How we doing and Retirement at 62 or earlier!

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Pulllikeadog

Registered User
Messages
5
Personal details

Age: 52
Spouse’s/Partner's age:49

Number and age of children: 2 ( 14 & 17)


Income and expenditure
Annual gross income from employment or profession: Basic €105K +Bonus ( 15%)
Annual gross income of spouse: €55K

Monthly take-home pay: Self 3650; Spouse Est €2,700

Type of employment: e.g. Civil Servant, self-employed Both Public

In general are you:
(a) spending more than you earn, or
(b) saving? Saving €1,000PM collectively


Summary of Assets and Liabilities
Family home Worth €560K (Mortgage Free)
Cash of €230k (on deposit main bank/CU, interest earned is negligible)
Defined Contribution pension fund: No, but DB estimated annual income@65 € 52K.

AVC’s: 30% monthly Current Value €308K ( estimated at 65 €875k +)
Company shares : ESOS: 48k + RSU’s 40K ( Receive and sell yearly as they vest)
Buy to Let Property : N/A


Family home mortgage information
Lender: N/A
Interest rate: N/A
If fixed, what is the term remaining of the fixed rate?

(No need to tell us the monthly repayments or what term is left)

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?


Buy to let properties: None
Value:
Rental income per year:
Rough annual expenses other than mortgage interest:
Lender
Interest rate
If fixed, what is the term remaining of the fixed rate?

Other savings and investments:

Do you have a pension scheme? In addition to DB AVC’s: 30% monthly Current Value €308K (estimated @65 €875k based on current % rate). Lump sum estimated €162k remainder to transfer to ARF and subsequent drawdown.

OH, received 190k as pension contribution from firm (ceased operations recently), will be invested in PRSA.

Do you own any investment or other property? No

Other information which might be relevant

Life insurance: Company 4X Salary
VHI paid by Company for Family ( Small element of BIK deducted from Salary)


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

Hi all, I have been a keen follower of the group for some time, reading the insightful commentary and suggestions and have finally decided to take the plunge and ask how do you think we’re doing retirement wise, personally speaking I think were on the right track, I have been paying AVC’s for numerous years but only started maxing contributions based on allowable percentages for the last 4. My question is that I wish to retire early, have 62 in mind but possibly earlier, at 62 I’d have accrued a DB of 44k per annum with a lump sum entitlement of 148k with remaining AVCs of 571k in an ARF ( based off company pension provider calculator). I’m hoping that this would be sufficient for myself & OH to realise that early retirement goal. The OH’s PRSA would be additional to this. Anything we could possibly do better or just continue as is! TIA
 
My immediate reaction is whether you are overfunding AVCs. If you will have a full Public Service pension (50% of Salary + 150% of Salary as lump sum with attaching Spouses Pension on death in retirement) then I cannot see how you can fund AVCs of potentially €875k. This would put you in excess of Revenue limits even allowing for pensioning €15k bonus.
Have you checked the AVC level with whoever is managing the AVC plan?
 
Conan said:
My immediate reaction is whether you are overfunding AVCs. If you will have a full Public Service pension (50% of Salary + 150% of Salary as lump sum with attaching Spouses Pension on death in retirement) then I cannot see how you can fund AVCs of potentially €875k.
Click to expand...

Unless they are on Class A PRSI?
 
Conan said:
My immediate reaction is whether you are overfunding AVCs. If you will have a full Public Service pension (50% of Salary + 150% of Salary as lump sum with attaching Spouses Pension on death in retirement) then I cannot see how you can fund AVCs of potentially €875k. This would put you in excess of Revenue limits even allowing for pensioning €15k bonus.
Have you checked the AVC level with whoever is managing the AVC plan?
Click to expand...
Thanks Conan, so when I stated public , I meant employed by a US MNC. When one considers I have already contributed 225k over my employment period which is greater than 20 years, equites did take a tumble hence only 308know and I continue to pay 30% of salary yearly , let’s assume no salary increase for next 15 years , additional contributions would be around 473k added to the 308k would bring total amount to 781k.Assuming as per there calculator that there is year on year growth of 3-4%, is the estimated final amountto far fetched ? Thanks for taking time to respond
 
Pulllikeadog said:
Apologises , an oversight on my behalf , publicly quoted US multinationals , hope that clarifys
Click to expand...
Ok.
So is the pension figure you mentioned inclusive or exclusive of a retirement lump sum?
If your total pension benefits is c50% of Salary (and you can surrender some of that for a retirement lump sum) then you have scope for AVCs (but probably not up to €875k) . Is there a Spouses Pension on your death in retirement if you predecease your Spouse?
If yes to both, then there is considerable scope for AVCs.
I think you need to get your Pensions /AVC advisor to run the numbers as it makes no sense to overfund.
 
Conan said:
Ok.
So is the pension figure you mentioned inclusive or exclusive of a retirement lump sum?
If your total pension benefits is c50% of Salary (and you can surrender some of that for a retirement lump sum) then you have scope for AVCs (but probably not up to €875k) . Is there a Spouses Pension on your death in retirement if you predecease your Spouse?
If yes to both, then there is considerable scope for AVCs.
I think you need to get your Pensions /AVC advisor to run the numbers as it makes no sense to overfund.
Click to expand...
Conan, the Estimated AVC of 875k would be before lump sum is taken from the amount. There is a spouses pension element to the defined benefit entitlement of 50% of annual benefit if I pass in addition to the remaining AVC fund post lump sum that would reside in an ARF which would also pass on , that’s my understanding!
 
Pulllikeadog said:
Conan, the Estimated AVC of 875k would be before lump sum is taken from the amount. There is a spouses pension element to the defined benefit entitlement of 50% of annual benefit if I pass in addition to the remaining AVC fund post lump sum that would reside in an ARF which would also pass on , that’s my understanding!
Click to expand...
Ok, but you are still subject to Revenue limits which says that the max you can fund (between the main scheme and the AVC fund) is
- a pension of 2/3rds Salary (inclusive of a retirement lump sum) or a pension of c50% of Salary plus 150% of Salary as a lump sum
- a Spouses Pension on your death in retirement of 100% of your pension IF you predecease your spouse
- indexation of your pension in payment
You cannot overfund on the assumption that some or all of the AVC fund will transfer to an ARF. Any overfunding beyond Revenue limits goes back to your main scheme.
So you need to be satisfied that the AVC fund will not result in excess benefits which you cannot access. Get your Pensions Advisor/Trustees to run the numbers so you don't overfund.
 
Pulllikeadog said:
Income and expenditure
Annual gross income from employment or profession: Basic €105K +Bonus ( 15%)
Annual gross income of spouse: €55K

Monthly take-home pay: Self 3650; Spouse Est €2,700
Click to expand...
Interesting that despite nearly a double salary the take home is only 1K more.
 
Pulllikeadog said:
Other information which might be relevant

Life insurance: Company 4X Salary
VHI paid by Company for Family ( Small element of BIK deducted from Salary)


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

My question is that I wish to retire early, have 62 in mind but possibly earlier, at 62 I’d have accrued a DB of 44k per annum with a lump sum entitlement of 148k with remaining AVCs of 571k in an ARF ( based off company pension provider calculator). I’m hoping that this would be sufficient for myself & OH to realise that early retirement goal. The OH’s PRSA would be additional to this. Anything we could possibly do better or just continue as is! TIA
Click to expand...
At age 62 will your income then fund your lifestyle, or the lifestyle you plan on having. You'll lose the life insurance and the VHI.

I think the money makeover should have a Retirement Makeover, with sections to deal specifically with people's income and outgoings in retirement. Ideally redoing the OP with those figures. In addition a section on what you plan on doing. Also should be clear if one will get the full state pension.
 
You can do an indicative max funding quote here

I would guess that the current 30% AVCs is within the paramaters as there's an obligation on providers/administrators to make sure that you're not overfunding.

Gerard

http://www.pras.ie (www.pras.ie)
 
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