Goal to retire early

S

Senben19

Registered User
Messages
16
Personal details
Age: 40
Spouse's age: 39
Number and age of children: 6, 5, 3, 2


Income and expenditure
Annual gross income: 118,000 + 10% Bonus
Annual gross income: 12,000

Monthly take-home pay: 4,800 (post avc)
Monthly take-home pay: 1,000

Type of employment: Employee (both)
Employer type: Private (me), public (spouse)

In general are you: Saving 800 per month.

Summary of Assets and Liabilities
Family home value: 520,000
Mortgage on family home: 212,000
Net equity: 308,000

Cash: 80,000

Company shares : n/a

Family home mortgage information
On a low fixed rate 2.5 yrs remain.

Other borrowings – car loans/personal loans etc
No other borrowings or credit card

Pension information
Value of pension fund me: <250,000.
Value of pension fund spouse: will be entitled to a public sector db pension.

Pension me: Employer 10%, Employee 20%, 30% total.
Pension spouse: db

Buy to let properties
None

Other savings and investments:
60k of the 90k mentioned above is in raisin at decent rates.

What specific question do you have or what issues are of concern to you?

• our current set up - me working full time, spouse part time is necessary for the next year or 2 after which spouse will be back full time earning a gross of about 55k. I feel like we are doing ok financially but we spend pretty much most of our income each month. I have looked at the spend and i dont see many ways to cut down. We save maybe 500pm.

• I max pension and will continue to do so. I will also be entitled to both uk and irish state pension (all going well!) And spouse will have decent db pension so i feel comfortable about our retirement years. My goal is to be 'able' to retire mid 50s if i wish to. Does this look feasible and how should we be working towards this?

• Assuming we will have school/college fees and the kids will likely be "dependents" for some time yet. We dont currentky have specific ring fenced fund for this. Should we? I always thought best to treat income as 1 pot and then spend, save, invest holistically from that.

• We have private health insurance through my employer, as well as income protection and life insurance. My spouse also has life assurance in place.

• We have some moderate expenditure coming up over next 3 years on our house - maybe 40k in total and we will need to set aside 45k to change car. So the funds in raisen are ear marked for that rather than pay off mortgage given low rate (2.1%). Is this the correct course of action?

Our big long term goal is to retire mid 50s together if possible.

Our big short term goal is to buy a btl. We are aware of the pros and cons of being a landlord so not looking for feedback on that specific point. I will receive repayment of family loan of 25k in next few months and so with that and some of our savings we are thinking of going this route although my preference at the moment would be to pay down mortgage on ppr. I see merit in buying a btl instead but it would need to be the right house in the right location at the riggt price which isnt easy to find. What are peoples views on this please?

In summary, i feel like we just need to continue to max pension, pay down mortgage with excess but given low rate this may not be optimum use of spare cash.

Thanks
 
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Senben19 said:
I see merit in buying a btl instead but it would need to be the right house in the right location at the riggt price which isnt easy to find. What are peoples views on this please?
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A bad idea.

Huge exposure to a single asset class and risk of a non-paying tenant. Plenty of horror stories in AAM. BTL rates are high and you will be taxed at the higher marginal rate. 33% on any capital gain with no indexation relief.

In your shoes I would just max out pension.
 
newirishman said:
Call me a pessimist but with 4 kids, aged between 2-6, I have no idea how you think you will be able to retire in 15 years unless you kick them out as soon as they are of legal working age.
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As long as we save up a college fund, continue to max pension, gradually pay down mortgage it might be possible. Maxing pension and assuming strong growth in equities market would mean a pension fund of approx 1.5m at 55. That with spouses excellent db pension would give us safety net. State pensions come on stream maybe 15 yrs into retire and so private pension woukd only need to bridge that gap. Tax free lump sum would cover college etc costs if we failed to save adequaetly for it. Lots of assumptions but definitly possibly..i think.
 
I don't see how 1.5M would cover the needs from 55 while you would have at least 3 costly dependents if not 4. Will your spouse pension be as good from 55? You are currently spending 60k a year. For 15 years, you will need 900k (Without any inflation ). For 11, 660k.
If you worked in the UK, how many prsi contributions will you have in 15 years ?
According to what you mentioned, you have 50 k deposit for buy to let, so you could buy a 170k buy to let (30 per cent deposit rule). Do you have any idea if you could find anything at this price anywhere?
I am landlord, and I would not recommend it, not now, not at the current property price and not in the current environment.
 
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Need more detail on the spouse public DB pension - will it be full 40 years? Is it the integrated scheme, if so there will not be state pension on top
 
messyleo said:
Need more detail on the spouse public DB pension - will it be full 40 years? Is it the integrated scheme, if so there will not be state pension on top
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Its a secondary school teacher pension, is there a way they can retire earlier, buy bk years etc? Either way as far as i know its a pretty good pension.
 
For kids costs when you retire, obviously it depends a lot on your location and the choice in terms of 3rd level. If they can live at home, it will make a huge difference.
 
In basic terms..
If they started since 2013 they have a pretty This post will be deleted if not edited to remove bad language pension
Between 2004 and 2013 is a decent pension but can’t retire early without ornaltied
Between 1995 and 2004 same decent pension but can retire after 35 years service
1995 or earlier is the best pension
 
Pension is the btw 2004-2013 one. I 'plan' to have the 2 state pensions from approx 70 therefore am planning to use (assumed) 1.5m private pension pot between approx 55 and 70.

If needs be could use tax free sum in mid 50s to fund college or whatever is needed.

I anticipate my salary will increase gradually over next 15 years which is not a guanantee but is somewhat probable. This will help me to continue max pension, pay down mortgage and build savings and continue current lifestyle. A lot of our expenses such as mortgage and childcare will fall off over time and other than that we dont spend lavishly at all. Although, as mentioned in OP we spend most monthly income but a lot of that is due to stage of life i think.

So its on this basis that i am exploring possibility of retire mid 50s. Lots of assumptions, naturally, but i thi k it might be achievable.
 
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Just curious, are there specific goals in mind to keep you busy in mid-50s. Retiring early might seem very attractive specially but its not for everyone. Reducing working hours, changing jobs to flexible hours, moving to less stressful jobs are other options to explore.
 
Senben19 said:
Pension is the btw 2004-2013 one. I 'plan' to have the 2 state pensions from approx 70 therefore am planning to use (assumed) 1.5m private pension pot between approx 55 and 70.

If needs be could use tax free sum in mid 50s to fund college or whatever is needed.

I anticipate my salary will increase gradually over next 15 years which is not a guanantee but is somewhat probable. This will help me to continue max pension, pay down mortgage and build savings and continue current lifestyle. A lot of our expenses such as mortgage and childcare will fall off over time and other than that we dont spend lavishly at all. Although, as mentioned in OP we spend most monthly income but a lot of that is due to stage of life i think.

So its on this basis that i am exploring possibility of retire mid 50s. Lots of assumptions, naturally, but i thi k it might be achievable.
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Really, if spouse in Secondary School, then she needs to contact pensions to find out what pension scheme spouse is on. There is no way to know from looking at payslip if pre 2004 (before April 2004) or post 2004 (new entrant) until the changes in 2011 and more again in 2013. Getting pension record can take up to 3 years. I've been teaching since Sept 1997, and even though always 22 hours and full time, as not 'on my own hours' I have only 22 years, 186 days eligibility by sept 2023. If spouse works in ETB sector that is a whole other crystal ball required.
 
Senben19 said:
A lot of our expenses such as mortgage and childcare will fall off over time and other than that we dont spend lavishly at all.
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Your mortgage is not big relative to your income and your spouse appears to be working 0.2 WTE at present so I don't see how they have such significance. If your spouse returns to full-time work will that result in your childcare costs increasing, even if all children are school-going?

Senben19 said:
Although, as mentioned in OP we spend most monthly income but a lot of that is due to stage of life i think.
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From my experience, as your children get older, your spending will only go one way over the next 15 years and it won't be down.

Senben19 said:
Assuming we will have school/college fees and the kids will likely be "dependents" for some time yet.
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What do you expect to be paying in school fees as they progress?
 
bish123 said:
Just curious, are there specific goals in mind to keep you busy in mid 50s
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Gardening cooking travelling playing music visitng friends and family watching tv meditating swimming walking eating out doing odd jobs. Hopefully spending time with grandkids into 60s and prob lots more besides.
 
The size of your wife's pension will depend on the number of full time years she has worked. 40 years are needed for the maximum pension. If she works half time hours, each calendar year will only count as a half year for example. The earlier she retires, the fewer years she'll have worked, especially if some of them were part time.
It sounds like her retirement age is 65. She could retire any time in the preceding 10 years, but the pension would be actually reduced (CNER or Cost Neutral Early Retirement).
 
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