the wife additional money for a further 12 years, should the husband die first.
Outcome – So, will my partner be OK?
Yes. By making the changes we suggested, the wife will now be well provided for should anything happen to her husband. In addition, they will both be able to enjoy a more comfortable, happy retirement, with the added security of still owning their home should they wish to downsize and release more money in the future.
The couple were hugely relieved and reassured, and felt they could stop worrying about their future financial security and get back to enjoying the present.
Notes on how to read our charts
Financial Case Studies aren’t always the easiest thing to read. We’ve made ours as clear as possible, but if you’d like to know more, we’d be happy to explain.
When we work out your Financial Plan, we create two charts, Before and After.
BEFORE shows your current situation, and how your money is expected to provide for you in the future.
AFTER suggests how it could provide for you after some changes. These plans can be revisited regularly to ensure your money is always working hard for you.
The money coming in
Employment – the money you receive from your salary, bonuses, dividends etc.
State pension – the pension you receive from the government.
Other pensions – income from any company, private or nest pensions you’ve paid into.
Money Purchase Pensions
Savings and investments – money from ISAs, Premium Bonds, stocks and shares.
Drawdown Pensions
Pension Annuity
Asset Liquidation – money you could release by selling assets such as cars, paintings, antiques, stocks, shares.
Estate credit – the money you’d get from the sale of your home and any other property you own.
The money going out
Planned withdrawals –big purchases or expenses, such as a new car, home extension, holiday or gift.
Shortfall – the difference between what you’re spending and your income.
Total need – how much you need to live comfortably and enjoy your life and retirement.
Basic need – the minimum needed to live, but probably not the life of your dreams.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
Do we have enough for the retirement we want, and when can we give up work?