Wealth Check: 'I want to retire at 60 and travel, so how should I plan my finances?'

Sheelagh Donovan would like to retire in eight years when she is 60. "I'd continue working longer if it made substantial economic sense but I'd rather not have to," she says.

Sheelagh Donovan would like to retire in eight years when she is 60. "I'd continue working longer if it made substantial economic sense but I'd rather not have to," she says.

Ms Donovan has been an information officer for Age Concern in South London since November, 2002. Before that, she spent 20 years with the Milk Marketing Board and worked for a firm offering advice on people's work-life balance. She lives in a one-bedroom flat in Sutton, Surrey, and has paid off her mortgage.

Luckily, she was in the final-salary scheme of the Milk Marketing Board and is a member of a handful of other personal and private schemes. "Is there any advantage in consolidating all my pension pots?" she asks. "Should I leave my Milk Marketing Board pension where it is? I have had a letter from trustees outlining plans to amend the scheme."

She has a NPI capital bond and would like advice after the proposal by AMP, the life insurance company, to de-merge from NPI. Much of her savings are in building society accounts. "I'd like to invest in something that will out perform building society rates but I don't want substantial risks," she says.

We asked Anna Bowes, of Chase de Vere Investments, Bob Riach, of Riach Independent Financial Advisers, Charles Ansdell, of Inter-Alliance and Roderic Rennison, of Charcol.

Case Study:
Sheelagh Donovan, information officer

Name: Sheelagh Donovan;

Age: 52;

Status: Single;

Occupation: Information officer for Age Concern;

Education: BSC in nutrition from University of Surrey;

Car: Fiat Tipo;

Salary: £25,000 ;

Property: One-bedroom flat in Sutton, Surrey;

Savings: Premium bonds; mini-cash Isa with Nationwide; Tessa about to mature; £8,000 in index-linked savings certificates; building society accounts; NPI capital bond bought 1993; Newton Pep taken out in 1993; Merrill Lynch Pep taken out in 1998;

Pension: Milk Marketing Board final-salary pension (20 years service); personal pension; five years deferred group personal pension; Age Concern money-purchase scheme;

Shares: Northern Rock and International Power;

Outgoings: (Per month) £1,100.

Solution 1: Pension

Ms Bowes says there is no problem with Ms Donovan having different sources of income in retirement . Her final-salary scheme is likely to be the most valuable of her pensions. Although the trustees of the pension have suggested there may be alterations there is no evidence these amendments wil l adversely affect her.

Mr Riach says it may be worth Ms Donovan transferring the five years of contributions into her Age Concern scheme. She should ask those trustees for a transfer value and ask Age Concern's administrators to show what additional benefits this will produce. Mr Riach recommends leaving her personal pension with the present provider, to avoid transfer fees.

Solution 2: Property

Mr Ansdell says there is little point in doing anything with her property at present since she needs somewhere to live. When she has retired, she could release the equity in her house for extra income.

Solution 3: NPI bond

Ms Bowes says with-profits bonds have been suffering for some time and NPI are among the casualties. But the problem lies with future performance as opposed to the security of her capital. It is likely her NPI bond will be in cash and fixed interest securities. This means the underlying fund may be lower-risk but it does not offer great potential for strong future performance because it will not benefit from growth in the stock market.

So while there is likely to be a penalty for cashing in the bond she may get better performance elsewhere. She must choose a company with significant financial strength such as the Prudential, Standard Life or Legal & General.

Mr Rennison says Ms Donovan should leave her NPI bond alone. AMP have withdrawn from the market because they wish to protect shareholders from further financial strain. There should be no further losses.

Solution 4: Savings

Ms Bowes says during the long bear market of the last three years Ms Donovan's investment choices have served her well. Cash has outperformed stocks and shares considerably. But that it is not the ideal investment environment for the longer term.

There are investments that have the potential to benefit from any rise in the stock market while keeping capital safe, but there are few to choose from. A guaranteed-equity bond will offer a proportion of any rise in a market index and guarantee to at least return the original investment at the end of the term if the market drops. She recommends the Portman building society Guaranteed Equity Bond or the Newcastle building society FTSE Bond 2.

Mr Ansdell says Ms Donovan should invest in a cash mini-Isa (up to £3,000 a year). She should also consider index-linked gilts which are relatively safe investments.

Mr Riach says Ms Donovan's premium bonds can be viewed as a no-risk investment, with a possible win. He has clients who invest in premium bonds for the excitement and a return above building society rates. After the rally in word stock markets she should review her Newton and Merrill Lynch Peps. These funds may have been appropriate when bought, but will not now be the best funds to take advantage of the present investment climate.

Ms Donovan should also maximise her Isa allowance by arranging a stock market-based Isa investment with a wide range of investment funds to reduce volatility. Mr Riach recommends a Skandia multi-Isa which offers a choice of more than 100 funds. She should also sell her shares because these are high-risk investments.

* If you would like to be given a financial health check-up, write to: Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
News
peopleFox presenter gives her less than favourable view of women in politics
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
PROMOTED VIDEO
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
News
i100
Arts and Entertainment
Taylor Swift performs at the 2014 iHeart Radio Music Festival
musicReview: 1989's songs attempt to encapsulate dramatic emotional change in a few striking lines
News
Mario Balotelli has been accused of 'threateningly' telling a woman to stop photographing his Ferrari
peoplePolice investigate claim Balotelli acted 'threateningly' towards a woman photographing his Ferrari
Arts and Entertainment
Paul Anderson plays Arthur Shelby in Peaky Blinders series two
tvReview: Arthur Shelby Jr seems to be losing his mind as his younger brother lets him run riot in London
Voices
Don’t try this at home: DIY has now fallen out of favour
voicesNick Harding, who never did know his awl from his elbow, is glad to see the back of it
Arts and Entertainment
Miranda Hart has called time on her award-winning BBC sitcom, Miranda
tv
Sport
Phil Jones (left) attempts to stop the progress of West Bromwich Albion’s James Morrison on Monday
I'm not worried about United's defence - Chelsea test can be the making of Jones and Rojo
Arts and Entertainment
Saw point: Bradley Cooper and Jennifer Lawrence in ‘Serena’
filmReview: Serena is a strangely dour and downbeat affair
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

    £350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

    Chief Financial Officer

    120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker