In the first part of a three-part series, Mike Mulhern, wealth director at Westminster Asset Management, looks at the questions Islanders should be asking as they approach, enter or live through retirement
FOR many successful Jersey residents, retirement planning has changed dramatically.
Previous generations often relied on employer pensions, shorter retirements and a clearer line between working life and retirement. Today, many high-earning professionals, business owners and senior executives are likely to reach retirement with significant pension and investment assets – but also with far more responsibility for making those assets last.
The challenge is no longer simply one of saving enough. It is about turning wealth
into sustainable income, protecting purchasing power from inflation, managing market risk, avoiding costly mistakes and deciding what that wealth should ultimately achieve, whether that is personal security, lifestyle, family support, charitable giving or leaving a substantial legacy.
Mike, tell us a little about your work and the type of clients you advise
Most of the clients I work with are successful professionals, business owners, senior executives and retirees who have accumulated meaningful pension and investment assets over many years.
Often, they have been very disciplined savers. They may have several pension arrangements from previous employers, investment portfolios built up over time,
cash savings, perhaps proceeds from a business sale or inheritance and other assets that have accumulated during a busy working life.
What they often do not have is a single, coherent plan bringing all of that together. My role is to help clients understand where they are, what they want their wealth to achieve and how their pensions and investments should be structured to support their retirement, their family and their wider objectives.
Why is retirement planning such an important issue for high earners in Jersey?
Because high income does not automatically translate into retirement security.
Many people in Jersey have worked extremely hard, built strong careers and accumulated substantial savings. But retirement is still a major financial transition. You move from earning and saving to drawing income from the capital you have built. That is a very different discipline.
One common issue is that people may know the value of their savings, pensions or investment portfolios, but not what that figure realistically equates to in sustainable income or retirement benefits. A large headline number can still fall short
if spending expectations, inflation, longevity and family commitments have not been properly considered.
For successful professionals, the question is rarely: “Will I survive financially?”
It is more nuanced. Can I maintain my lifestyle? Can I travel? Can I help children
or grandchildren? Can I preserve the value of my wealth? Can I leave a legacy? Can I
do all of that without taking unnecessary risk or paying unnecessary fees?
Those are not simple questions. They require planning, investment discipline
and regular review. The risks are not only market-related. Some people simply leave
their planning too late; others have portfolios that are too concentrated, not diversified enough or no longer aligned with the income and security they will need in retirement.
Is there a particular point when people should start taking retirement more seriously?
We often talk about three broad stages: accumulators, preparers and retirees.
Accumulators are still early in their savings journey. Retirees are already drawing income from their savings and investments.
Preparers sit in the middle. They are often in their 40s, 50s or early 60s. They have
usually achieved major life milestones –buying a home, raising a family, building a
business or career – and have accumulated a worthwhile amount in pensions and investments.
That preparer stage is very important.
It is when people should begin asking: When do I want to retire? What kind of retirement do I want? What responsibilities do I still have? Are my pensions suitable? Are my investments aligned with my goals?
Am I paying more than I need to? The earlier those questions are addressed, the
more options people tend to have.
What is the biggest misconception people have about retirement planning?
That retirement is simply about reaching a number.
People often think: “If I have £500,000, £1 million or £2 million, I will be fine.” But
the size of the pot is only one part of the equation. The more important question is:
what does that money need to do?
Does it need to provide a reliable income for 30 years? Does it need to keep pace
with inflation? Does it need to provide for a surviving spouse? Does it need to help
children onto the property ladder? Does it need to preserve capital for future generations?
Two people with the same amount of money can require completely different
strategies depending on their objectives.
- Don’t miss part two in next Wednesday’s JEP Business.
Important note
This article is for general information only and should not be interpreted as personal
investment advice. The value of investments and the income from them can fall as well
as rise, and investors may get back less than they invest. The suitability of any investment or financial planning strategy will depend on an individual’s circumstances and
objectives.
Readers should seek professional advice before making financial decisions.
Westminster Asset Management is a trading name of Westminster Capital Limited.
Westminster Capital Limited is regulated by the Jersey Financial Services Commission.
About Westminster Asset Management
Westminster Asset Management is a Jersey-based independent wealth
manager providing financial advice, discretionary investment management and custody/platform services through an integrated wealth management
service.
The firm works with high-net-worth individuals, high-earning professionals,
families, fiduciaries and retirees, helping clients align their investments
with their personal objectives from sustainable retirement income and inflation protection to capital preservation, family support and legacy planning.
W: westminsteram.com
E: info@westminsteram.com
T: 01534 616818
