Wealth Check: Writer needs a word on finances
Saturday 13 March 2010
Matt Lynn, 47, is a self-employed thriller writer from Goudhurst, Kent. He lives with his wife, Angharad, a 39-year-old lawyer, and their three children, Isabella, 9, Leonora, 7, and Claudia, 2.
He says: "I need to support three children through school and university, and I'd like to be able to help them on to the property ladder as well. I'd also like to make sure I have a comfortable retirement. I can't really imagine I'll ever stop working, but I'd like to be able to stop depending on it financially."
Matt's business, a limited company, is the main source of income as his wife only recently came off maternity leave. His new book, Fire Force, was published in February.
Annual income: £100,000 to £150,000 depending on the year
Annual expenditure: £109,000
Savings: £155,000 in an ISA account, £200,000 in the company account
Property: £1.25m house with an interest-only mortgage at 1.5 per cent
Investments: £500,000 buy-to-let flat with an interest-only mortgage of £275,000
Pension: Currently worth £30,000, with £1,500 annual contributions
Advising him are Christopher Wicks from Bridgewater Financial Services, Robin Keyte from Towers of Taunton and Aj Somal from Uniec Financial Solutions...
Matt hopes to continue writing into his old age, but he needs a retirement plan whereby work would be optional, not a necessity.
Wicks suggests setting a provisional retirement age for planning purposes – perhaps 66, when he would be eligible for a state pension.
He says: "It is about establishing your long-term goals and ensuring that there are the funds to deliver them. Even if you or your wife were to die or become incapacitated."
Matt hopes to build up a retirement income of £50,000 per year, so Wicks suggests creating a "cash flow model" to see whether his current arrangements would provide this.
Keyte predicts a fund of around £861,900 would be needed to provide an index-linked pension of £46,100, which could then be topped up with money from interest, rent from tenants and savings.
Matt is sceptical of pensions, but despite the negative press they remain one of the most tax-efficient ways to save for retirement.
According to Keyte, Matt's current pension would leave a shortfall of £713,800 on his desired retirement fund, so contributions should be increased considerably.
"The annual contributions that Matt needs to make from now onwards through to age 65 to meet this shortfall are £20,950 per annum," he says. "If Matt has more good years than bad years, this is an affordable option."
But before he does so, Matt should check he's getting the best deal on his current plan, and look into changing if not.
For an easy option, Keyte says a stakeholder pension plan can charge as low as 0.4 per cent. Matt should also consider a Self Invested Personal Pension (SIPP) plan, which allows holders greater freedom in choosing investments.
"I like the service offered by the Alliance Trust Select SIPP," says Keyte. "This allows investments in individual shares and fixed interest stock as well as funds."
Matt already pays just under £20,000 per year in school fees for two of his daughters, and as they grow older costs will increase.
Taking into account an extra £9,000 per year for university costs and a £20,000 mortgage deposit for each daughter, Keyte predicts Matt will have to find extra revenue if he is to continue supporting them. He says: "The total funds required to meet all of these costs related to Matt's children over the years up until Claudia is 25 in 2033 are a massive £720,000. It may be that a second income will be available from Angharad which will make a significant improvement to the situation."
Somal recommends saving into a Child Trust Savings (CTF) account, where a maximum of £1,200 can be saved per year.
He says: "Money cannot be taken out of the CTF once it has been put in, but once the child is 18 they will be able to decide how to use the money."
Matt's daughters depend on his income for their school fees, so he should consider insuring it against sickness or injury.
"It could pay a proportion of his income, say 60 per cent, until he recovers and is able to work again," says Somal. "This plan could be taken out on an individual basis or through his limited company."
Matt is paying interest-only on his mortgage, meaning he's making no dent in the debt.
"I recommend that Matt looks into moving this mortgage to a repayment basis as soon as reasonably possible," says Keyte. "It may mean this leads to a significant increase in outgoings: if so it would be worth doing some planning on ways to increase earnings, such as second earnings from Angharad's work as a solicitor."
For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email wealthcheck @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
Investors told to travel the world in the search for higher returns
The most expensive cities in the world 2015
Pension freedoms: How to deal with cold calls from scammers
Is there a connection between luxury student accommodation and high levels of debt?
Starter home initiative is urgently needed as rents go through the roof
- 1 Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
- 2 Novel Scarlett Johansson tried to ban, Grégoire Delacourt’s The First Thing You See, to be published in UK
- 3 A pint of water every day is the key to losing weight, scientists say
- 4 Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
- 5 Carol Vorderman reveals she is 'covered in burns' after she fell off her treadmill while running naked
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith calls for urgent ESA overhaul as part of drive to cut down welfare costs
iJobs Money & Business
£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...
£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...
£25000 per annum + benefits: Ashdown Group: A large financial services company...
£20400 per annum: Ashdown Group: An established and highly reputable organisat...
Day In a Page
This four-bedroom home has an annexe accessed from the side of the house, with potential for improvement and conversion subject to the necessary permissions.
In the heart of the hamlet of Wardley, this five-bedroom period home offers countryside views and a stylish interior, with original features and open fireplaces.
Offering countryside views and landscaped gardens, this three-bedroom Grade II-listed lodge has a spacious conservatory and a large cellar that could serve as a workshop.
Set in approximately 1.5 acres, this four-bedroom home comes with a second, detached property that's currently used as an annexe.
In the hamlet of Newchurch, this former parish church is now a four-bedroom home complete with clock tower and eyrie.
Offering scenic views from a large balcony and sun terrace, this four-bedroom home has a wraparound garden and a heated swimming pool.
Offering views across the Humber and East Yorkshire Wolds from a glass panelled balcony, this four-bedroom barn-style home befits a life of leisure.
This four-bedroom home offers versatile accommodation with annexe potential; features include a hot tub, sauna and Norwegian BBQ hut.
Well-located for schools, colleges and the town centre, this contemporary thatched cottage offers flexible living space with six bedrooms.
Built in 1907, this four-bedroom Edwardian period home has been refurbished by the current owners, retaining many original period features.
Surrounded by landscaped gardens, this five-bedroom home offers living space across three floors.
This lovely country home in Burnham Market is currently run as a popular holiday cottage, with five en suite bedrooms and colourful gardens.
This three-bedroom 17th-century former village bakery is just a few miles from the East Sussex coast.
Set on a landscaped plot, this light and airy four-bedroom home comes with a log burner in the lounge, a fitted kitchen and an open-plan ground-floor layout.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Built on a former chapel site, this impressive four-bedroom home boasts balconies, stunning views and contemporary modern living.
This three-bedroom house is situated in a quiet mews and set over three floors. Features include glazed staircases and high ceilings.
A period townhouse set over four floors, this five-bedroom home was built in the 18th Century and retains many original features.
With five bedrooms, this spacious home offers beautiful gardens and modern interiors - set within the popular market town of Bingley.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This first-floor flat comes with two bedrooms, an impressive open-plan reception room and two lovely roof terraces.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Moored at Taggs Island and reached via a pretty garden, this two-bedroom houseboat has a vaulted reception room and skylit garden studio - currently a beauty salon.
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
A contemporary house spread over three storeys, this three-bedroom detached home has large sliding doors that open out to the River Quaggy.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
This former village bakery, dating back to the 17th century, is now a three-bedroom detached home just a few miles from the East Sussex coast.
On the picturesque Isle of Man, this four-bedroom character home has a ground-floor shop that's currently run as a newsagents and a flat that would make an ideal holiday let.
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.