Case Studies

Early retirement planning

Mark is a 28-year old professional, newly based in Luxembourg.

He has the ambition to retire at 55 years old, 12 years before his State retirement age.

We discussed his standard of living and considered factors like property purchases and future income increases from promotions. From this we agreed that, to preserve his current standard of living, Mark would need an annual income of €80,000 in retirement. Mark already holds State and Company Pensions, index-linked to protect against inflation, that could supply €30,000 a year.

This highlighted a need to fund a €50,000 a year income shortfall, from his own investment arrangements. This figure does not, however, take inflation into account!

Preserving the current buying power of €50,000 and, assuming inflation at an average of 3% a year over 27 years, gives a projected annual income of €111,065.

Producing an annual income of €111,065 would need an investment fund of €2,221,300 which, with 5% annual growth, would produce the necessary income without eroding the capital.

We sat with Mark to discuss his options for saving this amount over the next 27 years.

Using a safe and reliable investment account, at a projected annual growth rate of 9%, Mark would need to invest €1,900 a month for the life of the account to achieve his goals.

As this level was not immediately attainable, we set up a plan for Mark to save €1,000 a month. He intends to increase contributions by 5% each year as his salary increases; this will put him on target to retire early.