Moneymakeover Is Early Retirement Possible

This might work well if you emigrated to Spain and pulled a rent off the Irish home to cover a cheaper rent in Spain. That way you would actually be using the value of the Irish home along with an overall lower cost of living. I think the numbers here are a bit low for Ireland. Higher pots compound better for obvious reasons (but may get hit harder by income tax).

If you think about the critical intersection of further compounding vs years to fund, even doing 2 extra years would make a massive difference to your outcome. The year you turn 50 you can up the contributions from 25 to 30%.

Also, as an aside, it's a great idea to get your pensions to at least 800k so you can take the full 200k tax free lump sum which to the early retiree will be super important for reducing tax liability annually.
 
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Don't think retiring in 2 years is realistic. Your current pension pot is 370K. Being optimistic, I think your pension in 2 years may be worth 500k. You won't be able to access the state contributory pension until you are 66.

So in 2 years time at the age of 50, pulling 4% from a 500k pension pot gives you an annual income of 20k. As you pull from the pension the principal sum, I suspect, won't change a huge amount. After management fees and inflation, I view it is prudent to calculate annual pension pot growth at 5%. Your pension pot will hover around 500k, or slowly fall from that amount, over the next number of decades.

20k now does not buy much over 1 year. It will be even less in 10 years, 20 years, and 30 years time. Also because of this, it would be unwise to take a 25% tax free lump sum in 2 years. Doing that would lessen your pension pot and the total compounding amount in the years ahead.

Yes your wife works but her pay is small.
Yes you have cash savings but it is only 25k.
Yes you have stocks but the tax due will be punitive.
Yes you have a mortgage free 400k house but this is not a house you can downsize from and also gain financially.

Financially you are in a strong position but you are too young to retire. As others have pointed out, getting your pension pot to a million should be the target. Hang in for another 7 years whilst maxing your contributions and you could be there or thereabouts.

Who knows, maybe in your mid/late fifties, you might even be made redundant and get a payout. Discussion for another thread but worth considering. That is how I would like it to go for myself - well funded pension and a payout from redundancy in my mid/late fifties...one can only dream.
 
Where have we ended up, with regards to the debate about including your home as an asset that can contribute towards retirement ?

While we all need a place to live, the ability to rent a room and generate an income, can't be ignored. Likewise, downsizing can release equity, or a "life loan" also facilities equity release.
 
MrEarl said:
Where have we ended up, with regards to the debate about including your home as an asset that can contribute towards retirement ?
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Maybe needs to be discussed here and that thread "promoted" to being a key post?

Should your home be considered an investment diversification?

I question the idea that your home is an asset in an investment portfolio. Are your legs also an asset? Diversification means that if one asset falls maybe another will do well. Your home may rise in value but you still have to live in it. If you want to think of it as an asset then think of...
www.askaboutmoney.com
 
MrEarl said:
Where have we ended up, with regards to the debate about including your home as an asset that can contribute towards retirement ?

While we all need a place to live, the ability to rent a room and generate an income, can't be ignored. Likewise, downsizing can release equity, or a "life loan" also facilities equity release.
Click to expand...
I think you've answered your own question. You only count the value of your home as an asset that will contribute towards retirement if you intend to expect to monetise it in retirement.

Obviously everybody's circumstances are different, and people's tastes and preferences differ, but I think not many people who own their own homes aim for a retirment in which they live in a share house. For most retirees, taking in a lodger would not be Plan A. It might be something they would consider resorting to if Plan A failed.

Equity release at some point during retirement might appeal to more people, especially those who have no children and no desire to preserve an inheritance for anyone.
 
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