Mr Mackrell already has an Isa with £45,000, which has an annual return of 5%. To meet their financial goals, they need to contribute £1,210 per month. With their combined annual Isa limits of £40,000, they have a generous margin.
This leaves them with £4,000 each to maximize their Lisa contributions.
When it comes to retirement planning, pensions are usually the most tax-efficient option for higher and additional rate taxpayers.
Expert advice from Kusal Ariyawansa, chartered financial planner at Appleton Gerrard
Based on their earnings and financial arrangements, the couple can maintain their current and anticipated lifestyle well into retirement.
They do not need to purchase a property, as a proactive savings strategy would sustain their income requirements for life, assuming they spend any surplus they have.
However, their financial goals are highly dependent on Ms. Livingstone’s salary.
While preparing for the best, they should also be prepared for the worst, especially if they have children.
Ms. Livingstone’s salary plays a crucial role. To maintain their lifestyle, pay £60,000 per year in school fees for two children, and retire by 60, they would need around £2.6 million if her income is lost for any reason.
To protect themselves, they should consider life insurance, critical illness insurance, and income protection insurance policies.
An income protection policy would provide them with a tax-free monthly “income” until they can return to work or reach the state retirement age.
Both of them should maximize their Lisa savings at £4,000 per year to benefit from the maximum £1,000 government bonus.
This can be done until they reach age 50, potentially resulting in savings of around £225,000 for Mr. Mackrell and £213,000 for Ms. Livingstone if the savings grow at a 5% annual rate.
Both of them could also consider making pension contributions to reduce their tax liability if the contributions bring them below a certain threshold.
They should also maximize their savings in stocks and shares Isas to benefit from tax efficiency and higher returns.
Their investment strategy should be threefold: for a property purchase within the next five years, they should save in cash Isas or National Savings Premium Bonds. Additionally, they can invest surplus money in a stocks and shares Isa with a balanced risk approach. Finally, their pension investments can be allocated to a 100% global equities model that focuses on a low-cost passive strategy.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
