Recently mortgage free & what do we do now?

K

Kramer

Registered User
Messages
135
Personal details

Age:51
Spouse’s/Partner's age:50

Number and age of children:
3 (16, 14 & 9)

Income and expenditure
Annual gross income from employment or profession: €67k
Annual gross income of spouse: €21k (4 day week)

Monthly take-home pay: €4120
Spouse: €700 every 2 weeks

Type of employment: e.g. Civil Servant, self-employed
Private
Spouse - Public sector

In general are you:
Breaking even

Summary of Assets and Liabilities
Family home worth approx €500k
Site Value: €25k (if zoned in the future would be worth signiifcanly more)
Cash from recent sale of property €230k

Family home mortgage information: N/A

Do you pay off your full credit card balance each month? Yes

Other savings and investments:N/A

Do you have a pension scheme?
Pension fund: €325k
Employer Contribution 10%
Plus personal contribution of 8% and matching employer contributions of 8%

Small pension from short time self employed
Zurich Pension (Management Charge 4.4% PA)
SuperCAPP: €450
Dynamic Pension & Invest: €2530
Accrued Charges: €-1001

Spouse only rejoined workforce (Single Public Service Pension)
@End 2022 value: €650

Also has a couple of small pensions from previous employment
AVIVA MAF Strategic Services B (Level 4): €1200
AVIVA MAF Dynamic Series B (Level 5): €300
Zurich PRSA Dynamic Pension & Invest: €8100 (Mgt Charge 1%)

Do you own any investment or other property?
Site mentione above

Life insurance:
Policy which was linked to Mortgage paying €26.72 per month
Current value of €150k reducing until Nov 2034, both lives insured

What specific question do you have or what issues are of concern to you?
Having recently sold a property we are in the fortunate position to be mortgage free with money in the bank and are unsure where to proceed next.

With our current income & expenditure we are not saving anything each month and just about breaking even.
I'm getting to grips with tracking all expenditure monthly but don't have too many areas we can cut back on (Medical, Dental, Shopping, running 2 cars, Extra curricular activites etc.)

We want to ringfence €50k for each of the children to help them, whether that's with Education, Property, other so leaves ourselves with approx €80k left to invest.
Both jobs are pretty secure and while I would love to retire earlier than 65 it's not too likely!
 
Kramer said:
We want to ringfence €50k for each of the children to help them, whether that's with Education, Property, other so leaves ourselves with approx €80k left to invest.
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No, no, no, no, no.

You have €230k to invest. Money is money and interchangeable. Do not split it into separate pots.

When the children get to an age when they need education, then take it out of the one big pot.

Of course, you can keep a note of what you spend on each child to make it equal, but do not invest them separately.

Brendan
 
The thing that immediately jumps out at me is that you have ample scope to boost your pensions.

You could contribute an additional 22% (30% in total) of your salary (regardless of your employer’s contribution) to your pension for 2023 and every year going forward. That is the most tax-efficient way to save for the future.

Also, I would suggest that your spouse should investigate the possibility of purchasing notional service and/or make contributions to a PRSA AVC to boost their pension.

Make sure your cash is earning interest (ideally in fixed-term deposits) while you are waiting to drip feed the maximum tax-relieved pension contributions that you can make every year.

You are in an excellent position to greatly enhance your retirement income if you make some smart moves.
 
At age 51, you can contribute up to 30% of your salary to your pension.

I think that this is what you should do. That is a further €15k a year.


The net cost after tax relief will be about €8k. So doing last year and this year now, will cost you €16k.

Then, as Sarenco says, see if it's tax efficient for your wife to buy back years.

Put the balance into a diversified portfolio of about 10 directly owned shares. They will go up and down but should rise over the long-term which is your investment horizon.

Make sure that half are in your name and half in your wife's name so that when you sell them, you each get the annual CGT allowance.
 
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All your old pensions look very small. If you have decent-sized pensions from previous employments, it can be worth keeping them separate. But for small pensions that may have large charges, it would probably be worth it to try to transfer them in to your current occupational scheme. It's a pain going through the paperwork, but I think it would be worth it in the long run.
 
Brendan Burgess said:
No, no, no, no, no.

You have €230k to invest. Money is money and interchangeable. Do not split it into separate pots.

When the children get to an age when they need education, then take it out of the one big pot.

Of course, you can keep a note of what you spend on each child to make it equal, but do not invest them separately.

Brendan
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Thanks, I agree with that, what I meant was that each of them will have the benefit of €50k in todays money if and when they need it.
I'm just trying to figure out what to do with it now
 
Persius said:
All your old pensions look very small. If you have decent-sized pensions from previous employments, it can be worth keeping them separate. But for small pensions that may have large charges, it would probably be worth it to try to transfer them in to your current occupational scheme. It's a pain going through the paperwork, but I think it would be worth it in the long run.
Click to expand...
I've already been in touch with Zurich about my own pension and have been told the following

"Unfortunately, it is not possible to amend the charging structure on this plan. You could transfer to another personal pension plan however there are penalties for doing this prior to your normal retirement age so I would not recommend it. It is not possible (Revenue rule) to transfer a personal pension to a workplace based occupational scheme."

I will be doing the same investigation for my wifes pensions also but fear I may get the same response
 
Also, could you invest in your home to make it more energy efficient?

Particularly with all the available grants, that can produce an excellent return on investment.
 
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