Moneymakeover 5-10 Year Plan

[PickerUpper]

Personal details
Your age: 48
Your spouse's age: 49
Number and age of children: 2 kids; 13 and 11

Income and expenditure
Annual gross income from employment or profession: €55k (part-time)
Annual gross income of spouse/partner: €190k employment and occasional 25k consultancy option

Monthly take-home pay: 11k-ish

Type of employment: PAYE Employees
Employer type: me - private sector, spouse - public sector

In general are you: (b) saving but not in an organised fashion, just letting funds build up in current account.

Summary of Assets and Liabilities
Family home value: €900k
Mortgage on family home: €135k

Cash: €40k
Investment: c. 40k, adding 1k per month till 2028, expected to be c. 90k

Value of pension fund:
Mine: Defined Benefit - expected to be 23k per annum at normal retirement age (2041) + AVCs and small DC top up
Spouse: €?k - several from previous private sector roles and currently 5 years into a public service pension (started age 44). Neither of us have a clear idea what these are worth combined. He may have transferred some or all of the private pension into the public service pension (if that's even possible? Neither of us are comfortable with pensions, as is probably pretty obvious from this post!)

Family home mortgage information:
Lender: PTSB
Interest rate: 2.35%
Type of interest rate: Fixed until Sept 2027
Normal Repayment: 1086 per month

Other borrowings – car loans/personal loans etc
Car - due to be paid in full in Nov 2025 (currently 1365 per month, which was overpaying the mortgage and plan to be re-diverted to the mortgage from December 2025)
No other loans, credit cards paid in full monthly

What specific question do you have or what issues are of concern to you?
We have been mostly overpaying the mortgage with any extra money for the last few years, until we bought the car last year. That will be paid off shortly and we plan to return to overpaying the mortgage.

One child is due to start private school this year - so we're estimating approx 7k per annum for 6 years for that and possible the same for our other child in 2 years time.
We would also like to have a college fund available for them - we could use the investment account for that when it matures (or use that to clear the mortgage?).

I suppose my main question is what should our priority be;
Overpay mortgage to clear it, then prioritise kids education or
Figure out where we stand pension-wise, particularly for my spouse and prioritise that?

I feel like we've been coasting along for a while and don't really have a plan. We have good salaries so haven't been feeling the pinch but we're both coming into our 50s next year and would like more of a plan. The kids will be midway through college when we're both 60 and we may look to retire a few years early, downsize, but don't know what may or may not be possible at this point.

Thanks

 

[conor_mc]

Figure out where you stand pension-wise. Then create an expected retirement budget (in today’s € amounts).

AVC’s likely to be more valuable in the long run than overpaying a 2.35% mortgage.

And clear the expensive car loan ASAP from cash.

 

[Clamball]

I think now is the time to start focusing on your pensions in more detail. And building up AVC by contributing the max you can for your ages.

But you probably need to figure out where your current pensions are; gather up all your yearly statements, make a spreadsheet. Figure out who is looking after the AVC, what company, what risk level, etc. Go onto mywelfare.ie and get a statement of your PRSI contributions so you can project your state pension.

Once you have the information gathered and organised and understood you and your spouse should be able to see where ye currently stand pension wise and where ye want to be in 6 years time (college years!) and when the kids finish full time education, probably 12 years time.

Then figure out what wriggle room you need in your current lifestyle and spending habits to make pension payments, and save for short term goals such as school fees, cars, etc. the fact that you needed to take out a car loan with your level of income is a bit worrying, why did you not have the cash saved before you bought? I am not asking for answers but perhaps a question for yourselves.

With €11K a month income you are only accounting for €3.5K; 1K mortgage; 1K saving & 1.5K car loan. So account for the rest of it €7.5K a month. Divide it out into categories for yourself, food, transport, heating, electricity, insurance, entertainment, phones, medical, pets, holidays, sports, etc, etc. Doing this exercise will give you a view of where you are potentially overspending etc.

And then for the next 6 years focus on a plan to
- pay school fees
- save for short term goals like holidays and car replacements
- long term max AVC for both of you.

And for the following 6 years reevaluate if you need to scale back the AVC if college costs increase you cash requirements. So focus is to rebalance
- college costs
- short term goals
- pensions

With your level of income you should be able to pay college needs from your monthly income and not save for them in advance, and use current money on pensions.

 

[Peanuts20]

Pensions are easy enough to figure out, OH just needs to reach out to his former employer(s) and/or their pension providers for the details. Most provide online tools for planning and understanding. It may take a few months to get all the details but once you have it, then you can calculate what you may get and then you may need to consider rolling them into one new pension or leaving them there.

I would do a full tax review as well to ensure you are claiming for everything

Also in terms of saving for the kids future, if they can live at home and not go to college away, then it is not expensive. Regardless, I'd look to start the ball rolling using the Childrens Allowance into some sort of regular payment plan but you may need to get a Financial Advisor to help you with that

 

[Fibbernacci]

Is your spouse due to turn 50 this year? If so he could contribute the full 30% for tax relief.

 

[PickerUpper]

Excellent advice, thanks all.

I think you've all clarified that we need to get on top of all the pension info and see where we stand. I know I'm only adding about 15% AVC for myself and as we're both turning 50 next year, we can both absolutely add more to pensions.

@Clamball, you're right, we don't have a budget- for now or for retirement so that will probably be a good place to start, along with checking our PRSI entitlements. We've both worked in Ireland our whole careers so should be fully paid up ( I hope).

As for financing the car, we needed a bigger one as the kids grew so we paid half from savings and financed half over 2 years to keep some emergency cash, but yes, that cash is built up again so we should just clear the loan. It only has 6 months left anyway.

@Peanuts20, we live close to a major university so in all likelihood, the kids will go there, or close enough, to live at home for college so that reduces the costs significantly.
The Children's Allowance does just go into general spending now, so I should just move it into a dedicated account so that's a good shout.

Good to know we're not wildly off track, just a bit aimless but now have some good ideas to work towards.
Thanks

 

[conor_mc]

The Children's Allowance does just go into general spending now, so I should just move it into a dedicated account so that's a good shout.

You have 5 and 7 years until the kids go to college and as you’ve since added, they’ll probably go locally. I don’t think you need to save for this tbh. You should easily be able to cover it from monthly income on the basis that car loan will be long gone (and hopefully not replaced again later!), mortgage can be cleared by then with a little overpayment towards the end if necessary, you’ll likely already have covered private school fees from income, and your existing private pensions can probably be tapped from age 50 in a real pinch.

Instead, focus on investing via maxed-out AVC’s x2, and clearing down your mortgage is a better option imo than “saving” children’s allowance (by saving, I mean putting on deposit at low interest rates).

If looking for a starting point re budgeting, I simply use the template that comes with Google Sheets. Can’t seem to change the $ to €, but other than that I find it useful and easy enough.

 

[ClubMan]

The Children's Allowance does just go into general spending now, so I should just move it into a dedicated account so that's a good shout.

You need to look at the household finances - incomings, outgoings, debts, savings, investments, etc. - holistically rather than as "silos".