Wealth Check: 'What do I have to do to retire on £50,000 a year?'

Eve Dolman, 26, moved to London from York two years ago and now works as a marketing manager. Although she is already a landlord, with few unmanageable debts and some savings, she has great expectations for her financial future, including retiring with an income of £50,000 a year in today's money. But Eve is finding it difficult to work out what she will have to do now to ensure her plans long-term, and is keen to learn whether her high-risk attitude to investment will reap rewards.

Our panel of independent financial advisers, Ian Hudson of Hudson Green & Associates, Dane Halling of Arcturus Investments and Alan Dick of Forty Two Financial Planning, provide their recommendations.

Case notes:

Eve Dolman, 26, marketing manager, London

Salary: £28,000

Mortgage: £90,000

Monthly spending: £2,195

Debt: £12,000 student loan

Pension: £200 per month, including employer contributions


Dick is concerned that Eve's retirement goals are unattainable, and warns that she could run out of money by her mid-seventies, which, with life expectancy now in the mid-eighties, could be disastrous. By the time she retires at 65, Eve's desired income will have risen from £50,000 to £160,722, adjusting for inflation. To reach this goal, Eve would need to amass an investment portfolio of around £3.2m, assuming she could achieve an income of 5 per cent from her savings. "She is probably on target for around two-thirds of her goal," Dick says, "but the cost of bridging the gap is unachievable." Eve would have a better chance of reaching her goals if she reduced her target retirement income to around £33,000, he advises.

Hudson also suggests she reconsider her needs: "Eve may not need this level of retirement income. It is unlikely that she will have a mortgage, nor will she still be saving for a pension, and she will not have the same wealth-growing ambitions. In retirement, disposable income is likely to be greater and her pension income will stretch much further than the disposable income from her salary."

Buy to Let

Eve already owns a property worth around £150,000 in York, which she rents out. She wants to expand her property portfolio, but with the state of the housing market in the balance, the panel is negative about buy-to-let investments. Eve is lucky to be achieving a gross capital return of around 6 or 7 per cent a year on an initial investment of £112,000, says Dick. "Many BTL investors are losing money on a monthly basis and are bargaining on capital growth to bail them out in the future," he says. If Eve decides to sell at the end of her mortgage deal and locks in the profit she has made, she should be wary of changes to capital gains tax, he adds.

Halling suggests that Eve watches the market to see what deals emerge as interest rates ease. He adds: "What is now clear is that the landscape has changed considerably since the summer and it is unlikely that we will see those sorts of offers again for some time."


Eve has cash accounts worth £1,925 in five different places earning around 3 per cent interest annually, and all three advisers believe that she should consolidate a number of these into a mini cash Isa with a rate of around 6 per cent. "Eve should limit her cash accounts to two that she regularly contributes to," says Hudson. "This will free up time to grow her investments."

But Eve also has a maxi Isa worth £9,000 with Fidelity, and with her significant appetite for risk, Halling believes the choice of funds is critical. "A basket of well-managed funds with consistent, long-term performance is essential," he says. "Avoid flavour-of-the-year funds and be wary of excessive emerging markets risk."

Meanwhile, Eve should look very seriously at critical illness and income protection insurance, the advisers suggest, as her biggest financial risk is loss of earnings.

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 email cash@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
    10 best statement lightbulbs

    10 best statement lightbulbs

    Dare to bare with some out-of-the-ordinary illumination
    Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

    Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

    Briton pumped up for dream meeting with world No 1
    Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

    Nick Bollettieri's Wimbledon Files

    It's time for big John Isner to produce the goods to go with his thumping serve
    Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

    Dustin Brown

    Who is the German player that knocked Nadal out of Wimbeldon 2015?
    Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

    Damien Martyn: 'England are fired up again, just like in 2005...'

    Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
    Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

    Twins have a mountain to climb during Tour of duty

    Yates brothers will target the steepest sections in bid to win a stage in France
    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    Forget little green men - aliens will look like humans, says Cambridge University evolution expert

    Forget little green men

    Leading evolutionary biologist says aliens will look like humans
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy