Couple both Aged 46, want to retire at 51

S

SqueezedMiddle

Registered User
Messages
50
Age:
46

Spouse’s/Partner's age:
46

Annual gross income from employment or profession:
65k

Annual gross income of spouse:
62k (Civil Service)

Type of employment:
One Multinational, One civil service (25 years so far)

In general are you: (a) spending more than you earn, or (b) saving?
Saving

Rough estimate of value of home:
350k

Amount outstanding on your mortgage:
€50k

Other borrowings – car loans/personal loans etc:
Investment property €20k left

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

Savings and investments:
20k in Savings and investments

Do you have a pension scheme?
Me: 280k - contributing the max 25% to it.
Spouse: Civil service pension plus AVCs of about €700 PM (AVCs currently worth about 50k)

Do you own any investment or other property?
Yes
Apartment. Worth €150k. 50k left on mortgage. Rent is €900 pm due to rent control, market rent would be €1200. Thinking of just selling this what with the rent control and treatment of landlords etc.

Ages of children:
1 child aged 5 years

Life insurance:
Pay about €250 pm in total for 20 year term life insurance. 15 years remaining on it.
Basically if either of us kick it the other gets about €1M.
Health insurance with VHI for the 3 of us paid for by my employer.
Also pay small amounts for mortgage protection insurance.

What specific question do you have or what issues are of concern to you?
Basically we are both sick of working the amount of hours and then paying such a high rate of tax. We would both like to just retire in 5 years, when we will both be 51 and our kid will be 10. I see my parents both worked themselves into their mid 70s with little choice and it leaves a mark on you. We want more family time and time to ourselves than working allows.

We pay any cash we have left off the mortgages and they should be totally paid off by 5 years time. And also there should be enough money but away for education etc for our kid.

After that we would like to retire to do as we please. No interest in working after that age, just want to enjoy ourselves and spend time with our families.

At the moment we are comfortable and paying AVCs and mortgages and still have enough money left to take a few holidays a year and pay off more of the mortgages. We are never stuck for money. Cars etc are bought outright whenever we need to buy one. We never take loans apart from the mortgages.

Ive said this to some friends and they think its impossible.

After all of the extra mortgage payments, plus regular mortgage payments, AVCs, tax etc we get by very well on about €3000 PM. So I think if we could get €3000 PM or close to that we would be very comfortable. More would be great too, dont get me wrong. I just dont know if we can achieve that on what we have put away.

Is it possible for us to retire in 5 years using the pensions we have at the moment?
If not is there anything we could do to get there?

Thanks in Advance.
 
Well none of us can say with any certainty, but hear in Switzerland where the state pension is extremely low, advisers use the following rules of thumb:
- You need about 60% of current income to live comfortably in retirement
- Assume your asset portfolio will generate about 2.5% in income
You seem to be a very long way from those figures.

I think you might be able to live very frugal on your figures, but would it be enjoyable? I don't know.
 
Can you draw down the pensions you have at 50? If so how much are they going to pay per month? I'd imagine that is the deciding factor.

I am mid fifties and can't draw my pension until 65, out of work now a few years and it's no fun living on a very tight budget, have a small self employed income but not coming near what I would like for comfort. If I could draw my pension it would make all the difference, then cars/holidays etc would be no difficulty.

Can you reduce your hours? Best of both worlds. I'd like to be working again but really have no interest in working 5/6 days a week, 3 would do nicely :)
 
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A rough estimate of your spouse's pension prospects at 51 - on the assumption that she is in a post- 95, Class A PRSI public service scheme. On the basis of her current salary and with 30 years service at 51, her actuarially reduced pension would be very approximately €9000 per annum and a lump sum of about €58000.

Her State Pension would not kick in until 68 - and it would be at a reduced rate unless she signs for, and qualifies for, credited contributions in the meantime.

Under current rules she would also be eligible to receive a supplementary pension from her public sector employer from age 60 to state pension age (Without going into the rules in detail - essentially that she is neither receiving, nor entitled to receive, a Social Welfare payment and is not engaged in any gainful/insurable employment). Roughly, this should be about €9000 pa.

Presumably, an option would be for her to put her AVCs into an ARF and draw these down, perhaps to bridge the gap to 60. The draw-downs would be subject to tax and Class S PRSI. But that might leave her a bit thin later ? Or the lump sum might cover this gap ?

Anyway, a very big decision. Good luck!

EDIT : Just now noticing that your spouse probably is not in a Class A PRSI Public Service scheme - more likely Class D. If not then the calculations would be different and State Pension would not be a factor. Can you clarify ?
 
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Thanks for your replies.
We figured we could live on the same amount we easily live on now. We do not actually need 60% of our current total income at all. Most of our current total income is spent on things that won't be there when we retire. Eg avcs , mortgages, mortgage overpayments. So we won't need to find any of that anymore for a start. And we extremely comfortably on what would be a lot less than our income actially is at the moment.
House has been just renovated so ylthat won't be coming up.for a long time either.

Maybe it's only a dream but it would be nice.

I just checked again with my wife and she is actually in the civil service for 26 years at the moment and is on the old system. She will have no state pension. I'm not sure anyone will in a few years anyway.

Im hoping not to need to draw down my pension for a few years into retirement either. There will be enough in savings to cover us for a few years in case pension payments don't come. Ideally it would.be nice to have an arf instead of an annuity, but I don't know if that will be allowed for us.

We are going to go to a financial advisor, but thought we would like to get some.food for thought here before that as have seen some great advice while lurking over the years.

Neither of us for our own reasons want to even work part time after retirement. So retirement will be all in for us when we do.
 
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It's a point people often miss. The industry pushes X% of income as a target, but typically the vast bulk of one's expenditure is debt servicing and pension funding!
 
Think that €3,000 is a very good number to work off.

Personally I would not consider retirement until children were educated but everyone to their own.

So how do you get to €3,000 per month after tax? That's approx €40,000 pa.

To have any comfort I'd like to have some level of certainty on the income so €40,000 per annum for approx 30 years is a long way off.

But a pension of €10k, with rent of €10,000 leaves a balance of €20k to be funded.
 
I live very cheaply, I budget for €15k p.a., it's not a luxurious life by any means. I have no mortgage or other debts but bills get in the way of fun! Health/car/house insurance being the main ones with the usual electricity/heat/property tax/car coming next, the main ones total 5k p.a. with the smaller ones like tv licence which I just paid coming out of weekly expenses. (When you are at home all the time you use more heat/electricity) On top of that you need to budget a lump sum for replacing car or holidays every so often. I don't buy expensive cars but I'd like one!

3k p.m. for a couple and a teenager in 10 yrs time might not be generous either, no way of knowing what way property tax/water or what else they might think of may go.
 
SqueezedMiddle said:
I just checked again with my wife and she is actually in the civil service for 26 years at the moment and is on the old system. She will have no state pension. I'm not sure anyone will in a few years anyw
Click to expand...

So at 51 your wife should qualify for an actuarially reduced pension of about €16000 and a lump sum of about €61000. As its the old system there is no eligibility for a supplementary pension or a state pension. She should be able to transfer her AVCs into an ARF at retirement - she will have to make the decision then(presumably amounting to €100000 + at 51 ?). With no state pension to fall back on later she will need to consider long term more carefully. I've no idea about your own pension.
 
Gordon Gekko said:
It's a point people often miss. The industry pushes X% of income as a target, but typically the vast bulk of one's expenditure is debt servicing and pension funding!
Click to expand...

True, but for most in early retirement, spending actually goes up as the couple have time to spend it and want to do stuff. An active couple moping about the house trying to life on reduced income may not be very enjoyable.
 
Qualifying for a pension at age 51? Are we sure about that?

Other than on ill-health early retirement grounds, typical PS pension schemes don't pay out at age 51 AFAIK.
 
We will have to live on savings and investments until pensions start paying out.
I'm not sure what age that would be for us.
Arts would be great if we can get them.

Hoping to have zero debts at that age and a nice pot of savings. At the moment we live off less than €3000 per month and we wouldn't exactly have a paupers lifestyle.
Basically we want for nothing but quality time with the whole family at the moment.
When we do start drawing pensions, both should be able.to get lump sums too.

I'm 100% certain that if we can even managed €30k a year we will be very comfortable. Sure we are basically living on only one of our wages at the moment and saving and paying down mortgages from that. The rental income all goes to tax and off of mortgages too.

The children's allowance has always gone into a separate account. That plus a little extra put away should take care of education needs.

It would be really nice if we could do this because the last couple of years we were both working very long hours and paying for childcare too. Only for half our extra income to go in taxes. My company even said toe that they now have a new policy of not paying for overtime because they can't afford it, but we are required to do it. I got a legal advice and it would appear that people aren't required to work overtime if they don't want to. So now we have both decided no more overtime beyond a couple of hours now and then. And now that there will be minimal childcare costs, we should be able to put some more money away for this dream too.

We just need to figure out does what we are doing bring us to €30k at 51 if we stop working. If not we need to figure out what age we can do it at. As I said, it may be Impossible, but it would be a dream come true for us.
 
Protocol said:
Qualifying for a pension at age 51? Are we sure about that?
Click to expand...

Absolutely sure - for Public Servants on the old Class D Scheme or on the post 1995 Scheme with a preserved pension age of 60 (ie eligible to draw pension from 60 without actuarial reduction). This is from the Superannuation Handbook :

Eligibility
13A.2 An officer who
(i) has completed two years’ qualifying service (see Chapter 8) and
(ii) at date of resignation is aged at least 50, if a preserved pension age of 60 applies
or aged at least 55 if a preserved pension age of 65 applies, may opt to apply for Cost Neutral Early Retirement in lieu of receiving preserved benefits.

Actuarial Reduction:


Age 51 Pension 65.1% Lump Sum 83.9%

Age 52 Pension 67.9% Lump Sum 85.5%

 
Gordon Gekko said:
It's a point people often miss. The industry pushes X% of income as a target, but typically the vast bulk of one's expenditure is debt servicing and pension funding!
Click to expand...

I cleared my mortgage at age 50 and retired at age 50. I am now 65 and my pension has just kicked in at €400 per week. Next year I will qualify for the state pension. My wife may qualify for some similar pension.
I married young, had children young so they were all sorted at the time I reached 50. I can absolutely assure you that not having any debt helped a great deal. I had about €200k in savings at age 50. We still have the same cars as we had when we retired.
Food, utilities, healthcare, Insurance, Property tax, holidays covers us for about €20k per annum.
I knew that I would inherit something during the past 15 years from my parents. I did. I have not touched it since I got it 4 years ago. I was also aware that I could downsize my house, a couple of steps, if needs be. I have not had to do this. We have lived well and had lots of great holidays over the last 15 years. We shop around and get the best deals on everything we do. This is not a chore, it can be fun.

I have done most of the DIY myself over the years and will continue to do so. We could spend about €60k tomorrow on upgrading our cars, carpets, kitchen etc. We will do some of this but at a certain stage in your life you are not interested in this sort of thing, I prefer comfort most of all. We will make do until we have to. However if we have to, we will spend the money on these things.

Having debt out of the way, children sorted, inheritance, savings, and possibility of downsizing our house made it possible for us.

We have never craved new cars, bling, expensive clothes, expensive restaurants, expensive gadgets, that sort of thing. If you do it could be a problem into the future.


I
 
I think you can access your avcs at age 50?

Couple of points

Would you consider keeping rental apartment? That would link you into inflation and property values are increasing.

The rental controls are annoying but you could do a major renovation and get market rates that way.

By the way could you not reduce your working week to 4 days per week?

And your wife can retire because she can access pension
 
Thanks for that early riser.
I think I am.alllwed to draw my own pension at 55. I'll have to check it out.
I suppose if the worst came to the worst we could both hang on til 55.
Not much point in one of us retiring without the other as we wanted family time.

We might both do parental leave at the same time and see if we enjoy that. We could call it a pre retirement excercise :)

I was just emailing a friend living in Spain who retired at 53 about 3 years ago. He says it's the best thing he ever did. Said he's living like a king on €1500pm. Now we wont be moving to Spain so might be more expensive here.

Thanks guys.
We were toying with the idea of her retiring first but she doesn't want to unless we both do it, which is nice.
Our kid still has a bit of growing up to do so comes first anyway, so that will require budgeting. After that though the world is our oyster. We will have no inheritance so can't really count on that.

I have configured our house so if need be we could have a lodger in one half with their own 1 bed apartment if we need to. It's wired up for kitchen and all. Dont the really want to go down that road though. That's just for emergencies. Could do airbnb too if we needed.

I had planned to keep the investment property but it's more of a liability with the new rules for rentals. I really don't want the risk of something going wrong and the rent control was the nail on the coffin. Controlling it so far below market rate is wrong on so many levels. God knows what's next. They'll probably stop me from ever selling it.

I've given the tenant notice that their part 4 is ending and they have to move out. I was going to just sell it, but it's in a good area and I might talk to the agent about short term let's instead and hang on to it for another five years or so. Maybe things will be better for investment property then but I doubt that it.
 
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moneymakeover said:
I think you can access your avcs at age 50?
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You can - if you are simultaneously retiring from your main scheme.

More generally - I think Laramie made some excellent points. You(as a family) need to be sure of what you are expecting from retirement, what sort of lifestyle suits you and whether this is feasible. How easily do you find it to fill time comfortably ? Some people retire with loads of money and hate it. You could easily spend far more in retirement than when working - or far less. There are other factors to consider than just the money. But it is one important factor.
 
moneymakeover said:
Would you consider keeping rental apartment? That would link you into inflation and property values are increasing.
Click to expand...


SqueezedMiddle said:
I had planned to keep the investment property but it's more of a liability with the new rules for rentals. I really don't want the risk of something going wrong and the rent control was the nail on the coffin. Controlling it so far below market rate is wrong on so many levels. God knows what's next. They'll probably stop me from ever selling it.
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Surely you should keep the investment property as a way of diversifying your income in retirement. There is pressure on landlords now true, but rents have risen significantly in recent years. Taking a long view, rental income has been very good over the last decade. Much better than earned income.[/QUOTE]
 
cremeegg said:
Surely you should keep the investment property as a way of diversifying your income in retirement. There is pressure on landlords now true, but rents have risen significantly in recent years. Taking a long view, rental income has been very good over the last decade. Much better than earned income.
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[/QUOTE]

I hear what you are saying but the risk of a bad tenant is too high. The amount of friends I have spoken to recently who have tenants that are taking the p and costing them a fortune now is unbelievable. It's like a new sport now to screw the landlord. And to make it worse, both tenants and government are in on it.
 
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