Downshifting/Coast FI Plan


Registered User
Age: 41
Spouse’s/Partner's age: 42

Annual gross income from employment or profession: 55k ( in an ever shrinking field and redundancy looks very likely soon)
Annual gross income of spouse: 44k

Monthly take-home pay: 4700 including Child Benefit

Type of employment: Private

In general are you:
(a) spending more than you earn, or
(b) saving? Full 25% to AVCs and 800pm savings (still enjoy life and pre-Covid travelled a lot, once a year to US and 3-5 trips within Europe/Ireland)

Rough estimate of value of home: 375k

Amount outstanding on your mortgage: 175k
What interest rate are you paying? 2.3% fixed until end of March 2021 with UB, overpay by 3-5k each year in lump sum

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? N/A

Savings and investments:

Cash savings 35k (emergency fund, travel and TBD amount earmarked for mortgage overpayment when fixed term ends in March 2021)

290k USD in US retirement accounts with Vanguard
( 2/3 not accessible until age 59 ½, AMC 0.04%)

Do you have a pension scheme? Yes, Defined Contribution pensions (mine 230k, 25% AVC plus employer 15%) (wife 290k, 25% AVC plus employer 12%)

**Against a couple of voices here in AAM, we continued to contribute max AVC even when we were on 20% tax ( versus higher 40%) for most of the last 15 years and this was one of the best decisions that has helped our net worth. Time in the market was so much more valuable than waiting on the side-lines to be on a higher tax relief.

Do you own any investment or other property? No

Ages of children: 7 and 4 (1400 in childcare, down to 900 in September)

Life insurance: mortgage insurance and Life with work for both

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

  1. Mortgage Overpayment: Anything to be careful of before making a lump sum overpayment to mortgage? Special instructions to the bank? Based on the cost of switching to be approx. €1200-1500 in Dublin, assume that it might not be worth switching to Avant. Also, very likely redundancy in the near future so trying to think ahead and lock in something for the next while. Thinking might be best to stick with UB ( 2.35% for 5 years) and keep making overpayments where possible.
  1. Downshifting: Thinking in a couple more years to quit corporate life and eventually find part-time/less stressful work. That is that if I am not made redundant first, which is looking more and more likely. With Markets at a high and having gone through a couple of major drops in the past 15 years, plan is to have 3 years of annual expenses in cash eventually as first bucket to utilize in case/when both of us are out of work/quit and to help with Sequence of Return Risk until DC pensions are accessible at age 50. Is a 3-3.5% withdrawal reasonable in Ireland?
  1. Market timing/Asset allocation: In our DC plans, we had moved to 80 equities/20 bond mix in the last couple of years ( previously 100% equities) and took advantage of the 30% COVID market drop this year to rebalance. I know its market timing but anytime the stock market has been down the last 15 years, I added to retirement investments or rebalanced with a higher stock allocation and this has served us well. We might tap into one of our old employment DC pans at Age 50 or so. Now that I am getting within 10 years of possibly needing the funds, how often should one rebalance? Can you rebalance too often?
  1. 290k in US Vanguard account : As this was saved and invested before moving to Ireland, assume there is no tax in ROI as a non-domicile unless remitted here? Can’t access most of this before 59 ½.
  1. Investment fees in Ireland: Are the higher fees due to the small size of Ireland? Does the difference between the US and Irish fees go to the broker/advisor? For example, we pay 0.04% AMC for US Vanguard accounts but to get similar Vanguard funds in Ireland seems to cost a lot more.
  1. Access to DC plans from age 50: Assume a DC plan linked to former employment can be accessed at age 50 + and if we both quit our jobs, all DC plans are available from age 50?

Our Tentative Plan:

-overpay mortgage each year

-build up cash to 3 years expenses, to help bridge when both of us quit corporate jobs but before access to DC plans at age 50 (would like to move into community work)

-keep shifting pension allocations when there is market drops.

-Consider throwing more funds into AVC than is tax-relieved.

- Coast FI until age 50 and reassess if we have enough to starting tapping

We already track expenses and can live very comfortably on 30-35k a year if not paying for childcare. Good free schools near us and university will be here in Dublin. Any tips to help us get further along?