Case study: Living life with purpose

Ian Painter CFP™ Chartered FCSI, managing director at Affinity Integrated Wealth Management, explains the value of helping clients establish, and achieve, a life of purpose

case study - purpose1920
The brief

Ian Painter CFP™ Chartered FCSI

Ian has been a financial planner for over 30 years, with his business specialising in true comprehensive lifestyle financial planning for those at or near retirement and their families.

He is a former committee member for both the Financial Planning Forum of the CISI and the South East branch of the CISI.

His firm is a CISI Accredited Financial Planning Firm.

Pat and Jennifer, both aged 54, were referred to us by an existing client. Pat, an architect, knew that he could soon begin to draw on his substantial pension benefits. He wanted to look at the option, and the affordability, of retiring early, having spent most of his working life in the same company, albeit one that had been through a couple of mergers. The latest senior management changes taking place at Pat’s employer did not suit him; he was tired of work and the new obligations he was being asked to take on. He needed to know when he could step away and either retire or do something completely different, less time-consuming and less stressful.

Jennifer, a part-time self-employed physiotherapist, had some health issues and it was likely that these would get worse over time, meaning their ability to make full use of their holiday home in Italy would be curtailed longer term. They loved holidaying in Italy and wanted to spend more time together relaxing and enjoying life. They also wanted to help their three children get on the property ladder by funding their house deposits. All three were in their mid-20s, two were in rented accommodation and one was still living at home.

The plan

Ahead of our initial meeting we requested that Pat and Jennifer complete some documentation. This included a full expenditure breakdown that enabled us to begin building some basic cashflow modelling for them. We always like to demonstrate the impact of cashflow modelling to a potential new client using some of their own data, as it’s a great way to bring things to life for them.

It was obvious at the initial meeting that Pat was exhausted, while Jennifer’s recent diagnosis was also a bit of a game changer. While there was no immediate danger to her quality of life, the condition would mean that she would get progressively worse and less mobile over time. Things had to change, and they had to begin to live life with purpose while they were able. But the big question was: what sort of life could they afford to live?

Pat’s pension was valued at £1.4m; it was their biggest single asset by far. Jennifer also had some deferred pension benefits under the NHS scheme and some smaller personal pensions with an old closed life office valued at around £30,000. Their home was valued at £600,000 with a £170,000 mortgage outstanding on it. Their property in Italy was valued at £100,000, and other than £10,000 on deposit, that was the entirety of their assets. They were still supporting their children from their income, which between them amounted to £115,000 per annum.

They had to begin to live life with purpose while they were ableWe discussed the type of lifestyle they wanted to lead. They had both become used to earning good incomes, yet had not managed to build up any significant savings outside of pension. They were spending all that they were earning, but where? After some probing questioning, we established that slowing down was what they both needed to do, even if this meant learning to live on a lower level of income.

Our subsequent detailed analysis of their finances revealed that they had spent a lot of money on their children’s education, and were now helping them with things like rent. Pat stopping work would mean him spending a lot less on fuel and there were several other expenditures that were either not required or would naturally fall away. 

We produced several ‘what if’ cashflow models with differing levels of expenditure, covering various scenarios like downsizing their house, selling the Italian property, and Pat doing some consultancy work. After running through these, we established that they could have a comfortable lifestyle by generating £50,000 per annum in total income, with additional top-ups as and when required for some big holidays.

We then set about determining how they could meet their objectives, which included:

• clearing their mortgage debt

• providing some monies for house deposits for their children

• making some long-awaited improvements to both their UK and Italian homes.

We established that Pat and Jennifer could retire and stop work completely if they wanted to at age 55 by drawing Pat’s pension, which would meet with most, if not all, of their objectives. They had sufficient resources to produce the £50,000 per annum they needed.

Pat gave notice to his employer, at which point they offered him a part-time consultancy position. He accepted, reducing his hours and increasing his daily rate to boot. Jennifer decided she did not wish to stop work completely, so she too reduced her working hours so they could spend more time together.

We began arranging for Pat to access his pension benefits at the age of 55. Once we had placed the pension onto a suitable platform, we structured the underlying investments, keeping a significant element in cash (we knew this would be required) and thereafter built a blended portfolio of both active and passive funds.

When Pat reached 55, we moved his pension into a flexi-access drawdown arrangement, and he began crystallising some of his benefits in a phased manner. We did this by targeting pension commencement lump sum amounts. The blended portfolio we built for him has increased by just over 15% since inception (late 2016).

When Jennifer reached 55, we arranged for the phased encashment of her existing personal pension plans over a couple of tax years, her self-employed profits being at a level below the basic rate tax threshold. She was therefore able to access her personal pensions in a tax-efficient manner.

This enabled them to:

  • Gift significant sums to their children to enable them to buy their own properties.
  • Reduce, but not clear entirely, their own mortgage.
  • Make the required improvements to both of their properties.
  • Meet their initial expenditure requirements in a tax-efficient way, taking account of their self-employed incomes. We were able to ‘gap fill’ their income with tax-free cash.
  • Open some additional cash savings for them in individual savings accounts.

What happened next

Pat was able to keep his pension crystallisations below the £1m level, thereby avoiding any immediate Lifetime Allowance issue. Unfortunately, Pat did not engage with us early enough to be able to apply for any form of pension protection.

Following a review meeting just before Christmas 2019, Pat decided that he would not renew his consultancy contract after April 2020, and he will now retire completely at age 57. We are preparing for his pension to take higher levels of income withdrawal in the new tax year.

Pat and Jennifer are more relaxed and less stressed than when we first met with them. They are now looking forward to the next phase of their life together, and being able to live life with purpose.

This article was originally published in the June 2020 flipbook edition of The Review

The full flipbook edition is now available online

All CISI members, excluding student members, are eligible to receive a hard copy of the quarterly print edition of the magazine. Members can opt in to receive the print edition by logging in to MyCISI, clicking on My account, then clicking the Communications tab and selecting ‘Yes’.

Once you have read the print edition, keep coming back to the digital edition of The Review, which is updated regularly with news, features and comment about the Institute and the financial services sector.


Seen a blog, news story or discussion online that you think might interest CISI members? Email
Published: 21 Sep 2020
  • Financial Planning
  • Pension
  • Case study

No Comments

Sign in to leave a comment

Leave a comment