Can i stop worrying abut money?

Discussion in 'Money makeover' started by 52andout, May 16, 2016.

  1. 52andout

    52andout Registered User

    Posts:
    11
    Age: 52
    Spouse’s/Partner's age: 50

    Annual gross income from employment or profession: 0 unemployed
    Annual gross income of spouse: 48k

    Monthly take-home pay 3300 per month

    Type of employment: private sector

    In general are you:
    (a) spending more than you earn, or
    (b) saving?
    spending >income 1000 per month since lost job

    Rough estimate of value of home 500k
    Amount outstanding on your mortgage: 0
    What interest rate are you paying? n/a

    Other borrowings – car loans/personal loans etc none

    Do you pay off your full credit card balance each month? yes
    If not, what is the balance on your credit card?

    Savings and investments:900k savings certs bank deposits

    Do you have a pension scheme? yes ( previous jobs)
    DC and prsas total 650k (not accessed yet)
    DB @ 65 20k per annum

    Do you own any investment or other property? no

    Ages of children: 10

    Life insurance: none


    What specific question do you have or what issues are of concern to you?

    Have i enough to assets to stop worrying about money
    even if expenditure - income = 1000 per month?
    (expenditure = 4300 per month - detailed budget done allowing for everything)


    I think so provided wife keeps her job but welcome views


     
  2. galwaypat

    galwaypat Registered User

    Posts:
    47
    The worry I would have is will I live long enough to spend all my money ,man your in a super poistion enjoy
     
  3. Sarenco

    Sarenco Frequent Poster

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    3,360
    You appear to have a net worth of ~€2.5million @52. Yes, I think you can stop worrying about money.
     
  4. mtk

    mtk Frequent Poster

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    318
    Great position. Probably no need to worry.
    The main risks you face imho are
    inflation impact on bank deposits/savings certs
    DB scheme not funded when you retire
    rising education costs
    partner/wife loses job

    once more well done!
     
  5. North Star

    North Star Frequent Poster

    Posts:
    185
    To echo other posters, it appears you are in an enviably strong financial position. However rather than make an educated guess, we would recommend that you pay a fee to a financial planner to fully map out your financial position both current and projected over the likely remainder of your lives. This should be based on conservative/realistic assumptions. Then you can stress test the plan to see how your finances hold up against any adverse scenarios. These could include partner/wife loses job, long term care cost for either/both of you, material fall in pension/PRSA values due to market crash and also what is probably a key risk, long term impact of inflation.
    This should bring clarity to the question you are asking, which we find is always the key financial question ' Do or will I have enough money to support my lifestyle for the rest of my life?' I suspect the results will be reassuring but there is real benefit in being accurate and quantifying key metrics on liquid assets, net worth etc. especially in the adverse scenarios.
    We find that the exercise provides both clarity and comfort in most cases. It can also help both partners to get a handle on their finances, which is relevant when one partner exclusively deals with the finances. We always recommend that both partners have at least a working knowledge of key financial info.
    Given the sums involved, for a relatively modest fee, I believe such thorough financial planning or analysis would be money well spent, and should confirm that you can indeed stop worrying...
    All the best Vincent
     
  6. 52andout

    52andout Registered User

    Posts:
    11
    [QUOTE="mtk, post: 1473616, member: 41262"]
    The main risks you face imho are
    inflation impact on bank deposits/savings certs
    DB scheme not funded when you retire
    rising education costs
    partner/wife loses job

    [/QUOTE]

    mtk I agree with those points very perceptive of you

    Anyone any thoughts on what i should diversify into from deposits/savings certs?
     
  7. Fella

    Fella Frequent Poster

    Posts:
    265
    Well done on getting into such a great financial position , I'm no expert but would think you have enough.
    You could always sell your house and rent or downsize that would free up more money (Not that I think you will ever need to but it's an option). I'd love to get to 50's in this position smashing stuff.
     
  8. Sarenco

    Sarenco Frequent Poster

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    3,360
    If I was ever lucky enough to find myself in your enviable position, I would make sure that the bulk of my PRSA/DC fund (perhaps even 100%) was invested in globally diversified equity funds.

    Beyond that it really doesn't matter what you do - you have more than enough in reserve to see you through the balance of your life based on your projected lifestyle/expenses.

    Why take unnecessary risks? Your fixed income investments will probably keep pace with inflation and beyond that does it really matter?

    If you want to start thinking about investing for your kids then you might want to think about transferring €100k, or so, from your state savings products into something like Foreign & Colonial Investment Trust (given that you will have a very low marginal tax rate) but ultimately it's probably not going to make a huge difference to your lifestyle or even your legacy.

    Here's a link to a similar question posed by a poster that was looking for opinions as to whether they could comfortably retire with around half your net worth that you might find helpful:-
    http://www.askaboutmoney.com/threads/retiring-at-50.197488/
     
  9. 52andout

    52andout Registered User

    Posts:
    11
    I agree with that idea and think most but not all are . i will check

    Again I agree.

    v useful read thanks
     
  10. mtk

    mtk Frequent Poster

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    318
    No problem "52" your welcome
    Even despite these risks i reckon you will be fine
    Have you anyway to earn money working part time as presumably you got this far with some skill i am sure!
     
  11. RichInSpirit

    RichInSpirit Frequent Poster

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    561
    That's the trouble with money. Not enough of it is bad enough but too much of the stuff is much worse.
    All the headaches of trying to mind it and stopping other people from getting their hands on it can be most worrisome.
    I suggest giving a big portion of it away to charity and lift the weight off your shoulders.
     
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  12. moneybox

    moneybox Frequent Poster

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    715
    Good idea but in reality few would do it.

    I hope the OP will find some other worthwhile aim in life now that he has achieved financial independence.
     
  13. Andy836

    Andy836 Frequent Poster

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    210
    You're 52 and retired - well done and congrats i think.

    Your cash should remain in deposits (spread across a range of banks under the deposit insurance limits) or govt bonds. You should not be going near any equities/growth funds when you've no future income.

    As noted your main risk is inflation. You could hedge this by investing some in inflation indexed govt securities. there's TIPS here in the US and Index Linked Gilts in the UK but I've never heard of an irish one - perhaps you could buy those of another larger euro zone country (I'm sure they're available) - although given how badly ireland manages it's economy I'm not sure german CPI would bear any resemblance to irish cpi.
     
  14. Dan Murray

    Dan Murray Frequent Poster

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    267
    Last edited: May 18, 2016
    3 comments - 2 serious, 1 not

    1. Given that OP is Scottish, he'll probably never stop worrying about money!

    2. I'd be very interested in seeing a generic example of what North Star is proposing. It would be great to see such an example - and to see what others think.

    (Personally, whilst I believe that such an exercise would be very useful, I'd be sceptical regarding the degree with which one can rely on such models. For example, in the late 90s, I received loads of actuarial models regarding the health of the pension fund in my company. Within a few years, the solvency level had gone from in excess of 150% to less than 80%. Explanations provided being that what occurred, at that time, represented almost 3 standard deviations from the central expectation or a c. 1 in a 100 year event. Roll forward to 2007/8 and guess what, we get another c. 1 in 50 year event. The pension plan needed to be wound up in 2010 - even then the projections for keeping it going were based on interest rates that look ridiculous at this stage.)

    3.
    Maybe Andy is right! But - the certainty of his views is a little alarming - as is the extent of his conservatism which seems to me that he may well be replacing one risk with another. Maybe a middle ground would be more appropriate?
     
    Last edited: May 18, 2016
    Andy836 likes this.
  15. North Star

    North Star Frequent Poster

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    185
    Good morning Dan,
    The strength of the modelling is that it helps clarify issues, risks and priorities. It doesnt deliver the outcomes so we fully support your view that you cant rely on the model, and that any of the variables can and will change and as such the model outcomes change over time. It does however really add value to the planning process and forms the basis of an annual review when all the variables are updated and the outputs revisited. Just good practice in my opinion.

    Re your thoughts re a generic example ... a generic example always lacks the impact of personalised analysis.
    What I can suggest to the OP, if they are interested is the following; We do this exercise for them and we waive the fee or it is donated to a charity of their choice, as they prefer.
    The OP can then, again if they wish, give feedback on this forum as to the benefits or indeed lack of benefits if that is the case, on the process. I will leave that with the OP.
    Regards Vincent
     
  16. Dan Murray

    Dan Murray Frequent Poster

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    267
    Hi Vincent
    You can't say fairer than that then (like the guy goes to the doctor unable to say the letter f and t).

    Also, upon reflection, I accept the points you make regarding the merits of the exercise.
     
  17. Andy836

    Andy836 Frequent Poster

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    210
    I'm never sure Dan! Middle ground most likely best but I don't think he should be going near any equities if he's finished his working life.
     
  18. 52andout

    52andout Registered User

    Posts:
    11
    Thanks for thoughtful comments guys and offer from vinny . I think I'll stay off the grid for now thanks .
     
  19. 52andout

    52andout Registered User

    Posts:
    11
    Just few updates
    1) expenses coming in a bit ahead of projected but not enough to worry me
    2) DC Pensions gone to 700k from 650k
    3) Interest rates have gone even lower and savings certs maturing with nowhere to go .
    4)
    This has been bothering me, Any suggestions in voluntary sector with good governance and low expenses/overheads
     
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  20. gnf_ireland

    gnf_ireland Frequent Poster

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    634
    I will happily take them off your hands to ease that worry for you !

    Any interest in going back to study something that you have an interest in, whether it be economics, politics, arts or whatever ? Any interest in exploring a hobby more, whether it be golf, photography, stamp collecting or lawn bowling ? Ever think about getting an allotment and growing your own veg ?

    Does your 10 year old have any interests that you would like to 'piggy back' on so you can do things together and maintain that bond through their teenage years ?

    Being fair, you don't really have many financial worries and I would say you have reached financial independence. I would suggest you do some 'trips of a lifetime' with your family over the next decade, that your child will remember forever.