Have you done the sums on what your eventual pension will be, maximising at your current salary? And will that be an amount that will give you the standard of living you will require if you do the max?
And I really urge you to cash flow plan the next 20 years, with a few scenarios ie all 3 go to college, 1 goes, 2 go etc. And see if your cash flow will support this and also continue maximising contributions. Because I think as most of your wealth is in property, one which is never to be sold/downsized,, the other pretty illiquid, at some stage, you will need to either reduce pension contributions or not fund something else, even with all the discipline in the world.
Our current pension contribution (between us) is 1k per month. If we continue even just that until I’m 68, our online fund value is showing as 621k. That’s without even maxing out the pensions. That’s with 12k a year going to the pensions (albeit including my employer contribution of about 10%). If my wife and I max out our pensions when mortgages are cleared, we’ll have 24k a year going in - 19k from us and 5k from my employer. That’s showing as over 1.1 million.
There is an element of how much is too much too. My wife and I are, to be honest, quite cheap to run. We’re happier with a take away as opposed to an expensive restaurant. Our favourite past time is attending GAA games which is a relatively cheap pursuit to follow. We go on two holidays a year which between flights, accommodation and spending money cost us less than 8k so about 4k per holiday. The apartments we stay in for the week on holidays cost one friend I have what their hotel costs them for a night!
I listen intently to people like Scott Galloway and, as he says, the wealthiest person in the world to him is his father because he spends 50k dollars a year to live happily but has 55k coming in.
I think the bottom line I’m looking at, and this is the decision I made last Summer, is that the house will need to be sold, albeit eventually. Why rush into selling it now though when there are factors to look at:
1. I’d have preferred to have engaged with a financial planner prior to selling it for a period so that I am happy to take their advice re how to distribute the funds.
2. Every month we are knocking more off the mortgage and, at present, prices are only going up. Others may disagree as they have above but the population is rising, we’re building 29k houses per year and we need 92k. I know plenty of people, taking the 30 year olds out of it, between the ages of 40 to 60 trying to rehome themselves that are regularly being outbid on properties.
3. Re the education issue, my eldest is in 2nd year. It’ll be at least another 3.5 years until he’s deciding what to do. Even then, a lot of children in the area attend a local PLC for a year to get a taste of college life before they continue onto college. He may not do that, he may not even go to college. There’s a lot up in the air but it’s still 3.5 years away which means time is there. If he does transition year, we’ve 4.5 years.
4. And, as I’ve said, when the property is gone, it’s gone. At the minute it’s there to at least help one child if they wanted to live in the area. Sell it and it’s gone. Sell it in a few years and hand them 100k each and 100k to ourselves for example. While it’s there, there are still options.
I’m sure people will come back and rubbish those points, which I’ve no issue with, that’s why I’m engaging in this process and I assure you I am taking the comments on board. Take the money now and stick it in a pension will maximise it I’m sure but, based on our lifestyle, do we need to make that decision right now considering the plans we have in place?
