Couple on beach holding hands

Enjoying retirement and passing on wealth

Stage five


Life events

  • Paul and Susan want to ensure they have a sustainable and tax-efficient income of £6,000 per month net.
  • Inheritance Tax (IHT) planning – they want to leave a legacy to their children and grandchildren.
  • They also want to plan for potential future care costs.
  • Paul and Susan both receive their state pension from age 67.


  • Income generation.
  • Income preservation.
  • Cashflow planning.
  • Tax efficiency.

How did we help Paul and Susan to generate a tax efficient income in retirement?

Paul and Susan have now completely stopped work. Their state pensions have come into payment and they are relying upon these, their investments and other pensions, to generate their retirement income. Their mind-set is now firmly focused on their lifestyle and fully enjoying their retirement, producing their required net monthly income target of £6,000 and preserving the wealth they have accumulated during their lifetime. They take regular ongoing advice from their Crowe Financial Planning consultant.

Putting in place a retirement strategy

Paul and Susan need a strategy to help preserve their wealth in real terms (taking account of inflation), achieve their retirement income goal in a tax efficient manner, and begin to consider what they will be able to pass on to the next generation.

Putting in place a retirement strategy and paying attention to the annual tax allowances and concessions provided by the government helps to maximise their income in a tax efficient and sustainable way. There are a lot of issues to be considered when structuring their assets, including the decisions relating to secured and flexible pension income options, the use of ISAs, General Investment Accounts, Onshore and Offshore Bonds. Consideration also needs to be given as to how their cash savings are held.

Tax efficiency

Ensuring their assets are structured in a way which utilises their respective tax bands is vital and will help utilise all the allowances available to them, making their net income target much easier to achieve. Tax exempt income can be provided by the tax free cash from Susan’s pension, their ISA savings and bank account deposits.

In addition the following annual allowances are available to each of them:

  • tax efficient pension income using the £12,500 personal income tax allowance
  • sales from their investments held in their General Investment Accounts, using each of their £12,300 annual capital gains tax allowances
  • utilising their tax-free dividend allowance of £2,000 per year
  • interest from cash deposits using the £1,000 savings allowance for a basic rate tax payer (£500 for a higher rate taxpayer)
  • tax deferred withdrawals from an onshore or offshore insurance bond. In addition to the 5% per year of original capital invested, an allowance of up to £5,000 per year to use the starting rate savings allowance.

These legitimate planning opportunities must be considered in tandem with the sustainability of income and their other goals, such as any large capital expenditure items (e.g. big holidays, car replacement and wedding anniversaries), as well as inheritance tax planning.

What did this mean for the Wells family?

Their retirement planning strategy helped them to put in place a sustainable and tax efficient income, as well as protecting the capital value of their assets against the effects of inflation. This was supported with cashflow planning which demonstrated a sustainable withdrawal rate and modelled the most tax efficient structure for their assets. Importantly, this strategy ensured that the income requirements of the survivor could still be met in the event either of them pass away.

Paul and Susan now feel comfortable that the level of income they require can be maintained for the remainder of their lifetime and their accumulated wealth has been positioned appropriately in terms of both investment approach and tax efficiency. This allows then to focus on enjoying their retirement, secure in the knowledge that they have an appropriate and sensible strategy designed to meet their objectives.

Financial support throughout your life

Find out what each stage for Paul and Susan Wells brings ...

Related podcast

In this episode of Crowe Casts, we are joined by Sue Daye, Partner, Private Clients, and Phil Smithyes, Partner, Head of Financial Planning.

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