Beachclub174
Registered User
- Messages
- 13
Hi everyone,
I am new to the boards and was looking for advice in terms of financial planning. Our intention is to retire (in Spain) as early as possible, making sure we have a decent enough level of income to live on. We have no children and we save money that is not really making any return. Before Covid the largest expense was holidays (6/7 trips a year around EU destinations for 1 week or couple of days each time)
Age: 44
Spouse’s/Partner's age: 51
Annual gross income from employment or profession: €46,000 civil service (reaching €60,000 in 4 years)
Annual gross income of spouse: €105,000 public sector (final salary to retire)
Monthly take-home pay: me €2,700 Spouse - €4,680 = €7,380
Type of employment: both civil service/public sector
In general are you: (b) saving? Saving
Rough estimate of value of home: €350,000 (Bought for €200K) (would sell or rent to finance property in Spain) Amount outstanding on your mortgage: €90,000 (repayments of €651 @2.75% for 14 years- ends January 2035)
Other borrowings – car loans/personal loans etc: none
Do you pay off your full credit card balance each month? Yes
Savings and investments: Cash: €130,000 (€40K between credit union, regular savings account, savings account and €90K Prize bonds)
Do you have a pension scheme?
Yes. The scheme attached the public sector for both of us, different joining dates and terms and conditions.
Me: Minimum retirement age 65 (55 with reduced benefits – might consider) Will have 21 years of service at age 55 – estimated lump sum tax free €36K and €4.5K annual pension. Will qualify for state pension at 68.
Spouse: Minimum retirement age 60 (50 with reduced benefits – no intention to avail of it). Will have 30 years of service at age 60 – estimated lump sum tax free €115K and €30K annual pension from scheme. I think spouse also qualifies for the “bridge” supplementary pension which is the same as the state pension for €12.6K. Might bring the total pension at age 60 to €42K – (might have the supplementary pension assumption wrong, need to investigate more)
Do you own any investment or other property? Yes, 2 in Dublin.
One
Rough estimate of value of home: €200,000 (Bought for €170K
Amount outstanding on your mortgage: €60,000 (repayments of €650 @Tracker for 7 more years) Will be paid off before Spouse retires.
Annual rental income: €14K gross
Two
Rough estimate of value of home: €240,000 (bought for €82K- has 7 years CG tax exemption)
Amount outstanding on your mortgage: €50,000 (repayments of €254 @2.3% for 23 more years)
Annual rental income: €18K gross
Revenue taxes: Paying around €8K per year on taxes for rental income after making all possible deductions (accountant, management agent, repairs, insurance, etc.)
Ages of children: none
Life insurance: only the life protection that we all have with mortgages. No other policies, except for death benefits attached to public sector workers.
What specific question do you have or what issues are of concern to you?
1. What to do with the cash we have and that we keep saving? I’m not a fan of paying off all mortgages as I prefer to keep the money in case some better investment opportunity arises. Would it be better to reduce some of my mortgage on my principal residence? We are risk averse regarding investment options, so any advice is welcome.
2. Pension: I read about AVCs but haven’t decided to start any yet. I was planning on making lump sum contributions as retirement age approaches for Spouse and maximise the tax free lump sum- shortfall of approx. €42.5K. If I intend to retire at 55 with reduce benefits, shall I start an AVC now or also wait until I am 50 to make lump sum contributions? No sure about building a fund on top of the lump sums. Is this a missed opportunity?
3. Investment property number Two has a 7 years CG tax exemption as it was bought in 2014 and has a lot of equity built up. It is also bringing the most rental income. Shall I consider cashing in this asset to avail of the CG exemption or better keep it for the future as a passive income source? The debt on it is low (€50K), so we could cancel it if need to.
Overall I feel that our position is good, but the idea of retiring at 55 when my Spouse will be 62 (and retired also) makes me feel vulnerable, although I could get part time work should anything happen. Would it be wise to engage the services of a financial planner to explore better options?
Any suggestions for our situation would be greatly appreciated.
I am new to the boards and was looking for advice in terms of financial planning. Our intention is to retire (in Spain) as early as possible, making sure we have a decent enough level of income to live on. We have no children and we save money that is not really making any return. Before Covid the largest expense was holidays (6/7 trips a year around EU destinations for 1 week or couple of days each time)
Age: 44
Spouse’s/Partner's age: 51
Annual gross income from employment or profession: €46,000 civil service (reaching €60,000 in 4 years)
Annual gross income of spouse: €105,000 public sector (final salary to retire)
Monthly take-home pay: me €2,700 Spouse - €4,680 = €7,380
Type of employment: both civil service/public sector
In general are you: (b) saving? Saving
Rough estimate of value of home: €350,000 (Bought for €200K) (would sell or rent to finance property in Spain) Amount outstanding on your mortgage: €90,000 (repayments of €651 @2.75% for 14 years- ends January 2035)
Other borrowings – car loans/personal loans etc: none
Do you pay off your full credit card balance each month? Yes
Savings and investments: Cash: €130,000 (€40K between credit union, regular savings account, savings account and €90K Prize bonds)
Do you have a pension scheme?
Yes. The scheme attached the public sector for both of us, different joining dates and terms and conditions.
Me: Minimum retirement age 65 (55 with reduced benefits – might consider) Will have 21 years of service at age 55 – estimated lump sum tax free €36K and €4.5K annual pension. Will qualify for state pension at 68.
Spouse: Minimum retirement age 60 (50 with reduced benefits – no intention to avail of it). Will have 30 years of service at age 60 – estimated lump sum tax free €115K and €30K annual pension from scheme. I think spouse also qualifies for the “bridge” supplementary pension which is the same as the state pension for €12.6K. Might bring the total pension at age 60 to €42K – (might have the supplementary pension assumption wrong, need to investigate more)
Do you own any investment or other property? Yes, 2 in Dublin.
One
Rough estimate of value of home: €200,000 (Bought for €170K
Amount outstanding on your mortgage: €60,000 (repayments of €650 @Tracker for 7 more years) Will be paid off before Spouse retires.
Annual rental income: €14K gross
Two
Rough estimate of value of home: €240,000 (bought for €82K- has 7 years CG tax exemption)
Amount outstanding on your mortgage: €50,000 (repayments of €254 @2.3% for 23 more years)
Annual rental income: €18K gross
Revenue taxes: Paying around €8K per year on taxes for rental income after making all possible deductions (accountant, management agent, repairs, insurance, etc.)
Ages of children: none
Life insurance: only the life protection that we all have with mortgages. No other policies, except for death benefits attached to public sector workers.
What specific question do you have or what issues are of concern to you?
1. What to do with the cash we have and that we keep saving? I’m not a fan of paying off all mortgages as I prefer to keep the money in case some better investment opportunity arises. Would it be better to reduce some of my mortgage on my principal residence? We are risk averse regarding investment options, so any advice is welcome.
2. Pension: I read about AVCs but haven’t decided to start any yet. I was planning on making lump sum contributions as retirement age approaches for Spouse and maximise the tax free lump sum- shortfall of approx. €42.5K. If I intend to retire at 55 with reduce benefits, shall I start an AVC now or also wait until I am 50 to make lump sum contributions? No sure about building a fund on top of the lump sums. Is this a missed opportunity?
3. Investment property number Two has a 7 years CG tax exemption as it was bought in 2014 and has a lot of equity built up. It is also bringing the most rental income. Shall I consider cashing in this asset to avail of the CG exemption or better keep it for the future as a passive income source? The debt on it is low (€50K), so we could cancel it if need to.
Overall I feel that our position is good, but the idea of retiring at 55 when my Spouse will be 62 (and retired also) makes me feel vulnerable, although I could get part time work should anything happen. Would it be wise to engage the services of a financial planner to explore better options?
Any suggestions for our situation would be greatly appreciated.
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