David Reid worked hard, very hard. But he played hard too – he enjoyed the lifestyle which he had created with his wife Sue and their daughters, Sarah and Emma.
David was 50 and he had a plan – his own financial plan. He planned to keep building until age 55, then gather up all his savings and investments and sail into the sunset for a life of leisure, travel and golf.
David didn’t think he had a problem. And he certainly didn’t need to seek any retirement planning advice.
His accountant, however, recommended he speak with a Chartered Financial Planner to help him ‘crunch his Number’. Very few financial advisers offer such a service, and so the Chartered qualification was crucial.
The financial planner spent some time getting to know David and Sue in order to understand the life they’d had, the life they had now and the life they wanted in the future. He helped them tune in to the real lifestyle they wanted to enjoy throughout their life. He also wanted to understand why retirement at 55 was so important.
David wanted to escape at the age of 55 and pursue his passion for sailing whilst he was still young enough and, more importantly, fit enough to partake in it. He wanted to cruise the Med. He wanted to cross an ocean – any ocean. David wanted to see the world. He wanted to ‘do stuff’ – ‘before it’s too late!’
But why 55?
David explained to the Financial Planner that his father had worked his whole life, right through to age 65, only to drop down dead at age 67. That was David’s main motivator – he could not bear the thought of that happening to him. He knew firsthand that life is not a rehearsal, and so he tried to live it accordingly. That’s why David worked so hard now – so he could ‘escape’ early.
So, understanding his clients, the financial planner said he would work with David and Sue through a lifestyle financial planning process to calculate their Magic Number – the amount of money they needed by age 55 to ensure they could live the life they wanted without fear of ever running out of money.
The financial planner built in the cost of continuing private education for Sarah and Emma, as well as the cost of their weddings. He got David and Sue to really think about the lifestyle they wanted at various stages of their lives.
And then he crunched their Number.
The financial planner then broke the news. He explained that, on agreed assumptions, David and Sue’s current plan – David’s plan – would see them running out of money by the time they reached 70!
So the planner then helped David and Sue to calculate ‘how much is enough?’ – i.e. how much they would need to accumulate by 55 in order to prevent the possibility of running out of money whilst living the life they wanted.
It was a Big Number.
The financial planner then worked with David and Sue to help find ways of accumulating the money, including making the most of tax breaks, reducing fees and paying off expensive debt.
David and Sue are now well on course to achieving their Number and to their intended retirement at age 55. David now has a reason to work hard – he is motivated, he’s inspired. He knows where he is going.
They continue to meet with their financial planner on a regular basis to constantly review their financial plan, to ensure they stay on track. The financial planner plays various roles to David and Sue, acting as a mentor and a coach, inspiring – and sometimes politely nagging – David and Sue to do the things they need to do to get where they want to go. And it’s working.