Mortgage paid, pension maxed (I think!) - next steps?

T

terrycasper

New Member
Messages
4
Personal details

Age: mid 40s
Spouse's age: mid 40s


Number and age of children: 3 teenagers

Income
Personal : 250k
Spouse : 5k

Summary of Assets and Liabilities
Family home value: 300k
Mortgage on family home: 0
Net equity: 300k

Cash: 130k


Other borrowings – car loans/personal loans etc
No loans, no debt

Pension information

Value of pension fund: 250k

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

Having read other posts similar, and general guidance across the forum, it would seem that the 2 key bridges are crossed in terms of paying off mortgage and maxing my 28,750 pension contributions. I understand the next step in the formula is to invest in a diverse portfolio of shares. Its a nice problem to have, but I have absolutely no idea how to go about doing this, and am conscious of getting exposed when stepping outside my area of expertise and paying over the odds to get a stake in the game of portfolio management. So one direct question is 'how to proceed with investing without being the last person in the transaction to benefit from it - or worse again, the only one who does not!'

Second question goes back to the element of doubt on the Pension Maxed thing. My wife is a homeworker who has a small cash business sideline, which had income before expenses of about 5k last year. This hasnt been declared or formalized as a business entity at this point given the low volumes. It is slowly crossing that point between becoming a sideline hobby that pays a few bob, and being a modest revenue stream that requires paperwork etc. My pension is a PRSA. My wife does not have any pension plan whatsoever. Is there a route to putting our savings cash into a PRSA for my wife that would be a major tax efficiency for us? It would essentially be my income going to her pension - I genuinely don't know whether that is tax avoidance or tax evasion!

Might be some questions on low current pension & savings vs income. This is attributable to significant income increases in the last couple of years, paying off the mortgage, cash purchase of car and home improvements.
 
Thanks for the reply Dr Strangelove.

No plans to move. Fortunate enough that the first home we bought is maybe the one we'll have for keeps. It has all we need. We've put a fair bit of work into it and maybe its worth a little more than 300k at this point. I haven't had it valued in a long time, but we have no aspiration to have a bigger or more impressive (and higher maintenance) home.

Its a spacious home in an unglamorous part of the country would be the impediment to a higher valuation I suppose.
 
You are not the first person I have seen with enormous salary but relatively low net worth. Has your salary increased lately or where has all the money gone?
 
Relatively low net worth attributable to:
- Paying a 40 year mortgage in 15 years
- Significant salary jump in last couple of years
- One income (large as it is) among 5 people with adult sized appetites
- 2 cars were both cash purchases
- Home improvements (100k+ in the last 2 years, paid with cash)

I think a lot of the expenditure that people generally cover with loans has been covered with the cash saved up before those things were bought. There's not really anything else that either needs to be bought or that we particularly want to buy. With no major expenditure on the horizon, I expect our savings to accumulate quite quickly and be perhaps more in line with expectations of net worth:salary ratio.

I certainly don't feel that money has disappeared or that we've not converted it to useful long term assets.
 
terrycasper said:
My wife is a homeworker who has a small cash business sideline, which had income before expenses of about 5k last year.
Click to expand...
Does she submit a Revenue return? Anyone with self-employed income >€5k pays €500 PRSI and gets 52 credits reckonable for the state pension.

As for own private pension it’s unlikely that she’ll ever pay enough income tax to make it worth her while contributing to one.
 
Dr Strangelove said:
Does she submit a Revenue return? Anyone with self-employed income >€5k pays €500 PRSI and gets 52 credits reckonable for the state pension.

As for own private pension it’s unlikely that she’ll ever pay enough income tax to make it worth her while contributing to one.
Click to expand...
Not as yet, but definitely something I need to look in to. Helpful to know that 5k threshold, thank you.
 
Well done for being in your financial position. If your children go to college, you will need to fund that and I am guessing that there will be accommodation costs with that. You're probably looking at the guts of €60,000 a child for a 4 year course. You can use the €130,000 for that and add to it over the years. Max out your pension.

Invest money each month too. Automate is so it is another bill instead of waiting to see what you have left over.

And if you don't have a big life cover plan to insure your family against the risk of your premature death, make sure you have plenty of cover.


Steven
www.bluewaterfp.ie
 
You must log in or register to reply here.
Back
Top