My favourite case

About 10 years ago, I was having an annual investment review with Cumbrian clients Andrew and Mary. They had spent over 30 years building their business and sold it, when they retired. Unfortunately, they were not spending their money, only living off the ‘interest’, because they were scared of running out.

I asked them, if they lived to age 100, how much did they want to leave? Their response was that they did not want to pay any inheritance tax (they had read this was a voluntary tax paid by those who dislike their children even more than they dislike the Inland Revenue) which, at the time, meant leaving no more that £650,000.

Using our cashflow modelling software, we calculated that between ages 68 and 80, they could spend an extra £30,000 on average each year. ‘A new car then!’ was Andrew’s response. And more holidays I suggested? He was all for this, but Mary was very quiet. She stated that they had had enough of cruises and driving around Europe. I said: ‘But there is a big world to be explored.’ However she was still very uncomfortable. It turned out that she feared flying.

Driving home that night, I remembered that a friend had been on a flying phobia course, at Newcastle Airport. I googled this and sent the link across to Andrew. To cut a long story short, she went on the course in the February and by May they were in Borneo, watching the orangutans, because that had always been on Andrew’s bucket list. The following month, they were in Barcelona for a long weekend with friends.

Since then, they have at least three holidays each year, and have been able to gift money to their daughters (because they know they are never going to drop below £650,000), who have now either paid off their mortgages, or will do in the near future. At every review meeting now, whilst we do review their investments, the main question is ‘How much can we spend next year?’ Talk about getting job satisfaction!