Moneymakeover Is Early Retirement Possible

S

sreeni

Guest
Personal details

Your age: 48
Your spouse's age: 46
Number and age of children: 2 (20 & 22)

Income and expenditure
Annual gross income from employment or profession: €85k
Annual gross income of spouse/partner: €12k

Monthly take-home pay: €5100 me + €1000 wife

Type of employment - e.g. Employee or self-employed.
Employer type: Both private, my wife is part time

In general are you:
Saving about €3k a month after tax
Saving €2.8k a month into pension (employer+avc)

Summary of Assets and Liabilities
Family home value: €400k
Mortgage on family home: €0
Net equity: €400k

Cash: €25k
Total pensions: €370k
Company shares : €25k
Personal investments: €95k
Buy to Let Property value: €0
Buy to let Mortgage: €0

Total net assets: €915k


Family home mortgage information
None

Other borrowings – car loans/personal loans etc
None

Pension information

Old employer pension €112k
Old employer pension €63k
Current employer pension €130k
PRSA €65k

Buy to let properties
None

Other savings and investments:
€95k in a large basket of various funds/individual shares. €25k worth of shares with current employer.

Other information which might be relevant

Life insurance: None


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

After a lot of hard work my wife and I have gotten ourselves into a good position. We recently paid our mortgage off and our youngest will be out of college in 2 years (we have money set aside to help not included in this). With no mortgage/loans I have been able to max my contributions to savings/pensions. In two years time I will turn 50 and am wondering is retirement possible? If I work for the next 2 years, save at the rate I current am at and add a little growth, I expect to have net assets of about €1.1m.

My wife wants to continue her part time job.
At 50 I will have 30 years qualifying prsi contributions for the pension.
I have read at 50 you can start drawing down a pension from a pension with a former employer, has anyone done this?

Would be especially interest to hear from anyone who has been in the same boat as me.
 
I don't understand this:
sreeni said:
We recently paid our mortgage off and our youngest will be out of college in 2 years (we have money set aside to help not included in this).
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Help with what? Why isn't it included in your money makeover? Is the other child working? Living elsewhere?
sreeni said:
Monthly take-home pay: €5100 me + €1000 wife
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Are you sure?
This calculator suggests that the household take home should be c. €6K without accounting for pension contributions that you (both?) are probably making?


As ever in such situations you need to know that your normal household expenditure is and is likely to be in retirement in order to make plans.

Moneymakeover - Household Budgeting Comparisons?

Not sure if the correct place... Life has been in (financial) flux for the last 4 years (house purchased, wedding, new baby, mat leave) but 2025 has brought some stability so I have had a look at our income and expenses. I track both pretty well. We both have decent incomes, don't live...
www.askaboutmoney.com
sreeni said:
I have read at 50 you can start drawing down a pension from a pension with a former employer
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Depends on the nature of the pension.

Early retirement - pensionsauthority

Most pension arrangements in the private sector permit members to retire early in certain circumstances. However, the benefits you receive are likely to be lower than they would otherwise be at normal retirement age.
pensionsauthority.ie
sreeni said:
has anyone done this?
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I'm accessing some of my main PRSA pension early in my late 50s.
sreeni said:
In two years time I will turn 50 and am wondering is retirement possible?
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Retiring at 50 with only €370K in pensions and c. €145K in non PPR non pension assets seems ambitious to me. But a lot depends on your lifestyle and regular expenditure...
sreeni said:
If I work for the next 2 years, save at the rate I current am at and add a little growth, I expect to have net assets of about €1.1m.
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Are you looking at your own assets in isolation from your wife's rather than looking at the household situation holistically?

Why do you want to retire so early?
 
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What are your projected annual expenses in retirement?

€600k could reasonably be expected to support expenditure of around €20k a year, adjusted for inflation, for 30-35 years.
 
sreeni said:
Annual gross income from employment or profession: €85k
Annual gross income of spouse/partner: €12k

Monthly take-home pay: €5100 me
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With 85K income, I am really surprised that your take home pay is €5100 after your pension contributions. Your take home pay seems high too me. How much are you personally contributing?
 
According to the figures given, you basically live on 36k a year. Are you sure this cover everything? Car, house maintenance... It seems quite/very low to me.
Based on you maxing your contributions, your net income should be closer to 5K a month (as a household). With 3k saving, it's 2K a month for living. Are you sure your figures are correct?
 
CharlieMac said:
Including the value of your family home in this?
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I agree entirely with this viewpoint, but I would note that if the OP follows the MM Template, it kind of leads to this: asking for a list of all assets, all liabilities and then Net assets.
 
I don't want to start another "Is your home an asset?" debate but... well it's hard to avoid.

Personally I just wouldn't include the value of my home for purposes of figuring out do I have enough money to live on in retirement. Unless I was planning on selling it.

Certainly a PPR can generate income, people can rent out a room in their retirement.
 
sreeni said:
If I work for the next 2 years, save at the rate I current am at and add a little growth, I expect to have net assets of about €1.1m.
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You’re including your 400k home in this number. In the FIRE community, you would subtract this from your net assets to get your financial independence number. This is the number you need above €1m really, so you’ll be 400k short I’m afraid. Your wife’s part-time income isn’t really enough to make up for this, plus you’ll be selling yourself short on your COAP.

In reality, I think you’ll need another 4-5 years of working after 50 to make it comfortable.
 
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ClubMan said:
Can you explain this please? Does the FIRE community identify €1M as some significant figure? In all cases? Why? Seems a bit arbitrary?
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No, that’s more my own opinion of a very rough lower bound, based on the likes of that recent report which guides something like 40k per single, 60k per couple - think it was the pensions council published it?

The FIRE point was just not to use “net assets” since your home value can’t be encashed for income (okay, maybe in extremis).
 
conor_mc said:
No, that’s more my own opinion of a very rough lower bound, based on the likes of that recent report which guides something like 40k per single, 60k per couple - think it was the pensions council published it?
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Ok, thanks for the clarification. I presume you mean this report?

Pensions Council: "€33k a year pension needed for 'comfortable' retirement"

https://www.rte.ie/news/business/2024/1218/1487073-pension-living-standards/ A single person would need a pension of €33,600 a year, and a couple would need €43,200 a year, in order to have a "comfortable" retirement. The figures are contained in a new report on Irish retirement living...
www.askaboutmoney.com
That and an analysis of ones own household expenditure is probably a good place to start for someone trying to understand how much they need annually and into the future in order to fund their retirement and preferred lifestyle.
 
ClubMan said:
Ok, thanks for the clarification. I presume you mean this report?
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That’s the one, thanks @ClubMan.

The €1m figure I proposed is just a really rough lower bound, but for the numbers posted by OP (income of €6,100, monthly savings of €3k, meaning expenses of approx 3k per month) with kids all but grown and college for youngest funded elsewhere, it sounds about the right ballpark.
 
1m is also referred to in the Epic Retirement Book which is an Australian book, and online community. It’s the estimate the author refers to for completely self-funded retirement.
It seems to have acquired a magic status judging by the references to it there.
 
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