40s, no mortgage, interested in FIRE, any feedback welcome

[charliebear]

It sounds like simple saving would work for you, you can probably save 4k a month with no mortgage to pay?
Do that for 10 years and you have 480k, that will pay you 4k a month for the next 10 years until your pension kicks in.

Add in some low-risk investment yield on that, you can get 3% now on deposit accounts, and some self employed income and you are well set.

Unless I'm missing something you don't need any high yield/high risk investing, you have a 10 year investment horizon which is very short, pension funds normally move away from high risk investments as they get toward retirement date, which in your case is just 10 years.

Thanks that's really helpful. From reading up on savings accounts, it seems like all of the options available in Ireland right now have very low interest rates (and we would have to pay tax on the tiny interest). I really wish the ISA type products from the UK were available here. With high inflation, everyone is also saying that cash savings means your money is basically losing money over time. So I thought we would need to try to invest it in some way so that there would be some potential growth. Does that sound right?

 

[charliebear]

Only after the AVC's into the public sector scheme are maximised. Once they are maxed out, contributions may be made to a personal pension in relation to the self employed income.


Being a member of the public service doesn't go well with retiring early...unless there is a possibility to get a package. For most, their pension is their biggest source of income in retirement. Those in defined contribution schemes can access their work pensions from age 50. Even if in a defined benefit scheme, you can take a transfer value and access it that way. But for public servants, there is no transfer value and if you aren't offered a package, you have to wait.

So you will need to find alternative funding for early retirement and that is saving and investing.

To start, I would clear your debts and redirect that money into investing. Your "free banking", as already has been pointed out, is actually a cost. I pay €6 a month with Bank of Ireland, nowhere near the €20 a month you mentioned. Just clear it.

Prize bonds are a waste of time. Cash them in. Get your money working for you.


Steven
www.bluewaterfp.ie

Hi Steven, that's really useful advice. I agree about prize bonds and about the bank account fees and will get onto that. In terms of investing the additional money each month that we had been using to overpay the mortgage, where would we even start with this? This is what we are really unsure about.

 

[charliebear]

Surveys show that only 20% of people are passionate about their job.
Theres a lot more to life than giving your time / energy in exchange for money.
Being a FIRE-man (person), I am biased towards early retirement planning.

I would go further on the above savings idea...
leaving investment ideas aside, if you could put away a similar amount each month, then plan on drawing down 2K per month.
Thats 20 years of freedom you are buying. A lot of people live quite well on this amount and less per month.
I did not allow "whataboutery" to derail my plans.
I would focus on the large and controllable expenses first. Dont think of expenses as ... its only 35 EUR per month.
Annualize or exponent an expense. Example = TV licence. 1600 EUR over 10 years. No thanks. Get a projector and a blank wall.
For every 1K annual saving you make to recurring expenses, thats 25K less you need in the pot using a 4% withdrawal rate.

Thanks for posting and for your encouraging comments about early retirement! We have looked closely at our budget in the past and reined things in in many areas to put more towards the mortgage and house renovations. We have probably drifted a bit recently and need to go through it again, cutting where we can. Unfortunately basic bills have gone up so our general running costs have drifted upwards too. I agree about putting an amount away each month with a view to having that to draw on later in early retirement but as I posted above, everything I'm reading says having cash sitting in an account earning virtually no interest with high inflation is not a good strategy.

 

[RonnieShinbal88]

Thanks that's really helpful. From reading up on savings accounts, it seems like all of the options available in Ireland right now have very low interest rates (and we would have to pay tax on the tiny interest). I really wish the ISA type products from the UK were available here. With high inflation, everyone is also saying that cash savings means your money is basically losing money over time. So I thought we would need to try to invest it in some way so that there would be some potential growth. Does that sound right?

People here have linked to better rates on: https://www.raisin.ie/
Many of those claim to have deposit guarantee's from the relevant governments, worth looking into if you are putting serious money in there.
Maybe put a bit of money across multiple banks.

Its going to be very hard to invest now to beat inflation without taking on risk and risk means you could lose a big chunk of your pot over a ten year period. So you are a bit constrained given your plan to retire in ten years or so. You'd imagine inflation will come down one way or another within a couple of years.

Another option is to buy a cheaper place in e.g. France, Italy or Spain, on a Ryanair route so you can come home cheaply when you want. You could get a small place for 150k and free up 300k when you sell your main home.

You could start buying that now, rent it out part of the time and start spending some time over there to get used to it and work on your language tapes!

 

[qwerty-2023]

Being a member of the public service doesn't go well with retiring early...unless there is a possibility to get a package. For most, their pension is their biggest source of income in retirement. Those in defined contribution schemes can access their work pensions from age 50. Even if in a defined benefit scheme, you can take a transfer value and access it that way. But for public servants, there is no transfer value and if you aren't offered a package, you have to wait.

Sorry for going slightly off-topic, but would you be able to elaborate on this (or link to any info as I can't find any)? I'm not sure I understand the implications of retiring early from a PS job. As a hypothetical example, say I work 15 years in a PS job and then "retire" at 45 years old (i.e. quit that job and maybe do some self-employed or part-time work). I understand that of course, they won't just start paying out a full pension at 45, and neither will they pay the full pension from 68 since I won't have contributed as many years as a typical PS worker. But surely I would get something in exchange for 15 years of contribution, such as a pro-rated PS pension from state pension age?

 

[Protocol]

Correct, yes you will.

 

[Fortune]

The self-employed income is an area where there is definitely potential for growth. I looked at this pre-covid and then got held back by covid itself but there should be more opportunity going forward. The issue with funding pensions from self-employed income is that to date that has been a small percentage of our earnings. And my ambivalence of locking money away until the very late retirement age of 68. A number of people in the generation above me in my family have not made that or just about made it past that age in recent years and it has made me think.

A PRSA relating to the self employment can be accessed from age 60.

 

[Fortune]

Sorry for going slightly off-topic, but would you be able to elaborate on this (or link to any info as I can't find any)? I'm not sure I understand the implications of retiring early from a PS job. As a hypothetical example, say I work 15 years in a PS job and then "retire" at 45 years old (i.e. quit that job and maybe do some self-employed or part-time work). I understand that of course, they won't just start paying out a full pension at 45, and neither will they pay the full pension from 68 since I won't have contributed as many years as a typical PS worker. But surely I would get something in exchange for 15 years of contribution, such as a pro-rated PS pension from state pension age?

The point being made is that a public service pension can't fund an early retirement as it can't be taken early

 

[Sarenco]

The point being made is that a public service pension can't fund an early retirement as it can't be taken early

I’m far from an expert on public sector pensions.

But, as I understand it, cost neutral early retirement is a possibility for all public sector employees from age 50.

And certain “uniformed” public servants (gardai, prison officers, etc) qualify for a full pension with just 30 years’ service.

 

[Billo]

Life insurance: We still have our mortgage protection policy and based on the original mortgage it would pay out about 150k today if the worst happened. We have no other life insurance policies other than some survivor benefits linked to our pensions.

Life insurance and mortgage protection are two dtfferent things. How mubh are you paying fir mortgage protection ?