I want to retire at 55 – do I have enough saved?

Pilot Will Godwin wants to make sure future shocks to the airline industry don’t leave him grounded. By Will Kirkman

Few sectors have been as impacted by the pandemic as much as the airline industry, with mass travel bans meaning many plans to venture abroad have failed to take off.

Pilot Will Godwin, 39, from Worcestershire, saw his income cut as a result. A father of two children, aged seven and five, he now wants to build more financial stability to protect himself and his family against future shocks.

Over the past year he’s managed to save almost £30,000, some of which has come from his role as an Army Reservist. Half of that has been used to buy Premium Bonds and the rest is in a current account.

He is risk averse and not confident about the prospect of investing, but is open to learning more and wants to build his knowledge in this area.

He and his wife are currently in the early planning stages of a loft extension on their house, funded by his father with £60,000 of early inheritance. He is expecting the build to start in the spring and cost around £50,000, with a £10,000 contingency.

Mr Godwin and his wife are animal lovers and keep chickens on their land. They plan to move to a larger house once their children have left school.

His current mortgage is £141,000 41,000 and he has no other substantial debts.

He earns £110,000 a year from om his main job and £13,000 from the e Army, while his wife earns around £ 13,000 as a part-time primary school teacher. eacher.

Mr Godwin contributes 18pc 8pc to his workplace pension scheme, e, with his employer contributing a fururther 10pc. He is aiming to retire e when he reaches 55.

Joe McGovern

Independent financial adviser, MPA Financial Management Mr Godwin and his wife are comfortably living within their means and have been able to save a significant amount of money, despite the fact he has been on reduced income. This is a very encouraging starting point.

Mr Godwin currently has £15,000 in a current account, which can act as an emergency fund should hould it be required. Emergency funds ds are a vital facet of any good financial ncial plan. The money should not be subject to investment risk and should remain accessible so that it can be called upon in a time of need.

Mr Godwin already has this level within the Premium Bonds he holds, suggesting he can afford to invest the additional £15,000 should he wish to.

If he wanted to look at a stocks and shares Isa, depending on his risk profile, he could look at a Prudential PruFund Isa that smooths out investment returns, so the fund doesn’t suffer any sharp stock market falls. The downside is that he will not enjoy the full benefit of a fast rise in the markets.

However, this may be a good stepping stone to feel comfortable about long-term investments and provide an opportunity to increase his knowledge.

The couple are saving £ 1,000 per month. If they are averse to investing more, a sensible option would be for the couple to utilise some of the excess monthly expenditure to reduce the outstanding £141,000 mortgage loan.

Overpayment would result in the loan being paid off before the end of their remaining 18-year term, reducing overall interest payments and helping towards their goal of retiring around the age of 55.

Alternatively, Alternative Mr Godwin could consider remort remortgaging his existing home loan to a five-year five fix, currently available as low as 1.54pc. 1 If interest rates rise before his next ne move, he could insure against that b by fixing now. Mr Godwin’s Godwin gross salary of £123,000 means he h falls into the “personal allowance allow trap”. The personal allowance allo is an amount every individual in can earn before incurring i an income tax charge – currently standing at £12,570.

For every £ 2 of adjusted net income above £ 100,000, an individual’s personal allowance is reduced by £ 1. Mr Godwin’s personal allowance has been reduced by £11,500 t to leave him with £ 1,070 re remaining.

A great way for him to comba combat this issue is to make further pen pension contributions. Not only will he receive tax relief at his marg marginal rate of tax, he will

also exte extend the basic-rate band by his gross pension contribution. Making further pension contributions will also help him create a bigger savings pot, which can be utilised during his planned retirement.

Roughly speaking, to raise £2,000 to £ 3,000 a month in retirement, he would need a pot worth between £ 600,000 and £ 1.2m to facilitate a 3-4pc a year income requirement.

Nick Onslow Chartered financial planner, The RU Group

To start off, as Mr Godwin and his wife have young children they need to ensure that their wills name guardians should they die prematurely.

If investing in shares is too scary, then paying off their mortgage debt may be the right solution for them. You can normally pay an extra 10pc a year off your mortgage.

However, if you are looking to save for a period of more than 10 years, such as towards retirement in the case of Mr Godwin and his wife, they should be exposed to higher levels of investment. Mr Godwin’s wife earns £13,000 as a part-time teacher, and the majority of this income is paid tax-free. She could invest 100pc of her earnings into a pension and receive tax relief of 20pc, which is £2,600.

As they would be unable to access these funds until at least 57, they would be able to ride out any short-term market volatility. After age 57 they can access 25pc of this money tax-free. It could be used to pay off any outstanding mortgage debt they have at that time.

If they are concerned about where they invest, then there are many good ethical funds available, but I would recommend the Invesco Summit Responsible Range as they have several risk profiles and a strong track record with a low charging structure.

Being tax efficient in the way they invest will give them the best chance of a great outcome in terms of returns. However, they may choose initially to mix and match the options of pension and Isa investments, as well as paying extra off their mortgage until they are more experienced investors.

Flight or fright? Pilot Will Godwin keeps animals but fears he is too chicken to invest