Personal Finance: Retirement Planning and Financial Objectives

Running head: PERSONAL FINANCE
Personal Finance
Name of the Student:
Name of the University:
Authors Note:

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Contents
Introduction:....................................................................................................................................2
Part A:..............................................................................................................................................2
Part B:..............................................................................................................................................6
Part C:..............................................................................................................................................8
Part D:............................................................................................................................................10
Part E:............................................................................................................................................12
Conclusion:....................................................................................................................................13
References:....................................................................................................................................14

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Introduction:
As a consultant firm we are obliged to provide our clients with best possible suggestions
to help them to achieve their financial objectives. In this documents we shall help Alastair and
Wendy Windsor of North East England to plan their retirement in a manner suitable to their
financial requirements in the future. Once retired the primary source of income of a person is his
or her pension. It is important to plan the retirement effectively to ensure that the pensions to be
received in the future shall be enough to meet the future expenses and other needs of the elderly
people. The detailed discussion and the suggestive course of action for Alastair and Wendy
outlined below.
Part A:
Financial objectives of Alastair and Wendy in the short and long run:
Financial objectives of clients are dependent on number of things including their age, financial
needs, income, quality of life in the future and others. The financial objectives are mainly of two
categories, firstly short term objectives and secondly long term objectives. Alastair and Wendy
aged 56 years and 49 years respectively are elderly couple looking to secure their future.
Short term objectives:
In the short run the objective of the couple is to ensure that the pension income of theirs will be
sufficient to meet their family expenditures. The pensions that would be received after paying
necessary taxes shall be enough to meet the family expenditures of the couple subsequent to their
retirement is the main short term objective.
Medium term objective:

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Covering the University fees of one of the dependents of the couple along with saving for the
America trip are part of medium term objectives of the couple. In order to achieve the medium
term objectives the funds must be invested in profitable investment options.
Long term objectives:
The primary financial objective of the both is to invest in stable sources to secure their future.
The dependents are Harry and Holly as Alastair and Wendy do not have any children from their
marriage (Ellison, 2011). In addition to meeting the short term objectives ensuring that the part
of net income of the couple subsequent to the retirement shall gone towards securing their future
is also to be noted.
The financial objectives of Alastair and Wendy thus, include that the income in the future should
be enough to meet their budgeted expenditures as well as to make savings for their future.
Meeting the family expenditures and providing for their dependants in case anything happens to
Alastair and Wendy is the main financial objective of the couple (Farrar, Moizer & Hyde, 2012).
Plans to achieve the objectives of the couple:
Pensions are received by both Alastair and Wendy from their respective employers in the form of
lump sum and annuity. In addition to the current employment income and pension both have also
inherited properties from their ancestors. Both their income and wealth are increased due to these
inherited properties from their grandparents.
From the facts it is clear that the main source of income to the couple is the respective income
from different pension schemes. With both having two or more pension schemes to earn income
in the future in the form of annuity and in lump sum. However, the amount of lump sum payment

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from the pension schemes are dependent on number of things such as the age in which they will
decide to retire and the level of the schemes (FRASSI, GNECCO, PAMMOLLI & WEN, 2018).
The couple have the desire to retire at the age of 60 whereas the standard age to release pension
is 67 thus, numerous calculations are provided to assess the options available to the couple in
case they decide to retire at different times. Ensuring that the couple make optimum use of their
income is the main objective. This will enable them to make provision for the future expenses as
well as make necessary savings for their future (Hinz, 2011).
The graph below shows the projected employment income under different scenarios.
0
50,000
1,00,000
Employment Income Projection Scenario's
15-16; L 56 D 49 16-17; L 57 D 50
17-18; L 58 D 51 18-19; L 59 D 52
19-20; L 60 D 53 20-21; L 61 D 54
21-22; L 62 D 55 22-23; L 63 D 56
23-24; L 64 D 57 24-25; L 65 D 58
25-26; L 66 D 59 26-27; L 67 D 60
27-28; L 68 D 61 28-29; L 69 D 62
29-30; L 70 D 63 30-31; L 71 D 64
31-32; L 72 D 65 32-33; L 73 D 66
33-34; L 74 D 67 34-35; L 75 D 68
35-36; L 76 D 69 36-37; L 77 D 70
Age
G B P
Taking into consideration all the expenses of the couple the monthly expenses adds up to £4,310.
The lump sum and annuity to be received by the couple would vary significantly depending on
the time of retirement of the couple hence, it is important to consider each and every aspect of
retirement (INTERNATIONAL SURVEY OF FAMILY LAW, 2011). Though the couple also have
income from their wealth and inherited property but the primary source of income is the income
from pension schemes. It is important to consider the implications of taxation on the wealth,

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property and overall income of the couple. After deducting all necessary taxes on income and
applicable taxes on wealth the available income should be sufficient to meet the monthly
expenditures of the family in addition to make necessary savings for the future. It is important to
note that the income of the couple in the future should not only be sufficient to meet their
expenditures but they have dependents including the parents of Alastair who are at the advanced
age and are sickly. Thus medical bills for his parents are also quite significant. Ensuring the
future incomes of the couple is sufficient to meet all these expenditures and provide for the
security of the couple is the primary financial objective of the couple (Kira & Eijnatten, 2011).
Apart from the above financing the University fees of Holly and to make provision for the
American trip will be fulfilled by investing certain percentage of total funds in lucrative
investment options such as Real Estate Investments Trusts and other such lucrative but less risky
investment options.
The projection of income and net savings is very crucial to the financial objectives of the couple
the graph below shows the income and net saving projections to help the couple understand the
impact of different alternatives (Lomax, 2012).