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SMART Objectives FULL v5.1 PDF

The document provides examples of SMART financial objectives for two individuals planning for retirement. The first individual wants to retire at 65 with £20,000 annual income guaranteed for life to maintain spending power. He also wants £50,000 lump sum to pay off his mortgage. The second individual wants to retire at 60 with £30,000 annual income split between essential and discretionary spending. She does not require tax-free cash at retirement but wants £50,000 at age 70 to purchase a flat for her son. Both examples demonstrate Specific, Measurable, Attainable, Realistic, and Time-specific financial goals.

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93 views2 pages

SMART Objectives FULL v5.1 PDF

The document provides examples of SMART financial objectives for two individuals planning for retirement. The first individual wants to retire at 65 with £20,000 annual income guaranteed for life to maintain spending power. He also wants £50,000 lump sum to pay off his mortgage. The second individual wants to retire at 60 with £30,000 annual income split between essential and discretionary spending. She does not require tax-free cash at retirement but wants £50,000 at age 70 to purchase a flat for her son. Both examples demonstrate Specific, Measurable, Attainable, Realistic, and Time-specific financial goals.

Uploaded by

Kimani Mungai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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An Introduction to SMART Financial Objectives

What is a SMART objective?

SMART objectives are Specific, Measurable, Attainable, Realistic, and Time-specific.

For example, the following are SMART objectives for a 64-year-old who is shortly to retire. His State
Pension is worth £8,000 a year, and he has a Final Salary pension of £12,000 a year which will also
provide a PCLS of £100,000 and a 50% spouse’s pension.

His CETV is £400,000.

1) I would like to retire at age 65 on £20,000 gross per annum, guaranteed for life, which
maintains its spending power throughout my retirement at least in line with inflation. I
would also like a net lump sum of £50,000 at this time to repay my capital repayment
mortgage, so I can retire debt-free. I am not concerned about flexibly accessing my pension.

2) I would like to purchase a new car when I retire at age 65, as my existing one is getting old. I
have seen one I like which is priced at £25,000. I do not want to borrow to fund this
objective as it is important for me as I don’t want to worry about debt in retirement.

3) If I were to predecease my spouse, I would like to ensure she is able to enjoy the same
standard of living as when I was alive. I do not want her to be disadvantaged financially if die
before her. Ideally, she would be able to draw the same £20,000 net per annum in today’s
money, after my death for the remainder of her lifetime.

4) I am aware I do not have an emergency cash fund in case of emergencies. I would like a
minimum of £5,000 as an emergency fund, which equates to 3 months’ net income. I would
like any excess tax-free cash to be invested as tax-efficiently as possible for capital
preservation at least in line with inflation, and in line with my Cautious risk profile.
SMART Objectives

Let’s look at a different scenario: a 59-year-old who plans to retire at age 60. Her State Pension is
worth £8,500 a year from age 66, and she has a Final Salary pension projected at £30,000 a year
which will also provide a PCLS of £200,000, at age 65.

Her CETV is £900,000.

1) She would like to retire at age 60 on £30,000 gross per annum, to pay for additional holidays
and a more luxurious lifestyle while still young and able enough to enjoy it. The £30,000 will
be broken down into £20,000 essential expenditure and £10,000 of discretionary.
She would like to draw this income as tax-efficiently as possible, to maximise the amount of
income from her pension. Her state pension commences at age 66, she would like at this
time to reduce her private pension income by approximately £5000. She is ‘’not concerned’’
about inflationary increases – she expects inflation to be @3%pa

2) I have no requirement for any tax-free cash when I retire. However, I am likely to want this
at age 70 when I intend to purchase a flat for my son. I would like to budget £50,000 for this.

3) I am single with no intention to marry again. I would like to ensure my adult, non-dependent
children are able to inherit any remaining pension in my pot when I die, as a legacy for them,
if there is anything left.

Your objectives for Your Pension

SMART objectives, means SMART professional Financial Advice.

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