Moneymakeover 53, Planning for the future

D

Dodger30

Registered User
Messages
19
Age:
53
Spouse’s/Partner's age:
48

Annual gross income from employment or profession:
€125k
Annual gross income spouse:
€25k (works part time)

Type of employment:
Both in the private sector

Expenditure pattern:
We’re both generally 'savers'

Rough estimate of value of home
€500k

Mortgage on home
€115k - Mortgage rate of 2.85% (Tracker)

Other borrowings – car loans/personal loans etc
None

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

Savings and investments:
c.€250k - split between a recent lump sum of €200k, previous savings and some shares.
Not wanting to tempt faith but I'm likely to receive an c€250k inheritance in the next 2-3 years

Do you have a pension scheme?
Current pension scheme - Defined Contribution Scheme - 5% from employee and 5% from employer. Only started in this role recently

I was on a defined benefit pension scheme for 25 years with previous employer. Current estimated pension amount will be €32k per year when I reach 65 (index linked).
I have c€86k in AVCs


Do you own any investment or other property?
Yes I have a rental property current that has a mortgage of €30k. Mortgage rate of 2.95% (Tracker)
I receive €1k rental per month for this property

My wife will be inheriting a house within the next 5 years.

Ages of children:
19 (first year in college)
15 (Junior Cert)

Life insurance:
Yes.

What specific question do you have or what issues are of concern to you?
Looking to make the best use of what we have already saved and hopefully retire in approximately 10 years' time (at 62).

Would like to know how to plan for this retirement age and still have enough to cover third level costs for the kids

We will likely move to a smaller house in a few years' time which should free up some equity and if possible set our kids up on the property ladder via the sale of one of our rental properties

I'm not sure whether to clear my the mortgage on my principal private residence now and invest the rest of my savings or else invest it all and keep paying off the mortgage.

Any investment advice would be appreciated.
 
Hi,
I am already paying Dublin rents for my daughter who is in first year.
I’m not sure what my son will do or where he will go to college.
Thanks
 
Dodger30 said:
I'm not sure whether to clear my the mortgage on my principal private residence now and invest the rest of my savings or else invest it all and keep paying off the mortgage.
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If I was in your shoes, I’d max out my AVC’s first.

The next thing I’d do is max out my partner’s AVC’s, assuming they don’t have any other pension pots (none mentioned). They’ll get relief at 20% but probably draw it down at 0%. Probably small enough money annually but adds up to tax-free income when you activate their personal tax-free allowance.
 
I,d recommend you max out your partners AVCs first. You will have €47k per year from 66 if you get the full state pension in addition. Your current avc and future matches will bridge the gap to that age and start to move you towards €53k at which you would be paying 42% tax on drawdowns. You wife will likely have some zero band and a lot of 20% band to fill. And it will take longer to fill them given her income. You can always pivot to fill up your 53k band at a later date if needed.

Also consider spouses income situation if you were to pass first.

If possible id move the rental income to you spouse to boost her income and pension contribution capability.

Personally I'd also use some of your savings to pay off the mortgage.
 
Gazzar said:
If possible id move the rental income to you spouse to boost her income and pension contribution capability.
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Oooohhh, sorry for off topic... I max out my AVC's but this is only based on my work salary, dont think it includes the rental income of 14400 py?
Thats a bit hhmmm, in the process of evicting / selling now anyway!
 
Colin4444 said:
I max out my AVC's but this is only based on my work salary, dont think it includes the rental income of 14400 py
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Your rental income doesn't count as earned income for AVC purposes tax relief. But having the rental income allows a lot of people to be able to make an AVC against their earned income ie they have the cash available from rental income to pay other expenses and can divert some of their earned income to AVC, which will qualify for tax relief.
 
misemoi said:
Your rental income doesn't count as earned income for AVC purposes tax relief. But having the rental income allows a lot of people to be able to make an AVC against their earned income ie they have the cash available from rental income to pay other expenses and can divert some of their earned income to AVC, which will qualify for tax relief.
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Ah grand thanks, thats OK then :)
 
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