Wealth Check: 'We want to save for our kids and for retirement'
Saturday 29 September 2007
With a 19-year age gap between them, Wendy and John Harbutt from Cheltenham, Gloucestershire, find their financial goals differ somewhat.
Wendy, 37, runs her own company and is the director of a second company, while John, 56, an operations manager, is just eight years away from retirement. They have two children, aged five and two.
"John would like to have paid off the mortgage by the time he retires, and to have achieved an adequate pension by that time," says Wendy. "I want to provide for the children and their higher education."
The couple have a £100,000 offset mortgage at a rate of 6.35 per cent. "We have enough money to pay off the mortgage in full, but we haven't done that as it would leave us illiquid. We keep thinking of buying a second property to use the cash capital."
In the meantime, they are trying to overpay their mortgage by as much as they can each month. John has £8,000 in an ISA. The couple also have an endowment with Standard Life.
Both John and Wendy have several pension pots, but are concerned about their current pension provision. "We would like to get our pension saving in order, and to consider other means of providing an income for retirement – such as rental property," she says.
John has life insurance through his employer, but the couple have no other protection policies in place.
We asked three financial advisers for their suggestions: Keith Churchouse from Churchouse Financial Planning, Anna Sofat from AJS Wealth Management and Adrian Kidd from Mint Financial Services.
Case Notes: Wendy and John Harbutt, from Cheltenham
Income: £80,000 a year
Pension: Wendy has a personal pension with GE Life; John contributes 7 per cent to his company scheme
Savings: £90,000 in accounts with Barclays – offset against their mortgage
Investments: £8,000 in a stocks and shares ISA
"The Harbutts are in a good position in that they have enough savings to cover their mortgage – and no other debts," says Sofat.
She recommends they open cash ISAs to maximise their tax-free allowances, and urges them to start saving for their children.
Sofat says that while the couple have an endowment policy maturing in 2021, they should review whether it's worth keeping it in its current form. " They might want to consider selling it or encashing it," she says.
But Churchouse says that when this policy matures in 14 years' time, it could be put towards university funding for their children.
Kidd adds that the couple should have received some Standard Life shares last year after the float of the company, and says this money could be used to pay off the rest of the mortgage.
An offset mortgage is a "good way to keep your money liquid and in a tax-efficient manner," says Churchouse, adding that it is a "good strategy" to pay it off before John retires.
Kidd says the couple should look at the pros and cons of property investment, but that "many foreign property markets have low entry deposits, which could pay huge dividends over a 10-year time-frame".
Sofat says that if they sink all they have into buying another property, they are exposed to that one asset. She recommends instead that they build up a balanced investment portfolio that will have exposure to a number of assets, including equities.
With so many pensions from previous employers, Churchouse recommends the couple make use of the Pension Tracing Service.
Sofat says that as John is approaching retirement, it is important for him to do a full review of what he has – and the income he expects them to provide.
He should order statements from the pensions providers, and also request information about his state pension by completing a BR19 form.
As Wendy has her own business, and the couple have two young children, income protection is essential, as a loss of income could seriously scupper their plans in the future, warns Sofat.
"It is important for John to investigate what benefits he is entitled to at work," she says. "Check what would happen to John's income if he became too ill to work."
To find an independent financial adviser in your area, visit www.unbiased.co.uk
For a free financial check-up, write to Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail email@example.com
Compare with the Independent: See how much you could save by switching credit cards. Compare now
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Orgasm machine to deliver climax at the push of a button
- 3 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
White people become less racist just by moving to more diverse areas, study finds
Exclusive: Impact of immigrants on British workers ‘negligible’
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...
Day In a Page
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew