Introduction and Background
A Managing Director starting working with Andrew Day in 2000 leading up to his retirement at age 65 in 2002. Having spent a number of months looking at the options available with the purchase of an annuity, taking the tax free cash and either phased or full drawdown, it was recommended to take the lump sum that amounted to £160,792.07 that was then utilised for other purposes and enter income drawdown.
This left an amount of £717,454.73 on the 11th May 2002 as the starting value of the income drawdown fund. The amount of income withdrawn each year since has been as follows.
The Numbers
| 2002 | £3,557.88 | Initially a small amount of income was taken as the client continued a consultancy role. |
|---|---|---|
| 2003 | £21,347.28 | |
| 2004 | £31,256.46 | |
| 2005 | £60,984.00 | The income started to be stepped up as the client profits were being made and the client were increasing their spending in retirement. |
| 2006 | £60,984.00 | |
| 2007 | £66,410.52 | The most crucial asset allocation decision was made to completely remove the property holdings that had been buoyant to this point and equity holdings in favour of a high weighting in Gilts that protected the fund through the financial crisis years. |
| 2008 | £71,837.04 | |
| 2009 | £40,232.84 | The fund was impacted at this point and therefore a decision was made to reduce the income level and call upon other cash reserves as the fund was able to rebuild from this point. |
| 2010 | £33,912.00 | |
| 2011 | £36,738.00 | |
| 2012 | £31,086.00 | The income level has been maintained at this level which has provided for the majority of the client’s needs together with a state pension and other resources. |
| 2013 | £36,738.00 | |
| 2014 | £33,912.00 | |
| 2015 | £33,912.00 | With the changes in death benefit rules, the strategy continues to be maintained to provide this level of income and eventually the remaining fund could be passed to the client’s wife or children. |
| 2016 | £33,912.00 | |
| 2017 | £19,782.00 | Income at 02/08/2017. Projected £33,912 by end of year |
The Result
A total amount of £616,602.02 has been paid in income and as at the 2nd August 2017 the remaining fund value is £637,156.20.
As a guide to returns over the period the FTSE 100 Index stood as follows:
- 01/05/2002 – 5085.04 points
- 02/08/2017 – 7394.22 points
- This represents a 45.41% rise over the period in the value of the FTSE 100
The client is now 79 years old and has met with Andrew Day 2 or 3 times a year to keep this plan and his overall planning up to date. The client now looks forward to a continued happy retirement with a sound financial plan that continues to stand the test of time.
If you are interested in how we have achieved such a good result in difficult market conditions over these last 15 years, then please do not hesitate to contact Depledge Strategic Wealth Management Limited for an initial free no obligation meeting.
Past performance is not necessarily a guide to future performance. Investment and the income from them can go down as well as up and you are not guaranteed to make a profit from your original investment.
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