Moneymakeover 47, Prudent Future Planning

[Leesider32]

Below I have used the template provided and answered as many questions as possible.

Personal details

Your age: 47
Your spouse's age: 40
Partner's age if not married:

Number and age of children: 1 (5 years)


Income and expenditure
Annual gross income from employment or profession: €86,000 + approx €12,000 annual bonus
Annual gross income of spouse/partner: €30,000

Monthly take-home pay: €5,800 (25% of my salary goes to pension)
Annual bonus take-home: approx. €4,500 (25% pension and tax deducted)

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

In general are you:
(a) spending more than you earn, or
(b) saving? - saving, €1k per month


Summary of Assets and Liabilities
Family home value: €550,000
Mortgage on family home: €300,000
Net equity: €250,000

Cash: €70,000
Defined Contribution pension fund: 25% of my salary

Total net assets:


Family home mortgage information
Lender - PTSB
Interest rate - 2.43%
Type of interest rate: tracker, variable, fixed. - fixed
If fixed, what is the term remaining of the fixed rate? - 2.5 years
If tracker, what is the margin e.g. ECB + 1%

Remaining term: (Original term is not relevant) -23 years
Monthly repayment: €1410

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? No other borrowings
If not, what is the balance on your credit card?

Pension information

Value of pension fund: €50k, hence the decision to put 25% of salary towards it recently.
Between my wife and myself we have €150k in super pensions in Australia


Other savings and investments:
Invested in property abroad, this money will remain in that country, will not be used for any purposes in Ireland, and will be used as a retirement fund to spend 3 months a year there when we retire. No loans on this property.

The €70k in cash will be reduced to €46k approx due to the purchase of an EV and solar panels. Plan to keep €25k in a deposit account at 2% interest for easy access if/when required. Considering putting the reminaing €21k against the mortgage.

Considering putting any additional monthly savings against the mortage so that there is potential to pay it off before my child goes to college. The only thing I think I am missing is my wife putting 25% of her salary into her pension.

Any recommendations on the above appreciated.

 

[Premos]

Invested in property abroad, this money will remain in that country, will not be used for any purposes in Ireland, and will be used as a retirement fund to spend 3 months a year there when we retire. No loans on this property.

Are you using it? Is it rented ? How is it a retirement fund if you want to live there for 3 months?
Do you need to buy a property to live there? If you are not currently using it, if it is not rented, is it an investment, do you need to have it now?
Does it really make sense financially?
If the plan is only to use it during retirement, only for 3 months a year, I would review if it is the best financial option.

 

[Leesider32]

Are you using it? Is it rented ? How is it a retirement fund if you want to live there for 3 months?
Do you need to buy a property to live there? If you are not currently using it, if it is not rented, is it an investment, do you need to have it now?
Does it really make sense financially?
If the plan is only to use it during retirement, only for 3 months a year, I would review if it is the best financial option.

It is rented out, making €15k per annum after all costs, tax etc., this is money is used to visit there every 2 years (flights etc.) as my wife is from there (not going to mention the country for privacy reasons). Additional money will be used to build up a deposit for a beach house, should be able to do that within 10 years, this will be rented out to pay for the loan to purchase it. When we retire the plan would be to use this additional property to stay in 2 to 3 months a year. Income to support us over there coming from the original rental property and the rent for the other 9-10 months on the beach property.

In retirement we should then only have to rely on our annual pensions in Ireland for 9-10 months of the year. Maybe it isn't the best investment but more of a lifestyle choice due to where my wife is from.

 

[Premos]

Maybe it isn't the best investment but more of a lifestyle choice due to where my wife is from.

Even so, I would consider the best investment options (perhaps it's the best one). I am spending at least 6 weeks a year in another country as I have close links to it. I have the intention to spend more time there during retirement. However, I don't see buying there has a good financial option. I am renting. I might change my mind in the next 10 years for lifestyle reason but I don't think it will ever be the most astute financial decision

 

[Leesider32]

Even so, I would consider the best investment options (perhaps it's the best one). I am spending at least 6 weeks a year in another country as I have close links to it. I have the intention to spend more time there during retirement. However, I don't see buying there has a good financial option. I am renting. I might change my mind in the next 10 years for lifestyle reason but I don't think it will ever be the most astute financial decision

Fair point and you are right the preference to buy a beach house may change once we look into it more. The initial thing was to get the property up and running, building etc. won't go into detail but my wife inherited a small plot of land. That's done with no outstanding loans so puts us in a good position to have a steady income stream there facilitating visits and savings.

The things we need to look into are how much will beach property cost? What type of loan can we get and LTV? Annual rent on it? Then we need to consider would we actually spend 2-3 months in that place or would we actually rent it out longer? And maybe all of that doesn't stack up. I suppse that's a decision for another day. Currently keeping this very separate to our Irish money situation and plan to do so in the future as well.

 

[ClubMan]

It is rented out, making €15k per annum after all costs, tax etc.,

This really should have been mentioned in the income section of the Money Makeover to give people an accurate picture of the total household income.

 

[Leesider32]

This really should have been mentioned in the income section of the Money Makeover to give people an accurate picture of the total household income.

Fair enough but as mentioned it is something I want to keep totally spearate from Ireland, and I want to be able to plan for the future based on Irish income only.

Btw re monthly spending we keep very tight control of it with costs that only come annually, such as insurance, also factored in.

Taking all into account I should have approx. €25k to put against the mortage, maxing out on pension conttributions, and putting an extra €750 against the mortage every month so can pay it off in 11 years. €25k on deposit for rainy day fund.

Any feedback on if this is a good approach or I should be looking at things differently please let me know.