Simon, a 40 year old predominantly NHS principal dentist, approached us via our website. He was feeling uncomfortable with respect to the advice he had just received from another adviser and was seeking a second opinion.

One of Simon’s main concerns was that he was feeling that he was working all hours of the day and was not able to spend enough time with his family. He is married to Rachel, 49, and lives with her two children who are aged 22 and 23, both of whom are planning to leave home very soon as they embark on their respective careers. Rachel works as the practice manager at Simon’s dental practice and had previously worked as a teacher.

Their aims for the future were to design their working lives so that they were able to spend more time with each other. In addition to this, they had recently purchased a holiday cottage on the coast of south west Scotland and wanted to spend more time there - they were currently visiting once or twice per month over weekends, Friday to Sunday (travelling time was over two hours from home).

As a business owner, Simon wanted to explore all their options to see if reducing his hours was a realistic goal without it impacting too much on their future retirement goals. Their aim was for him to part-retire in his early 50s and then retire in full by age 55.

Simon and Rachel were interesting as they wanted to make it a priority to live as much of their lives now, instead of working hard all their lives until age 55/60/65 and then trying to cram in as many non-work activities as they could. Prior to meeting, we emailed some ‘homework’ to Simon and Rachel. This included a goal setting document so that they came to the meeting having gone through some of the mental process required when really trying to define and map out what they wanted for their futures.

At the meeting I was delighted that they had individually written down what they wanted for the future (which can lead to ‘interesting’ conversations at times!). The exercise provided confirmation for them both that they wanted to design their lives so that they could spend more time together.

In particular, Simon admitted that he was finding the running of the dental practice very tressful and wondered whether he was the right person to be in charge (crucially, he said he still loved the clinical side of being a dentist and was wondering if he could be doing more of this).

They envisioned a future of living in a village type environment with a small, close community where they could spend time walking together and pursue their main hobby of researching and visiting places of historical significance.

We discussed how we would create their long term financial plan, incorporating cash flow projections. I also provided them with an expenditure template so they could itemise:

What will their likely expenses be from now until retirement?

How much income will be required once they cease work for the rest of their lives?

Will this be sufficient so they can live the lives of their dreams?

At the next meeting we discussed the expenditure prior to going through the projections. They forecast that they would be able to reduce their outgoings in a number of areas. If Simon sold the business, they would be able to repay their residential mortgage of £120,000 (house is valued at £450,000). In turn, this would save the monthly payment of £2,000 (currently overpaying). They decided to cancel their Sky TV subscription and also review the tariffs for their gas and electricity (for all three properties).

Also, as the children would be leaving home soon there would be further savings, although they knew that they would be needed as an ATM to some extent for the foreseeable future!

Projected retirement income required was £3,300 per month (today’s values), inflation protected. The great news was that the first cash flow projection we looked at showed that they were on track for Simon to part retire at 50 and then retire in full at age 55.

Retirement income would mainly come from Simon’s NHS pension and personal pension (fund value £60,000), Rachel’s teacher’s pension, savings/investments (they currently have £110,000 invested in equity ISAs) and State Pensions.

For the NHS pension, in the future Simon would need to decide whether to take the benefits prior to age 60 and suffer an actuarial reduction or wait until normal retirement age of 60. Of course, there are current proposals to change the scheme so we will be keeping a close eye on the situation. The current plan would be to ensure there were sufficient liquid funds in place at age 55 to draw down until age 60.

Once we were able to confirm that their long- term financial future was looking secure, they decided that the best option in the short term would be to sell the business (they already had a purchaser interested). This would involve Simon remaining in the business for a period of one or two years as part of the sale agreement, working as an associate dentist (so he would be doing clinical work for the majority of his time) on a four day week. With the current value of the business being £400,000, there would be circa £210,000 capital available (after CGT) once the business loan had been repaid.

It would also result in Simon’s income reducing from £140,000 to £70-80,000 per annum. The second cash flow projection also indicated that their long term retirement income would be secure even though Simon would accrue lower pension benefits in the future due to the reduction in his pensionable income (NHS pension benefits accrue on a CARE basis for practitioner NHS dentists).

For the immediate term, this would enable Simon and Rachel to take long weekends at their holiday cottage, probably travelling up on Thursday evening until Sunday (which they said made selling the business even more of a priority).

Firstly, once Simon had handed over the business and was free to leave after two years or so they would consider moving to the holiday cottage. Simon had made some contacts in the local business community and had already discussed joining a local practice as an associate dentist.

He quite liked the idea of a four day week and, better still, there wouldn’t be any commuting time on weekends. Rachel would probably see if she could secure a part time position as a teaching assistant – she had already decided that she didn’t want to return to work as a teacher.

They said that they weren’t sure what they would do with their house if they moved. One option was to sell it and purchase a smaller property so that they still had a base to use when visiting family. This would then free up the funds to purchase a larger property in Scotland.

To finalise the plan, we also:

Analysed the risk profiler questionnaires that Simon and Rachel had completed and agreed how much risk they should have with their invested capital and Simon’s personal pension fund. This decision was taken within the context of the cash flow projections so that we could clearly see how much growth (and therefore risk) was required.

Referred the clients to a solicitor as no wills or Lasting Powers of Attorney were in place.

Covered the inheritance tax liability with a joint life second death whole of life policy written in trust. The clients decided to pay a ‘maximum’ basis monthly premium, understanding that it was likely to increase substantially at the 10 year review.

Checked Simon’s income protection – we changed one plan as it did not have own occupation definition of disability.

It’s also worth mentioning how grateful Simon and Rachel were that they had met me and become associated with our company. The last adviser they had seen had spent only one hour with them and recommended that Simon invest £2,500 per month into a personal pension. Simon was uncomfortable that the adviser’s company would be paid a commission of £19,500, so our fee was very reasonable in comparison!

Fast forward four years and a lot has taken place.

Simon sold the business and worked at the practice for just over two years as part of the sale agreement. At a review meeting the year prior we discussed the idea of them taking a few months off to travel (a new goal). They fulfilled this and actually travelled on and off for eight months, visiting countries that included Thailand, Australia, Canada and Morocco.

They then moved to the holiday cottage to test living in the locality, which was a success. This persuaded them to sell their house in England and move permanently to Scotland. They are now in the process of purchasing a larger house, which will give them more space for when the children and family visit. They will also buy a flat in England in due course.

Simon works a four day week at a local dental practice and Rachel does two days at the local primary school as a teaching assistant.

Their invested capital is invested in line with both their risk profiles and capacity for loss.

To ensure continuity of service, we are using Skype video meetings and desktop meeting software to conduct their financial reviews.