02 Sep Can I Afford to Retire Early? How Financial Planning Helped One Couple Find Out
"When can I afford to retire?"
is one of the most important questions we help clients answer.
Sometimes, however, people don’t ask it at all.
They simply assume they’ll retire at the age shown on their pension statements.
That was the case for one couple we’ve worked with for many years. We’d previously helped them with their investments, but we’d never really discussed their pensions or what retirement might look like.
He was 61 and working full-time. She was three years younger and working part-time.
Their assumption was simple: he had final salary pensions with a normal retirement age of 65, so he expected to carry on working until then.
What happened next changed their plans considerably.
What were their pensions actually on track to provide?
I suggested that we take a step back and look at the bigger picture.
Rather than starting with when they should retire, we started with what they wanted their retirement to look like.
How much would they need to maintain their lifestyle? What would they like to do with their time? What might holidays, hobbies and other plans cost?
We could then look at everything they had already accumulated — pensions, savings and investments — alongside their expected future State Pensions, and use cash-flow modelling to illustrate what they might be on track for.
That’s an important distinction.
A pension statement can tell you what a particular pension is worth or provide an illustration of the income it might produce.
What it can’t necessarily tell you is what all of your pensions, savings and investments mean for you.
The forecast revealed something they hadn't expected
When we brought everything together, the modelling indicated that they might not need to wait until he was 65 to retire.
Based on the assumptions we’d made, retiring at their current ages appeared possible.
That wasn’t something we’d set out to prove.
The purpose of the exercise was simply to help them understand what their existing financial arrangements were on track to provide. Sometimes that exercise identifies a potential shortfall and gives us an opportunity to build a plan to address it.
Sometimes it provides reassurance that things appear to be on track.
In this case, it presented them with an option they hadn’t previously realised they had.
They now had something quite significant to think about.
What if things didn't go according to plan?
Cash-flow forecasts aren’t guarantees of what will happen in the future.
They rely on assumptions about things such as investment returns, inflation, expenditure and life expectancy. Reality will inevitably be different.
That’s why we didn’t stop at the first forecast.
We deliberately put their plan under additional pressure.
We modelled a significant market fall ten years into retirement.
We added the cost of purchasing a static caravan, running into tens of thousands of pounds.
We doubled their planned holiday expenditure.
Even after adding those scenarios, the modelling still showed no projected shortfall based on the assumptions being used.
They didn’t rush into a decision.
They went away, talked about what they’d seen and allowed the information to sink in.
Then life presented them with a decision
Not long afterwards, his employer offered voluntary redundancy.
Without the planning we’d already done, being offered redundancy at 61 could have prompted an entirely different set of questions.
Would he need to find another job?
Could they afford for him not to work?
Would retiring four years earlier put their future lifestyle at risk?
Instead, they already had a much clearer understanding of their financial position.
He knew that, based on the planning we’d done together, retirement appeared affordable without needing to find another job.
He chose to retire.
Financial planning didn't stop when they retired
They’re still clients today and we revisit their cash-flow forecast with them every six months as part of their regular reviews.
We update it to reflect what’s actually happened rather than assuming that a forecast produced years ago remains accurate.
Their investments have subsequently progressed differently from the original assumptions, their spending changes and their plans evolve.
But there’s another interesting challenge we’ve encountered along the way.
They’ve spent most of their lives being savers.
Suddenly becoming spenders isn’t always easy.
We see this with quite a few clients approaching or entering retirement. After decades of being careful, accumulating pensions and building investments, giving yourself permission to actually spend some of that money can feel surprisingly uncomfortable.
For this couple, some of the greatest enjoyment has come from using their money with their family.
They’re spending more on their children and grandchildren, including enjoying family holidays together and sometimes paying for them.
They recognise that they’re unlikely to spend all of the wealth they’ve accumulated.
Rather than their family only benefiting from that money after they’re gone, they’re able to see some of the benefit it provides while they’re all here to enjoy it together.
Do you know what your pensions actually mean for your future?
You might have several pensions from different employers, some savings, perhaps ISAs or other investments.
Every year, another collection of statements arrives telling you what each one is worth.
But do you know what they mean when you put everything together?
That’s where we believe financial planning becomes particularly valuable.
When someone first comes to see us, we don’t begin by assuming that they need to change their pensions or investments.
We start by understanding what they’re trying to achieve.
With their permission, we can then obtain information from their existing providers and build a clearer picture of what they already have. Once we understand the starting position, we can consider whether there are any actions worth exploring and begin to model what their existing arrangements could mean for their future.
Cash-flow modelling can then help us explore questions such as:
- What might my existing pensions and investments provide?
- Am I on track for the retirement lifestyle I want?
- When might I be able to afford to retire?
- What happens if I want to spend more during the early years of retirement?
- What could happen if investment returns are lower than expected?
- If there’s a projected shortfall, what could I do about it now?
The answer won’t always be “you can retire tomorrow.”
Sometimes the modelling shows that changes may need to be made.
But either way, having a clearer understanding of where you’re heading can help you make more informed decisions about what you do next.
Would you like to understand what you're on track for?
If you’ve accumulated pensions, savings and investments but aren’t really sure what they mean for your future, we’d be happy to have an initial conversation.
You don’t need to know exactly what advice you need.
That’s part of what the first conversation is for.
You can call us on 01270 250900, send us an enquiry and ask us to call you back, or book an initial conversation at a time that suits you.
The first step is simply understanding where you are now and where you’d like to get to.
This case study is based on a real client’s experience, with identifying details omitted to protect their privacy. It illustrates one particular set of circumstances and should not be taken as an indication that the same outcome will apply to everyone.
Cash-flow modelling uses assumptions about future events, including investment returns, inflation, expenditure and life expectancy. These assumptions are not guaranteed and actual outcomes will differ. The value of investments can fall as well as rise and you may get back less than you invested.
A pension is a long-term investment the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
This article is for general information only and does not constitute personal financial advice. The suitability of any course of action will depend on your individual circumstances.
Cashflow modelling is not regulated by the Financial Conduct Authority.
Approved by 2plan wealth management Ltd on 28/08/2026
View Pensions & Retirement Planning
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
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