Late 40s. Have a little bit of money...dont want to waste it

W

warnerbottom

Registered User
Messages
19
Hi,

Ive worked hardand had some luck and managed to build up a bit of savings. Recently returned home from overseas and getting settled has eaten into savings etc. However, I feel were now in a good position to start planning for the near future.

I've never really had much spare funds and the assignment overseas has given us a bump, so would really appreciate some advice on what to do to put our family in a strong position for the future.


Personal details

Age: 48
Spouse's age: 47

Number and age of children: 2 children, 16 & 15

Income and expenditure
Annual gross income from employment or profession: c. 220k including bonuses
Annual gross income of spouse/partner: 50k

Monthly take-home pay: 11,500 (combined)

Type of employment - e.g. Employee or self-employed. Employed
Employer type: private company.

In general we are saving about 3k per month but have had ongoing home improvement expenses that will end this year. From Q4 I expect that we would have about 4-5K per month savings.


Summary of Assets and Liabilities
Family home value: 900k
Mortgage on family home: 350k
Net equity: 650k

Cash: 270k
Defined Contribution pension fund: 300k
Company shares : 150k
Buy to Let Property value: No
Buy to let Mortgage:No

Total net assets:


Family home mortgage information

Interest rate 3%
Type of interest rate: fixed for 7 years, 5 remaining

Remaining term: 15 years
Monthly repayment: 1800

Other borrowings – car loans/personal loans etc

No car loans
Do you pay off your full credit card balance each month? yes


Pension information

Value of pension fund: 300k

Buy to let properties - None


Other savings and investments:


Other information which might be relevant

Life insurance: yes. work scheme
Health insurance (Laya) 500 per month

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

I'm conscious of funding needs for university in 3-5 years but would also like to exit my corporate job in 5 years (stress issues). i would love some advice on how to invest / use the funding we have to create a passive income stream, or to invest so that I can move to a less well paid, but less stressful job in 5 years.
 
Are you maximising your tax-relieved pension contributions? Your pension pot looks a little light for your age/salary level.

Also, does your spouse have a pension?

Beyond that, I would suggest paying off your mortgage ahead of schedule and investing in energy efficiency upgrades to your home, where possible.
 
First, congrats -you have obviously done well to end up on your stated salary!

Few things.

1) Pension: You mention pot value but what is the monthly contribution & what does the employer offer? These in a way are more important pieces of information at this stage. Given your excellent joint income plus equity in your home I would regard you as in a great spot, but the pension pot is relatively small considering, and needs some focus in my opinion.
- Did you work in Ireland in 2023, if so put some of the cash pile into your 2023 pension contribution - must be done by October revenue deadline. This will be tax effective.
- Your wife could also retrospectively pay up to her maximum for 2023
- Increase your contributions substantially.

2) Budget & intentional lifestyle: On €200+ per annum you are entitled to enjoy life, but lifestyle creep should be an intentional choice. I get the sense that post home move the outgoings are a bit up in the air, and you are not really sure what your disposable steady state income is? I just went through a phase like this after moving too. Your biggest barrier to effective money management is burning cash unintentionally - given your home and income are sorted. Spend 2 hours doing a list of your expenses with the wife, a simple annual budget/statement, just the transparency alone will likely drive awareness if there is any unwanted leaks.... it will also see how you cut your cloth- important to understand if you have one eye on exiting your job.

3) University: This shouldn't be too much of a burden on you even if you had no savings. Even if you took a haircut on pay in a new job. What do you expect it to cost, you could put some money into a savings account for this - if it is a big concern, but I would not put aside too much, as your monthly income closer to the time can be quickly accumulated if a spike is in sight.

4) Investments: Your job is intense, messing around with property or similar assets is probably not an option, unless the option is to invest in a business that you know something about and this becomes the exit that you want in 5 years....otherwise I'd just stick as much as possible into your pension and the rest into an index fund. Paying off the mortgage is an option as Sarenco suggest - but might need to check the terms of the fixed mortgage, some of these are becoming a pain to pay off surplus unless you pay the entire amount. If you pump up your pension contributions that will limit the cash piling up for a while too.
 
warnerbottom said:
Health insurance (Laya) 500 per month
Click to expand...
This sounds like a lot for a family of four. Do you really need the bells and whistles?

Otherwise I’d echo advice above. Pay off mortgage from cash. Your income is great so maximise tax-relieved pension contributions also for spouse.
 
Dr Strangelove said:
This sounds like a lot for a family of four. Do you really need the bells and whistles?

Otherwise I’d echo advice above. Pay off mortgage from cash. Your income is great so maximise tax-relieved pension contributions also for spouse.
Click to expand...
Thanks for pointing this out. It’s a very good observation. I was just looking at this on another post and it definitely looks like we could save a good bit there.
 
Dr Strangelove said:
This sounds like a lot for a family of four. Do you really need the bells and whistles?

Otherwise I’d echo advice above. Pay off mortgage from cash. Your income is great so maximise tax-relieved pension contributions also for spouse.
Click to expand...
Do you know if wife can benefit from tax relief at the higher level based on us having joint assessed married status?
 
presidenttttt said:
First, congrats -you have obviously done well to end up on your stated salary!

Few things.

1) Pension: You mention pot value but what is the monthly contribution & what does the employer offer? These in a way are more important pieces of information at this stage. Given your excellent joint income plus equity in your home I would regard you as in a great spot, but the pension pot is relatively small considering, and needs some focus in my opinion.
- Did you work in Ireland in 2023, if so put some of the cash pile into your 2023 pension contribution - must be done by October revenue deadline. This will be tax effective.
- Your wife could also retrospectively pay up to her maximum for 2023
- Increase your contributions substantially.

2) Budget & intentional lifestyle: On €200+ per annum you are entitled to enjoy life, but lifestyle creep should be an intentional choice. I get the sense that post home move the outgoings are a bit up in the air, and you are not really sure what your disposable steady state income is? I just went through a phase like this after moving too. Your biggest barrier to effective money management is burning cash unintentionally - given your home and income are sorted. Spend 2 hours doing a list of your expenses with the wife, a simple annual budget/statement, just the transparency alone will likely drive awareness if there is any unwanted leaks.... it will also see how you cut your cloth- important to understand if you have one eye on exiting your job.

3) University: This shouldn't be too much of a burden on you even if you had no savings. Even if you took a haircut on pay in a new job. What do you expect it to cost, you could put some money into a savings account for this - if it is a big concern, but I would not put aside too much, as your monthly income closer to the time can be quickly accumulated if a spike is in sight.

4) Investments: Your job is intense, messing around with property or similar assets is probably not an option, unless the option is to invest in a business that you know something about and this becomes the exit that you want in 5 years....otherwise I'd just stick as much as possible into your pension and the rest into an index fund. Paying off the mortgage is an option as Sarenco suggest - but might need to check the terms of the fixed mortgage, some of these are becoming a pain to pay off surplus unless you pay the entire amount. If you pump up your pension contributions that will limit the cash piling up for a while too.
Click to expand...
Thank you for the reply. I really appreciate you taking the time.

In the pension, I’ve been maxing mine at tax relief levels (c.28k). Wife was out of work for a while so doesn’t have much of a pension. she has minimal pension pot.

100% on the lifestyle comments. Since we came home, getting set up with house, schools etc has had a fair impact.
Generally we’re not very extravagant. Most non essential outlay is on kids and the odd family meal out. Other than that it’s typically one annual family holiday and an odd city break if we can get a good off season deal.

Great advice on the family budget - will get this started this weekend. Prior to moving we had a good handle on this, but it has definitely crept while other things have taken over.

on the investments, is it a case of buying a standard US ETF or does this need to be EU? Also, any thoughts on dividend stocks and how to buy them via a fund?
 
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