DeepThinker
Registered User
- Messages
- 12
Might be worth reviewing these threads:Can you have too much pension?
Not a direct answer to a question but at your age you need to give some thought to succession. At your wealth level you should seriously consider marriage to avoid a large CAT bill.I’m 55 and my partner is 58. Intention is to finish full time working at 60 for me (partner 63)
Thanks Sarenco. I will look at those threads again.I think you should be maximising your tax-relieved pension contributions.
This thread contains a useful explanation why it makes sense to continue contributing to a pension once it reaches €800k -
https://www.askaboutmoney.com/threads/my-pension-pot-has-reached-€800k-should-i-stop-contributing.211550/?amp=1
How is your pension invested? It doesn’t make sense to hold cash in your pension (which attracts charges) while simultaneously investing your after-tax savings in equity funds.
You are creating a real tax headache by investing in ETFs in that manner.
My suggestion would be to maintain a high allocation to equities in your pension fund and keep your after-tax savings in cash.
Thanks Kilkenny06A few things to consider if you haven't already (I'm not a financial advisor):
- Tax free lump sum is 200k, but you may be able to draw more taxed at 20%.
- If I understand correctly, for a few years you are drawing no income and living off of savings. Have you considered using your tax free allowances & standard rate tax band by drawing an income from your pension?
- I'd also try and keep equities within the pension wrapper to maximise the tax benefits, and keep the lower risk/lower return stuff in the tax free savings, however I'd also look to use the CGT allowance (every bit helps).
- Your net income is 7k, and your savings are 1.5k - is that correct? Do you have a path to get spending down to that 40k level?
Pensions are taxed as income, so by (let's say) withdrawing c. 30k-40k p.a. from your pension you would be paying lower rate tax only on that income/withdrawal. It would seem a shame to me not to take advantage of that lower tax rate (and your tax free allowance).Can you explain what you mean re using our TFAs and SRTB as opposed to not to? I’m not clear on that. Again my thinking was to use our savings as a bridge to the beginning of retirement and leave our pension funds alone. Until 65. What would the benefit of your suggestion be?
Just noting this statement. Separate pension funds don't have to be retired at the same time. You could choose one to retire ahead of the other pots and live off the income from that whilst continuing to grow your other pension pot(s).My combined pension funds are currently valued at €725,000.
The 75% or whatever that goes an ARF will hopefully also continue growing?You could choose one to retire ahead of the other pots and live off the income from that whilst continuing to grow your other pension pot(s).
That would be the plan, I was also thinking that instead of having a plan of saving outside of the pension, why not use one of the pension pots to provide that bridging income (or if they're not big enough, to supplement a lower amount in the less tax efficient savings lower).The 75% or whatever that goes an ARF will hopefully also continue growing?
Don't forget that you pay tax on all pensions including state pension when you retireHi all and a happy new year.
Looking for peoples’ insights into the scenario below:
I’m 55 and my partner is 58. Intention is to finish full time working at 60 for me (partner 63)
My combined pension funds are currently valued at €725,000.
Partner’s are €225,000.
I am making 20% pension contributions and partner 40%. I could afford to pay more (and I know the tax relief limits will permit me to) but we are trying to beef up my partner’s as I am likely to hit the €800k threshold soon and want to max the tax-free lump sum there too as best we can.
Mortgage-free and youngest will be finished College in four years.
No other loans.
€7,000 net income monthly.
We’ve €81k in savings outside a pension wrapper.
We are lucky and comfortable. Not living a particularly flathiúlach lifestyle. Saving circa €1.5k per month. Some into our emergency fund and some into ETFs as described above.
- €28k cash as emergency fund
- €25k in a Zurich Matrix bond
- €18k in a diverse basket of 11 shares which I manage myself via DEGIRO and add €100 to it monthly
- €10k in ETFs. I buy twice a year. €2,500 a time in Vanguard type accumulating funds. Fully understand the deemed disposal complexeties.
All going well my partner will have 40 years of prsi payments by then. I will have around 32 so might need to keep my hand in “work” to keep that up. Or, alternatively make voluntary prsi contributions to max my State Pension.
Ambition is to get off the 9-5/ Mon-Fri treadmill in 2027. Do a wee bit of consultancy myself to top up a drawdown of €40k from our savings for three years. I’m hoping the investments plus additional savings will be circa €120k by then. We can then start drawing my partner’s pensions and State entitlements when hitting 65/66 and then phase mine in as I hit that age.
With this in mind, are we mad saving €1.5k a month and not putting it into our pensions to avail of the tax relief and tax free growth ? My thinking is to diversify a little and also to have cash/reasonably liquid shares and ETFs outside of pensions in case we need it.
Anyone seeing any flaws with this plan?
Can you have too much pension?
DT
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?