Really good financial planning can be truly life changing, improving your financial and mental wellbeing.
This is what we aim to deliver to each and every client. To demonstrate how we can make a genuine impact, let me give you an example. Through the financial planning process, I have helped the following client not only improve his retirement prospects, but also save vital money now on the heavy burden of childcare.
Major milestones
I was contacted earlier this year by 41-year-old John (not his real name) who was seeking advice on investments and savings. In the previous two years he and his wife had moved house, had a baby and he’d started a new job paying £50,000 more than his previous salary.
With so many significant life events happening in quick succession, it’s no wonder John was beginning to think about the future and how he would support his family when it was time for retirement.
We had an initial chat on Zoom, where I outlined the financial planning process. John was nervous about incurring fees and making a commitment, but I put his mind at rest by explaining that our first meeting is always free and there’s absolutely no obligation to follow up on any of my recommendations.
Several meetings and lots of emails and phone calls followed whilst John collected the necessary information and I answered his questions about the outcomes he could expect.
Research and recommendations
It transpired that John had a number of small pension pots accumulated through previous employers, but in total, they were only worth around £30,000. This was concerning, given his age and current salary. Thanks to his recent promotion, he had disposable income in the region of £1,500 a month, so I suggested we consolidate the small pensions and boost his arrangements by adding a personal contribution of £500 a month.
Two other key concerns arose from our discussions. Although he is well paid, John’s contract of employment only entitles him to two weeks’ sick pay. Secondly, because his salary exceeds £100,000, he believed he was not eligible for the government’s Tax-Free Childcare scheme and was paying £950 a month in nursery fees.
I explained that the childcare scheme eligibility is dependent upon a net adjusted income of under £100,000. However, when working out this figure, you can deduct gross monthly pension contributions. This meant that by increasing the £500 I’d originally suggested to just over £660, he would meet the eligibility requirements for the government’s scheme, saving him £200 a month in childcare fees. In addition, it protects his income tax personal allowance, which reduces by £1 in every £2 and earns him an extra 20% tax relief as a higher rate taxpayer.
I also recommended he takes out income protection insurance to ensure he can continue to support his family should he become seriously ill, along with making regular contributions to a Junior ISA for his son.
Moving forward
My relationship with John continues to evolve and we’re still in regular contact, whilst we put all of the pieces in place that make up his new financial jigsaw.
Long term, I will see him annually to review any future life changes and ensure the plan we have implemented still serves his needs. I’m also available for John to contact at any time, if he has questions or there’s anything he wants to discuss.
By working together for the last nine months, we have restructured John’s finances extensively, saving his family money and boosting his retirement prospects, leaving him a very happy chappy indeed.
If you are considering your plans for retirement and would like a professional to review the pension pots you have accrued, don’t hesitate to contact me on 01246 298181 or email: enquiries@belmayne-ifa.com
