Tim and Lillian – Planning for the Unexpected

When I first met Tim in February 1999, he needed financial advice.  He was introduced to me by another client and had never visited a Financial Adviser before, but he felt it was time to organise his finances and plan for the future.  Tim was married to Lillian (who he brought to our first meeting) and the two became my clients.

As a child, Tim had unfortunately suffered with Polio. As a result, he wore a raised heel on one foot and often needed to wear a calliper to alleviate his pain.  In fact, he suffered with pain regularly – which is one of the after-effects of Polio, but nevertheless, he wanted to make the most of his life.  He refused to let any discomfort get him down!

Paying off Tim and Lillian’s Mortgage

One of the first things that the couple wanted to do was to pay off their mortgage with their available cash.  Before we cleared their mortgage we held a series of meetings, where we discussed various aspects of their finances and rearranged their affairs.  Within their financial planning, we altered the couple’s banking arrangements and set up a management system.  We purchased NHS Added Years for Lillian, re-brokered their general insurances and drew up their Wills and Enduring Powers of Attorney.

As soon as all of the above had been completed, we reduced their mortgage and then cleared it completely.  Tim was just 52 years old, debt-free and with financial plans coming together nicely for the future.

An Investment Portfolio

With regard to investment, Tim had dabbled a little but needed some guidance.  His paperwork was very muddled and took me some time to sort through.  Tim’s investments had mostly been taken out on a whim, from a “friend from around the corner” or through a “must buy” he’d seen in the Sunday newspapers.

Once I’d reorganised his paperwork, and following several discussions, everything was neatly arranged into a sensible portfolio, with suitable diversification and risk level (as well as at a low cost).

Forward Planning

The next area to tackle was Tim and Lillian’s future but before that, Tim gave himself a task. His priority was to plough through his existing investments and sort those out – then move on to discussing the future.  Once all of the above was organised, we finally began to discuss the couple’s future plans.

Of course, with Tim’s disability, he was aware that as he grew older it might become more of a problem to deal with.  One way to navigate any potential problem was for Tim to retire early, and he wanted to know if he could afford to do that.  He’d already accumulated 30 years in his occupational final salary pension scheme and had an early retirement option, with an actuarial reduction from the age of 55.

I used my own “Lifetime Cash Flow Skills” to work out what Tim could do – and he was delighted to hear that he could indeed take early retirement and receive his occupational pension at the age of 55!  Using the aforementioned Lifetime Cash Flow Skills formula, it was also apparent that the couple could maintain their desired lifestyle by taking an income from Tim’s investments.  

A Dramatic Change of Plans

However, as is often the case in life, things did not go the way they were expected when the next year Tim’s employer ceased trading and he was made redundant.  Consequently, we had several discussions to work out next steps.  Tim decided to get another job with a view of retiring in four- or five-years’ time (in line with our earlier planning).  He received a redundancy payment and some of it we used towards Tim’s investment portfolio.  Additionally, we retained an amount in cash so the couple could go on a Mediterranean holiday.  This was something Tim had dreamed of – he’d never been abroad before.

So off the couple went to Spain and upon Tim’s return, he was excited!  They had both fallen in love with the sunny shores and decided to completely change their lives by upping sticks and moving there permanently.

I organised financing for their new house in Spain on a flexible basis so it could be paid off without a penalty when their house in the UK was sold.  Fortunately, their UK house was sold soon after their move abroad which enabled them to redeem their new mortgage.  The two moved to Spain in 2002 and we were able to stay in touch on a regular basis.

One little piece of information that always makes me smile is that before Tim left for a new life in Spain, he’d built up a small collection of shoes with raised heels, as he was worried, he might not be able to get hold of them in Spain.  Amazingly, within a few months of living in Spain, Tim no longer needed his special raised-heel shoes!  The warm, dry weather meant he no longer suffered with pain in his leg. For the first time in over forty years of living with the after-effects of Polio, Tim was finally pain-free.

When Tim and Lillian’s English house sold, the amount it raised was considerably more than the purchase price of their new home in Spain.  So, the surplus was added to Tim’s investment portfolio which enabled him to draw more income.  Life was good – for a while.

Unfortunately, while Tim absolutely loved his life in Spain, Lillian didn’t, and she wanted to return to the UK.  Eventually, the couple got divorce and in the financial settlement, Tim kept his home in Spain while Lillian received a share of the investment portfolio.

The Brexit Effect

Brexit was on its way and during one of my last conversations with Tim (he was still living in Spain) he confided that he was concerned about the effect of Brexit on his residency status in Spain and his access to European healthcare.  He felt he was being forced into returning to England (which he didn’t want to do) but the sale of his Spanish home wouldn’t provide sufficient proceeds for him to buy a house in England.

By this point, Tim was well into his seventies and with limited options.  He was a casualty of the madness of Brexit and there was nothing I could do except console him. He was angry, especially with the “right-wing nationalist vote” which had put him in an impossible position.  Sadly, a few months after this conversation, I found out that Tim had died, so he no longer had to face the consequences of Brexit, unlike the rest of us.

The big question is whether I made a difference to Tim and Lillian’s lives?  I think I will leave that to you to make the judgement.  Did I get tremendous satisfaction from helping both of them at a crucial point in their lives?  Absolutely!  Do I feel angry that my clients’ plans for retirement to warmer climes was ruined by Brexit? Well, guess what – I’m furious and it happened to many clients of mine.  

Flexible Life Planning

Finally, the key pointer I want you to take away from Tim and Lillian’s story is that life events show that financial planning should always be flexible allowing for the unexpected.  It’s something that I’ve always put into place for my clients and have done so since my early days as a Financial Advisor. Investments should almost never be tied up for lengthy periods of time unless there’s strong reason for doing so.