House Rich, Cash Poor, Low Income Retirement Plan Advice

E

eyesgreen_1

Registered User
Messages
95
Personal details

Age: 57
Spouse's age: N/A
Partner's age if not married: N/A

Number and age of children: N/A


Income and expenditure
Annual gross income from employment or profession: €9,500
Annual gross income of spouse/partner: N/A

Monthly take-home pay: €800

Type of employment - Self Employed

In general are you:
(a) spending more than you earn, or
(b) saving - I generally just about break even.


Summary of Assets and Liabilities
Family home value: €210,000
Mortgage on family home: €29,500
Net equity: €180,000

Cash: €2,500
Defined Contribution pension fund: N/A
Company shares : N/A
Buy to Let Property value: N/A
Buy to let Mortgage: N/A

Total net assets: €210,000


Family home mortgage information
Lender: BOI
Interest rate: 4.150%
Type of interest rate: Variable
If fixed, what is the term remaining of the fixed rate? N/A
If tracker, what is the margin: N/A

Remaining term: 8 Years
Monthly repayment: €372.49

Other borrowings – car loans/personal loans etc
Car Loan (Credit Union)
Balance: €4,299
Repayment: €191 per month


Pension information

Value of pension fund: N/A

Buy to let properties

N/A


Other savings and investments:
Rent a room: €500 per month (Family Member)

Other information which might be relevant

Life insurance: Mortgage pay off insurance (Zurich Life: €10.35 per month







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

I am 57 years old and I have no retirement fund as I am self employed in the Arts sector. I also live off a low income and with the beginning of some health issues (Manageable and still very active) I am looking to how best plan a path forward. I am still self employed but would like to free up money to concentrate on other parts of my craft. I am house rich and cash poor and as outlined above I generally just about break even every year.

Going forward I would like to have some holidays, do some writing ect, concentrate on my own projects,so in going forward without a retirement fund I am looking for some advice/Ideas work out the best way to generate an income and live comfortably as I age. For example I had an idea of a credit Union loan for granny flat income onto the house then rent out rooms in house (Under rent a room scheme). I would rather a separate living area if renting out rooms going forward as the hassle can be difficult. Or try to downsize to unlock a lump sum of equity and invest any left over in government bonds or a retirement fund?Although it’s difficult to find a cheap enough properly in this market to make that worthwhile (Northwest of Country). Other option could be full house rental with market value rent of about €1350 per month.

Basically as I said I have about €180,000 of equity in my house, (I would have no interest in equity unlock companies like Spry ect). So any ideas or advice on what would be the best way to move forward in a way that both generates an income and even possibly helps unlock equity would be very much appreciated.

Kind Thanks
 
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Have you given any consideration to any entitlement for social welfare,. Jobseekers allowance does have a specific scheme for artists

Professional artists on Jobseekers Allowance

A scheme for professional artists on Jobseeker’s Allowance (JA) that allows you to focus on your artistic work and develop your portfolio.
www.citizensinformation.ie www.citizensinformation.ie

Likewise, are there any artists grants you take advantage of? Also there are schemes through the likes of Music Generation where they hire tutors, is there anything like that in your area of expertise?
 
thedaddyman said:
Have you given any consideration to any entitlement for social welfare,. Jobseekers allowance does have a specific scheme for artists

Professional artists on Jobseekers Allowance

A scheme for professional artists on Jobseeker’s Allowance (JA) that allows you to focus on your artistic work and develop your portfolio.
www.citizensinformation.ie www.citizensinformation.ie

Likewise, are there any artists grants you take advantage of? Also there are schemes through the likes of Music Generation where they hire tutors, is there anything like that in your area of expertise?
Click to expand...
Hi thanks for your reply. I have previously checked the criteria for jobseekers artist scheme. According to its criteria: you have to be unemployed (I am self employed) and satisfy their means test, also it is only for the first year of unemployment. So according to their criteria it wouldn’t seem to offer any credible way forward for my situation. As for teaching with the music generation, I have some basic musical ability so not sure if would suit but I could investigate further, kind thanks.
thedaddyman said:
Have you given any consideration to any entitlement for social welfare,. Jobseekers allowance does have a specific scheme for artists

Professional artists on Jobseekers Allowance

A scheme for professional artists on Jobseeker’s Allowance (JA) that allows you to focus on your artistic work and develop your portfolio.
www.citizensinformation.ie www.citizensinformation.ie

Likewise, are there any artists grants you take advantage of? Also there are schemes through the likes of Music Generation where they hire tutors, is there anything like that in your area of expertise?
Click to expand...
 

Contribution Statement

<p>Request a statement of your history and record of contributions paid</p>
services.mywelfare.ie services.mywelfare.ie

You will need to register on the website with your PSC, Public Services Card. Order a contributions statement.. it's instant.
 
If you're an earning artist, your income as outlined would be tax free. Is it possible for you to up your productivity to avail of the full 50k allowable exemption going forward?
 
fistophobia said:

Contribution Statement

<p>Request a statement of your history and record of contributions paid</p>
services.mywelfare.ie services.mywelfare.ie

You will need to register on the website with your PSC, Public Services Card. Order a contributions statement.. it's instant.
Click to expand...
Kind thanks, I’ve just received my statement. It would seem that you need at least 520 paid contributions to qualify for a pension. My present total is 1549, so I’m presuming that qualifies me for some kind of state pension.
 
LLB123 said:
If you're an earning artist, your income as outlined would be tax free. Is it possible for you to up your productivity to avail of the full 50k allowable exemption going forward?
Click to expand...
Kind thanks for your reply. Yes that was one of the reasons I wished to free up some money going forward so that I could invest some capital and time to grow my own projects.
 
Hello,

While I appreciate that it's a family member, you really need to get that rental income up.

€500pm is extremely generous, and while I'm sure it's well intend, unfortunitely you can't afford to be that generous.

Knowing the price of Irish property, I'm assuming that you've a modest enough home, so down sizing doesn't really sound like an option, unless you'd be happy in a very small rural cottage. That could in turn result in other costs, like heating, going up, though.

What about your self employed income, what are the prospects for increasing this - can you try to renegotiate your rate, given the impact of inflation? Perhaps you could get a few extra hours, each week?

I'd also approach both the Bank, and Credit Union, and ask both to extend the term of your loans, so as to reduce your monthly repayments. While this will result in you paying more interest, over the life of the two loans, the balances are small so it wont be an awful lot. It will however, help reduce the pressure on your monthly cashflow - which appears to be the most important thing, right now.

I would urge you not to take on any additional debt, you need to increase your income from your existing talent, and the room rental, imho.
 
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MrEarl said:
Hello,

While I appreciate that it's a family member, you really need to get that rental income up.

€500pm is extremely generous, and while I'm sure it's well intend, unfortunitely you can't afford to be that generous.

Knowing the price of Irish property, I'm assuming that you've a modest enough home, so down sizing doesn't really sound like an option, unless you'd be happy in a very small rural cottage. That could in turn result in other costs, like heating, going up, though.

What about your self employed income, what are the prospects for increasing this - can you try to renegotiate your rate, given the impact of inflation? Perhaps you could get a few extra hours, each week?

I'd also approach both the Bank, and Credit Union, and ask both to extend the term of your loans, so as to reduce your monthly repayments. While this will result in you paying more interest, over the life of the two loans, the balances are small so it wont be an awful lot. It will however, help reduce the pressure on your monthly cashflow - which appears to be the most important thing, right now.

I would urge you not to take on any additional debt, you need to increase your income from your existing talent, and the room rental, imho.
Click to expand...
Many thanks for your reply. The family member is my daughter and her baby & partner. The rent is low as shes moving back home to save up their deposit for a mortgage, which as her father Im grateful to be able to offer them, (I wish I could do more financially for both my daughters) so it’s important to me that she can at least utilise the benefit of her family home to help her get sorted. They were paying huge rent and felt trapped and unable to move forward.

Up until recently and at different time I rented out two rooms in my home but as I said in my original post it can be complicated managing tenants and their personal choices, so it can be that you solve the financial problem but create a bit of a Rod for your back. I take your point about taking on more debt, that makes total sense. The granny flat extension came more from the idea of possibly selling my daughter the house and living myself in the annexe, that would free up my equity and create an affordable downsize whilst being close to family. But this kind of joined arrangement can throw up all sorts of complications also.
 
Your income is very low - even someone on Jobseekers Allowance is clearing over 12,000 per year or 1,000 per month, yours is only 800 pm. Please do not dismiss the Jobseeker Allowance for professional artists - suggest you call into Citizens Advice and review (in detail) your entitlement to Jobseekers Allowance. I'm no expert but you should be able to top up your income, bring this up to 1,000 per month at a minimum?

Professional artists on Jobseekers Allowance

A scheme for professional artists on Jobseeker’s Allowance (JA) that allows you to focus on your artistic work and develop your portfolio.
www.citizensinformation.ie www.citizensinformation.ie

see extract below - you need to be unemployed but also be registered as self-employed

Also you say JA is only for the first year of unemployment: this is not the case! as I understand it, if your income continues to be low then your allowance should continue into the future
------
To qualify for the Scheme, you must be aged over 18 and under 66. You must also:
At least 50% of your income in the previous year should be derived from your work as a professional artist. For example:
etc etc
------
Finally its seems you are well on the way to getting close to the full Contributory Pension. Do you pay self-employed PRSI annually? Just make sure you continue to pay this or are getting PRSI credits for every year for the next 8 or 9 years
In any case if your savings etc at retirement aren't huge then you would probably satisfy the means test for the State Pension (Non-Contributory)

Hope this helps
 
Homelandfan said:
Your income is very low - even someone on Jobseekers Allowance is clearing over 12,000 per year or 1,000 per month, yours is only 800 pm. Please do not dismiss the Jobseeker Allowance for professional artists - suggest you call into Citizens Advice and review (in detail) your entitlement to Jobseekers Allowance. I'm no expert but you should be able to top up your income, bring this up to 1,000 per month at a minimum?

Professional artists on Jobseekers Allowance

A scheme for professional artists on Jobseeker’s Allowance (JA) that allows you to focus on your artistic work and develop your portfolio.
www.citizensinformation.ie www.citizensinformation.ie

see extract below - you need to be unemployed but also be registered as self-employed

Also you say JA is only for the first year of unemployment: this is not the case! as I understand it, if your income continues to be low then your allowance should continue into the future
------
To qualify for the Scheme, you must be aged over 18 and under 66. You must also:
At least 50% of your income in the previous year should be derived from your work as a professional artist. For example:
etc etc
------
Finally its seems you are well on the way to getting close to the full Contributory Pension. Do you pay self-employed PRSI annually? Just make sure you continue to pay this or are getting PRSI credits for every year for the next 8 or 9 years
In any case if your savings etc at retirement aren't huge then you would probably satisfy the means test for the State Pension (Non-Contributory)

Hope this helps
Click to expand...
Kind thanks for taking the time to reply. Yes my income is too low and is difficult to sustain. I will investigate the professional Artists job seekers again further and see what be achieved. My experience of Social Welfare in the past is that Creative artists tend to be pushed and nudged into any job to get them off the register and I had applied for the Pilot scheme of the Universal payment for Artists, it’s a pity that scheme isn’t fully implemented. But I will investigate and gain further advice on your suggestion. As for the PRSI, my accountant does my Tax return every year so I’m presuming I pay PRSI annually but I’ll double check this and clarify, Kind thanks again for your advice and time.
 
Most self-employed artists make very little money. That is true for the visual arts or the written arts or even the performing arts.

They sustain their living by working outside the arts and doing their art in their spare time.

So I think you should investigate this. Can you get work anywhere else? The minimum wage is €12.70 an hour which is about €26k a year.

You can't afford to be a full-time artist now. So work in a paid job until you are 66 and then pursue your arts with the comfort of a state pension.

Brendan
 
eyesgreen_1 said:
Kind thanks for taking the time to reply. Yes my income is too low and is difficult to sustain. I will investigate the professional Artists job seekers again further and see what be achieved. My experience of Social Welfare in the past is that Creative artists tend to be pushed and nudged into any job to get them off the register and I had applied for the Pilot scheme of the Universal payment for Artists, it’s a pity that scheme isn’t fully implemented. But I will investigate and gain further advice on your suggestion. As for the PRSI, my accountant does my Tax return every year so I’m presuming I pay PRSI annually but I’ll double check this and clarify, Kind thanks again for your advice and time.
Click to expand...

You have an accountant and you earn 9.5k?!!!

With such a low income, is an accountant necessary?

(1) their fee will eat into your low income
(2) with a low income, your accounts must be fairly simple
 
Protocol said:
You have an accountant and you earn 9.5k?!!!

With such a low income, is an accountant necessary?

(1) their fee will eat into your low income
(2) with a low income, your accounts must be fairly simple
Click to expand...
Your point is a good one but if all the accountant does is ensure that the OP makes the minimum PRSI contribution each year, thus securing a contributory OAP pension entitlement for them, their fees may well be a very wise investment.
 
You need a bigger income. You can't expect to have a pension fund, your own house and holidays etc when you earn €9,500 a year. You should get a job that will generate a higher income. As Brendan pointed out, you'd get over 2.5 times your current income on the minimum wage. You can do your other work in the evenings/ at the weekends.
 
Hello @eyesgreen_1
Without going into too much identifying detail, a family member was in the same situation as you.
They did rent a room in their house to a son and his partner. They have just had a Revenue audit.

You cannot use rent a room for a family member, its against the rules. In their case they were asked to provide a guide to the market rent of the house they were renting in and they were made pay a portion of that including interest & penalties.
You must charge your child full market rent however you can offset this against the value of the Small Gifts Allowance which you are entitled to give to your child and their partner - €3k each. So if the rent at open market is 1k per month then its 12k a year rent.
You can give your child and partner €3k each - €6k per year so offset this off the rent - so your child should pay €6k per year rent to you which would have to be declared in your accounts.

I know the possibility of discovery is minimal but its no harm to have this arrangement in place in writing and have the payment.
In the end you can hold onto the payments and gift them to your child as a lump sum tax free once they have had no gift previously that puts them over the value of 300K which it sounds like has not happened.
 
Steven Barrett said:
You need a bigger income. You can't expect to have a pension fund, your own house and holidays etc when you earn €9,500 a year.
Click to expand...
I agree. I wouldn’t describe a person in late 50s with €180k of house equity as “house rich” even.

The jobs market is very buoyant at the moment and anyone able-bodied with own transport can earn minimum wage for whatever hours they wish. Job search might take some effort and the work may be tedious but these jobs exist.

OP will not be young and able-bodied forever and has about a decade to put themselves in a better situation
 
Thanks everyone for taking the time to reply to my post. I had at different times and up until recently earned a higher income, so a transition from a lower income now to higher income again and different approach is now required. I’m very thankful for everyone’s advice and have gained new knowledge around pension contributions, Revenue implications of rent a room to family and the need to raise a higher income, and also to approach my creative life with a more realistic strategy.

Easy to get into a rut of thinking so I’m glad I utilised this fantastic platform and it’s members to secure advice, strategy and generosity of knowledge.

Much appreciated & Kind thanks to all.
 
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