Thanks Gordon. You're right of course, I have decided to pay off the €22k car loans leaving me with say 48k savings. I'm very hesitant to pay off the full amount of the mortgage as you never know when I might need a tax free rainy day fund. So say I pay off €20k off the mortgage , leaving €28 k cash outstanding for maybe , a rainy day requirement .My income requirement going forward , would then be say 50K per anum for next five years including my two boys' education and say €38k after that.You have €70,000 in cash earning you nothing and you have €22,000 of debt costing you 10% a year. That’s absolutely crazy.
Plus you’ve a mortgage of €40,000 that’s costing you 2.9% a year.
You should definitely clear the car loan(s) immediately. And you should clear the mortgage too. That would leave you with €8,000 of savings but would remove a large part of your monthly outgoings.
For the year you turn 61 and subsequent years, you’ll be forced to withdraw 4% of the value of the ARF (increasing to 5% from age 71 or 6% if the ARF grows to €2m or more). But in the interim, you can take as little as you like from the ARF. What’s your income requirement for the year excluding the mortgage and the car finance (‘cause they’d be gone)?
I agree. In my case I can downsize my home a couple of times if I need, so I have that buffer. I am also aware that my defined benefit pension may not last the distance.That’s good to know Isle of Man , but I’d be concerned that anyone with 20 years to state pension age needs to think differently as that 12.5k or 25k if a couple is not guaranteed in that timeframe … it makes retirement planning for more strategic than it is for somebody retiring today.
3) Your net income on €40k gross is about €34k a year
4) You have €1.6m of assets.
5) Your net pay is increasing your assets by 2% a year.
It's not clear to what extent you and your spouse will be able to rely on the contributory state pension.The real question here is not "do I have enough to retire now" but do we or more precisely does my partner have enough??
Have you taken into account that when you're 80 they will still be a young spritely 68 year old with hopefully many years in front of them
Hi Brendan,If you don't work, you can take out about €25k a year from your ARF tax-free. (€25k @20% = €4,950 , your tax credits)
You will pay 20% tax on the next €20k you take out.
I haven't got this clear in my head yet, but I think I am right in saying, that by working, you will be missing the opportunity to take money out of your ARF tax-free.
Brendan
In case it's relevant PRSI/USC will still be chargeable so the €25K will be income tax free but will be €23K net after those deductions as far as I can see.If you don't work, you can take out about €25k a year from your ARF tax-free. (€25k @20% = €4,950 , your tax credits)
You will pay 20% tax on the next €20k you take out.
I haven't got this clear in my head yet, but I think I am right in saying, that by working, you will be missing the opportunity to take money out of your ARF tax-free.
Brendan
I have an ARF. Today worth €1,250,000.
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