Cash surplus, what to do? Early retirement possibility? Middle age couple no children

Early Riser

Registered User
Messages
1,110
As a pre-2013 public servant you may qualify for a supplementary pension if you retire at 65 and state pension age (67 or 68
Correct. Not the full rate of State Pension but proportional to years of PS service, eg, if 24 years then 24/40* State Pension. Same terms and conditions as per spouse apply. Assuming the new interim payment from 65 remains temporary (?).
 

Beachclub174

Registered User
Messages
13
Thanks for the advice regarding the supplementary pension. I don't really think I will work until 65 unless something dramatic changes.
As far as I am aware, you can claim your state pension in any EU member state you are living at the time you reach retirement age. Different terms and conditions will apply depending which country you are living in. For example in Spain you need a minimum of 15 years contributions while in Ireland I believe is 10 years. (other conditions also apply)
 

NoRegretsCoyote

Registered User
Messages
3,013
As far as I am aware, you can claim your state pension in any EU member state you are living at the time you reach retirement age.
No. Not unless you've worked there.

You will get a contributory state pension paid from Ireland to an account of your choice.

You may have to deal with Spanish tax authorities depending on income and residency. You won't have any social security pension in Spain.
 

NoRegretsCoyote

Registered User
Messages
3,013
As far as I am aware, you can claim your state pension in any EU member state you are living at the time you reach retirement age.
No. Not unless you've worked there.

You will get a contributory state pension paid from Ireland to an account of your choice.

You may have to deal with Spanish tax authorities depending on income and residency. You won't have any social security pension in Spain.
 

Bronte

Registered User
Messages
14,165
Thanks for the heads up regarding PRSI if relocating. I was not aware I would have to pay more taxes in Ireland. I assume you could decide to pay taxes in Spain for all your income once you are a resident in Spain.
You’ll pay less tax as non resident if your income comes down. Because you will probably no longer be a higher income tax bracket.

But you need to learn if Irish rental income is further liable to Spanish tax.

You will not be eligible for a pension in Spain. If you were living in Spain in a job that would give you rights to a Spanish pension, plus at the relevant age an Irish pension based on service in Ireland.

You need to figure out what income you would like to be on when you retire. Including if one of you pre deceases the other.

You also need to figure out if you should cash in the CGT exempt property.
 

Beachclub174

Registered User
Messages
13
You’ll pay less tax as non resident if your income comes down. Because you will probably no longer be a higher income tax bracket.

But you need to learn if Irish rental income is further liable to Spanish tax.

You will not be eligible for a pension in Spain. If you were living in Spain in a job that would give you rights to a Spanish pension, plus at the relevant age an Irish pension based on service in Ireland.

You need to figure out what income you would like to be on when you retire. Including if one of you pre deceases the other.

You also need to figure out if you should cash in the CGT exempt property.
Thanks for your info and views.
 

Tuscany

Registered User
Messages
6
You are looking nine years ahead and by then your level of cash will be substantially larger with spouse’s lump sum and the disposal of some properties. You are looking for opportunities for cash while being quite risk averse. Your only major expense could be a property purchase abroad. I’m not clear if your intention is to be owner of a home in one of the countries.

Buying years for spouse may be one of the better options but ironically you will be well able to manage that from salary deductions and that probably will have little effect on savings, other than adding more cash in the form of an increased lump sum for spouse at age 60.

Cost of purchase of 10 years will be around 27k per year (gross). That will yield around 40k extra lump sum on retirement and 13.3k per year pension. Is that value? You are then looking at indexation and life expectancy for both of you to estimate the benefits of the purchase.

Purchasing 10 years’ service I think could cost you net 1,500 approximately per month. Net current take home salary is 7,380 per month and this will increase further when your salary rises by 14k per year in four years. Buying the extra years could be manageable from current take home amount. So that is a quite early decision for you; whereas a lot of the other factors may be less immediate options (other than clearing mortgage).

Buying service for you is much less clearcut because of early retirement implications. You will need your HR to explain that to you.

On state pensions will the surviving one of you be eligible for a pension.

There are big decisions both personal and financial but you are looking nine years. It is reasonable to feel vulnerable as you mentioned. It seems to me that

It would help if you have a clear idea if you are going to have a ppr in at least one country.
You need to clarify as much as you can around state pensions and also implications of Spanish residency on disposal of Irish properties for CGT.
You will be cash and asset rich as your spouse retires but your household salary/pension income drops from165k to over 40k, including spouse’s state pension. Despite your other resources, it’s a serious drop.
You mention about part time work if necessary; is that in Ireland? Instead of retiring at 53 would you consider a career break for up to 5 years and give yourself the option of returning if necessary. You should be able to return on a part time basis. Giving yourself the choice of returning part time to a 60k position might be a better prospect than other part time work maybe at a fraction of the salary in your mid to late 50s. You forego a lump sum of 36k but only a pension of 4.5k but you can still retire after a career break on increased lump sum and pension. Given the likely scale of your cash and other assets this would not have a huge financial impact and it could lessen the feeling of vulnerability.
 

Beachclub174

Registered User
Messages
13
You are looking nine years ahead and by then your level of cash will be substantially larger with spouse’s lump sum and the disposal of some properties. You are looking for opportunities for cash while being quite risk averse. Your only major expense could be a property purchase abroad. I’m not clear if your intention is to be owner of a home in one of the countries.

Buying years for spouse may be one of the better options but ironically you will be well able to manage that from salary deductions and that probably will have little effect on savings, other than adding more cash in the form of an increased lump sum for spouse at age 60.

Cost of purchase of 10 years will be around 27k per year (gross). That will yield around 40k extra lump sum on retirement and 13.3k per year pension. Is that value? You are then looking at indexation and life expectancy for both of you to estimate the benefits of the purchase.

Purchasing 10 years’ service I think could cost you net 1,500 approximately per month. Net current take home salary is 7,380 per month and this will increase further when your salary rises by 14k per year in four years. Buying the extra years could be manageable from current take home amount. So that is a quite early decision for you; whereas a lot of the other factors may be less immediate options (other than clearing mortgage).

Buying service for you is much less clearcut because of early retirement implications. You will need your HR to explain that to you.

On state pensions will the surviving one of you be eligible for a pension.

There are big decisions both personal and financial but you are looking nine years. It is reasonable to feel vulnerable as you mentioned. It seems to me that

It would help if you have a clear idea if you are going to have a ppr in at least one country.
You need to clarify as much as you can around state pensions and also implications of Spanish residency on disposal of Irish properties for CGT.
You will be cash and asset rich as your spouse retires but your household salary/pension income drops from165k to over 40k, including spouse’s state pension. Despite your other resources, it’s a serious drop.
You mention about part time work if necessary; is that in Ireland? Instead of retiring at 53 would you consider a career break for up to 5 years and give yourself the option of returning if necessary. You should be able to return on a part time basis. Giving yourself the choice of returning part time to a 60k position might be a better prospect than other part time work maybe at a fraction of the salary in your mid to late 50s. You forego a lump sum of 36k but only a pension of 4.5k but you can still retire after a career break on increased lump sum and pension. Given the likely scale of your cash and other assets this would not have a huge financial impact and it could lessen the feeling of vulnerability.
Thanks for the comprehensive reply. I still have some homework to do about living in Spain and access to benefits and tax situation.
A career break is on the cards for me soon, will explore the buying NS back for 2/3 years.
 
Top