Jenny Dunk

Will using Guyton Klinger guardrails allow me to withdraw 7% from my pension in early retirement? A big part of our job is encouraging clients to spend money in retirement without fear of running out. Many clients want to front-load their retirement spending, undertaking activities now that they might not be able to later in life. We recently discussed how cashflow planning software might not reflect the potential risks of front-loading retirement spending, and we've also covered the risks in the past when adopting the Guyton Klinger (GK) guardrail strategy. Today, we investigate the risks of front-loading retirement spending when a retiree uses the GK guardrail approach. Our client (Pete) has a retirement pot of £1,000,000 and wants to take out £70,000 per annum during the first decade of retirement. Pete is prepared to: 1️⃣ Accept some cuts to his retirement income should we encounter turbulent markets. 2️⃣ Reduce his retirement expenditure once the first decade has passed. For benchmarking purposes, we use an inflation-adjusted approach and examine just the first decade (this might give a clue as to how bad things can get). We then move on to GK guardrails. If we look at just the median retirement balance, things don't look too bad, with the balance (in real terms) slowly reducing over the decade. GK does a good job (vs the inflation-adjusted approach) of reducing the range of potential outcomes of the retirement pot, and even in the worst case, the funds don't run out in the first decade, although we'd question whether a retiree would stick with the plan if the balance fell too far. Regular readers of our blog will know what's coming..... In the worst case, real income will be cut by over 😲 60% 🤯 by the end of the first decade. Would holding a cash buffer help? Realistically, we'd suggest not for several reasons. 1️⃣ Should you temporarily ignore the rule during down markets and start taking money from the cash buffer instead? 2️⃣ Do you use the cash buffer to bolster the retirement income if you experience poor Guyton Klinger outcomes? You would need a very big cash buffer to do this! 3️⃣ How does the cash buffer get topped up after being depleted? 4️⃣ How do you accommodate increased withdrawals at the outset from the portfolio after you have taken two years' income (for example) for the cash buffer? For example, if a £140,000 cash buffer is set aside, the initial withdrawal will rise from 7% (£70,000/£1,000,000) to around 8.1% (£70,000/£860,000). It's important not to double-count assets! We conclude that taking an initial 7% pa using the GK approach is probably not viable if retirees knew the potential downsides. We'd also question whether a retiree shouldn't instead be using risk bask guardrails, which have far fewer drawbacks and align more closely with real-world retirement planning scenarios. Links in the comments below: Today's pic is AI-generated and shows a broken guardrail (one of its better efforts 🎉).

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𝐀𝐝𝐯𝐢𝐬𝐞𝐫𝐬, 𝐃𝐨𝐧’𝐭 𝐆𝐞𝐭 𝐂𝐚𝐮𝐠𝐡𝐭 𝐎𝐮𝐭 𝐛𝐲 𝐇𝐢𝐝𝐝𝐞𝐧 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲 𝐅𝐞𝐞𝐬! Recently, an adviser I know invested in new financial planning software, assuming it would be like their old system—where adding a paraplanner or assistant was either free or much cheaper. Imagine the shock when they learned that even if a contract paraplanner only needed access a few times a month, a full-price license was still required! That was $1000's of dollars a year. With tools like LastPass, sharing logins used to be simple and secure, but with two-factor authentication, each user now often needs their own login, and costs can add up quickly if you’re not prepared. That’s why I’m a fan of Claras.ai software. While the full license is $139 pm, you can add an admin login for just $39 pm, giving your assistant access at a fraction of the cost. Plus, your practice manager/admin can access the platform for free to set up and edit templates, keeping your operations lean and efficient. A little bit of homework on fees and admin logins can save you from surprises down the line. 𝐇𝐚𝐯𝐞 𝐲𝐨𝐮 𝐜𝐨𝐦𝐞 𝐚𝐜𝐫𝐨𝐬𝐬 𝐡𝐢𝐝𝐝𝐞𝐧 𝐭𝐞𝐜𝐡 𝐟𝐞𝐞𝐬 𝐛𝐞𝐟𝐨𝐫𝐞 ? 𝐃𝐫𝐨𝐩 𝐚 𝐜𝐨𝐦𝐦𝐞𝐧𝐭 𝐚𝐧𝐝 𝐭𝐚𝐠 𝐬𝐨𝐦𝐞𝐨𝐧𝐞 𝐰𝐡𝐨 𝐜𝐨𝐮𝐥𝐝 𝐮𝐬𝐞 𝐚 𝐡𝐞𝐚𝐝𝐬-𝐮𝐩 !

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For years now I've been talking to my clients about life expectancy. However just basing your financial (or life) plan based on life expectancy alone feels a bit one dimensional A two dimensional plan might be to also consider the fact that if we're in our 50's or 60's we're likely to have a period of time where our health will allow us to do the things we've always wanted to do, and focus your money on doing those things whilst still physically able. It might include ticking those things off the bucket list you've always wanted to do However the more I think about this the more I believe that both our financial (and life) plans need to be three dimensional. They should be about what makes us happy. They should be about how to spend our most finite resource, time. They should be about wellbeing. They should allow us to define what success looks like for us. It's why we have nuanced conversations on "What Happens Next". I love understanding different perspectives on what a life well lived looks like and the elements we need to consider when thinking about how we spend our money, our time and much more. We've been fantastically fortunate to interview loads of brilliant guests including... Nick Elston, Pete Matthew, Peter Grundy, Martha Lawton, Lesley Thomas, Penny Power OBE, Thomas Power, Pradip Mistry, Jamie Harrison, Ian Harrison, Chris Budd, David Forsdyke. Award winning Later Life Lending expert, Jo Taylor, Will Rainey 👱🏻‍♂️, Himanshu Jain, Jeff Gosling, Jane Thomas and continue to share insights from loads who are able to help. You can benefit today, for free, in a number of ways... You can join the What Happens Next book waiting list. We're going to be collating and sharing all of the insights from our guests and much much more and you can get the first change to buy the book when it's released in 2025 HERE - https://lnkd.in/exNBU4nX You can take the quiz so that if you're thinking about your 'what happens next' you can take our Free quiz. It takes 5 minutes and allows you to understand in what areas of wellbeing you might be strong, and what might need a bit more effort. You can do this HERE - https://lnkd.in/e3P7aPj5 or You can subscribe to our YouTube Channel HERE - https://lnkd.in/eHH6muvi Also, we'd love to know who else to invite on What Happens Next... So, I'm curious...Who do you know who could provide us with a unique insight into a life well lived? I'd love to know....

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***COMPLETION*** A challenging case which was underpinned by time pressure given the client had reverted to a rate of 10.24% !! Refinance of 6 bed Licensed HMO which involved a Trust which we restructured that allowed us to repay the JV investor from another recently refinanced property and agree a new rental income agreement split with no security. This allowed for a clean Ltd Co Refinance on a 5 year fixed 5.24% @ 75% with a Investment Yield Valuation. Most lenders would only consider a Bricks & Mortar valuation but by demonstrating the following: > The previous funding and valuation we obtained 5 years prior was Investment > Planning was granted for major structural works and clearly changing the properties footprint. > Required Licensing to operate as a HMO > Was located in an Article 4 Area The lender took a view that it warranted a hybrid valuation which looked at Sales of Investment Properties (HMO's) but also reported on the Income and applied an Investment Yield Calculation based on the Gross Rent minus property costs. The result: Instead of a shortfall of approximately £70k which would of been the case with the lenders that deemed it a "Small HMO" we ended up releasing capital £51k to allow my client to further make improvements to exiting property investments and consider further acquisition. My thanks to #Keystone who were very understanding of the clients situation and views on the property #complexbuytolet #hmo #ltdcobuytolet #portfoliolandlord #buytolet #specialistlending

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Stop thinking financial advice is expensive. A good financial adviser should only take you on as a client if there is benefit for using them. Of course, you need to see the value in their expertise, but trust me, they know a lot more than 'Dave from down the pub'! #financialplanning #moneymanagement #tax

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𝐖𝐡𝐚𝐭 𝐢𝐬 𝐠𝐨𝐨𝐝 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐩𝐥𝐚𝐧𝐧𝐢𝐧𝐠 I like this graphic from James Shackell 🤩 Financial advice / planning is terribly misunderstood 🫣 Most people just identify selling insurance and picking investments 🤪 Maybe it’s misunderstood because it is a radically different profession with a different service / value to 20 years ago (when I started) 🧐 Although I belive the value is mainly relational / behavioural… I love the specificity and accountability behind this breakdown. Do you agree with this breakdown? Are you experiencing / delivering it today? I would love to hear your thoughts 👇 #financialplanning #financialadvice #clarity

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Worth pointing out that St James’s Place are not the only “vertically integrated” financial advice business. True potential have grown enormously over recent years, enticing advisers with a very generous payment for each client they bring with them. In fact, most larger “Wealth Management” companies have their own funds and/or products and platforms, even the ones classed as “independent” rather than “restricted” advisers. We have had a very positive 10 years on the stock markets, meaning portfolio’s have performed well even with higher than average charges, but this is no excuse for advisory companies to push charges up & use clients loyalty against them. A reduction in charges of 0.5% per annum can make an huge difference to whether your money is left to your children/grandchildren rather than the shareholders of a large advisory firm. For a second opinion on your portfolio charges, risk and financial planning needs, please consider a local & independent business, that does not promote their own products. Celtic Financial Planning Ltd offers a no cost no obligation review service to make sure you are not being overcharged. Please feel free to get in touch with me, Robert Lewis or Jamie Hughes IFA to take arrange a chat!

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Inheritance Tax EXPLAINED 🧠 🤓 Don’t get caught out unnecessarily. Inheritance Tax (Death Duty 💀) can be reduced or even avoided entirely with some forward planning. Understand the rules and do something about it if you or your parents are likely to exceed the thresholds 😯 Feel free to message me if you have any inheritance tax questions❓ Freddie ⭐ Chartered Financial Planner ⭐ 👉🏼Follow me for more at Freddie Winter 💻 Find out more about what I do at gratitudefp.co.uk ——————— My posts and social media content are for education and guidance only. ——————— #FinancialPlanning #financialadvice #financialadviser #inheritance #inheritancetax

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Can anyone tell me why financial advisers love to list their AUM (assets under management) as the thing that defines them? Post after post recently. For me it suggests they’re only interested in one thing - their client’s money. Why not let the impact they’ve had on their clients define them instead. But these stories are rarely mentioned. We'll never list the amount of investments we advise upon on our website or post about it in general, it just doesn't matter. I couldn't even tell you what it is. Literally no idea. But I could tell you the story of every one of my clients - what their biggest fears are, how they got to this point and what their vision is for the future. And I will continue to tell those stories to highlight the impact we can have when financial planning is done well. Tell the stories and highlight your impact - please don’t define yourself by your AUM! Or it’ll be pretty clear to me what your values are. Just a thought..

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When we talk about saving and investing, we generally think of them as the two main ways to set money aside for the future. It can be easy to confuse them as one and the same thing – or think that you should opt for one or the other: https://lnkd.in/evGa3Mq5   #Investmentplanning #financialeducation #wealthmanagement #toptips

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Not for the faint hearted 😱 There are rumours about tax hikes in the budget, but since I do not deal in rumours lets see what tax we are currently paying. All figures are approximate and there are initial allowances in some circumstances (and in brackets are ways you can mitigate against these taxes, for the majority of the population); 8%                                               Employee National Insurance 14%                     Employer National Insurance (Salary Sacrifice into pension) 20%, 40%, 45%                            Income Tax (Pension) 10%, 20% and/or 18%, 28%      Capital Gains Tax (ISA, Pension) 20%, 25%                    Corporation Tax (Employer contribution into pension) 9%, 34%, 39%                              Dividend Tax 20%, 40%, 45%                            Savings Tax (Pension, ISA) 40%                                              Inheritance Tax if over thresholds (Pension) 20%                                              VAT on most purchases 56%                                              Fuel duty and VAT on petrol/diesel (buy a bike) 0-12%                                           Stamp duty on house purchase I'm sure there are more taxes I've missed out, but you get my point. Its an uphill battle if you don’t invest tax-efficiently 👊

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Not everyone needs financial advice, but in some pension cases it has saved my clients tens of thousands........especially since the LTA has been abolished. One client has saved £28k in tax by drawing pensions in the best order and other clients have saved significant amounts by NOT consolidating pensions. I have a client in their 40's who has benefited from not consolidating one pension, so it isn't just those nearing retirement that might need advice with their pensions. 🐸 It is worth checking before you leap, because you can't leap backwards! #pensions #LTA #financialadvice

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Inheritance tax is something which is affecting more of us than ever, due to rising house prices and allowances being frozen since 2009. Inheritance tax is no longer a tax on the wealthy. Recent figures show an increase of 7.5%, meaning the treasury is on track to take over £7.6 billion in inheritance tax in the 2023/2024 tax year. So, what can you do about it? The first thing, and I really cannot stress this enough, is to take professional advice. I have seen multiple times the effects of people trying to skirt the system, having taken advice from friends, family, or colleagues thinking they're being clever. It doesn't work and it often ends up costing the families more. The answers are broadly to spend it or to gift it, but it is HOW you do this that really makes the difference. Using gift allowances, trusts, investments which are specifically for this, even taking out life insurance to cover the cost of the inheritance tax itself... There are multiple solutions. This is a complex planning area, but the reality is for many that this is largely an optional tax. If you seek professional support and act early with a little planning, there are a number of perfectly legitimate ways for you to reduce your inheritance tax liability. https://lnkd.in/eTKWNP9K #inheritancetax #estateplanning #willsandestate #protectyourself #protectlovedones #polegate #financialadviceuk

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