Moneymakeover Mid 50s - can we retire?

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Albufeiralegria

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My age: 56
Spouse's age: 57

No children

Income and expenditure
Annual gross income from employment: €210k
Spouse annual gross income: €20k

Monthly take-home pay: €7k (after AVCs)
Spouse not contributing to pension

Type of employment: Employee
Spouse type of employment: Self-employed

Both savers. I’m making AVCs to maximum threshold, and saving €2k per month to BOI regular saver @ 3% AER
Spouse not contributing AVCs or saving

Summary of Assets and Liabilities
Family home value: €700k
No mortgage, recently refurbed

Home in Portugal: €400k
No mortgage, not rented

Cash: €750k in various deposit and State Savings accounts
Defined contribution pension fund: €760k
Spouse defined contribution pension fund (from previous job): €360k

Total net assets: €2.97m

Other borrowings
No borrowings, all credit cards paid in full monthly

State pension contributions to end 2025:
Me: 1,522
Spouse: 1,377
Planning to use ARF for continued contributions to age 65

Other information which might be relevant
Planning to sell the property in Portugal in 15-20 years, when maintenance/hassle might become difficult

We currently spend €55k/year, including outgoings on both properties

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

Can we afford to retire early next year?

Although our net worth looks good, I’m concerned about the impact of tax and inflation on the gross figures over such a (hopefully) long retirement period.

We’re acutely aware of the time / health / money trade-off and want to bring forward our “go-go” years, leave my stressful job and spend up to and below the permitted 183 days a year in Portugal, where the cost of living is lower.
 
Yes, I think you have sufficient assets to retire now with a high degree of confidence.

Ignoring the value of the Portuguese property and future State pension entitlements, you have 34 years’ worth of projected expenses @€55k per annum. That’s plenty.

I would have no real issue with keeping your after-tax savings in cash/State savings products, provided you maintain a chunky allocation to global equities in your pensions.

Congratulations, you’ve won the game!

Go and enjoy your retirement- you’ve earned it.
 
Albufeiralegria said:
Cash: €750k in various deposit and State Savings accounts
Defined contribution pension fund: €760k
Spouse defined contribution pension fund (from previous job): €360k
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You will not beat inflation with deposits & state savings. Have you no appetite for All World Equity ETFs?

Is the pension in equities?

If you are spending €55k annually I’d say you are in a great position to retire. Why not get a professional to do Cash Flow Model for you to give yourself increased certainty?
 
Last edited:
Thank you all.

Our €55k annual expenditure should fall post-retirement, and for the first five years we plan to spend an additional up to €10k/year on travel.

To protect our tax-free lump sum, just before the US midterms we adjusted our pensions from growth funds to:
Me: 30% higher target return, 30% medium target return, 35% cash
Spouse: 75% de-risking fund, 25% cash

We’ve engaged a financial planner to model cashflow and advise us on investing and pension management.
 
It’s important to consider all your accounts in aggregate, and not to focus on any one account in isolation.

Taken together, it looks like you have too much in cash/bonds to maintain the real value of your savings over the medium/long-term.

At your ages, I would suggest that at least 50% of your overall liquid assets (pensions and after-tax savings) should be in global equities.

You don’t need to shoot the lights out but you do need to maintain a reasonable allocation to risk assets to keep up with inflation over the medium/long term. You look a little light in that regard IMO.
 
Sarenco said:
At your ages, I would suggest that at least 50% of your overall liquid assets (pensions and after-tax savings) should be in global equities.
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I'd agree with this.

At the moment you have...
  1. Property: €1.1M (37%)
  2. Cash: €750K (25%)
  3. Pensions: €1.12M (38%)
  4. Total: €2.97M (100%)
I don't think that you should have any of your pension in cash or cautious funds.
Albufeiralegria said:
To protect our tax-free lump sum, just before the US midterms we adjusted our pensions from growth funds to:
Me: 30% higher target return, 30% medium target return, 35% cash
Spouse: 75% de-risking fund, 25% cash
Click to expand...
And, in fact, you might want to consider putting some of your cash into equities too as some have suggested above.
 
Albufeiralegria said:
Our €55k annual expenditure should fall post-retirement,
Click to expand...
In which basis. Do you currently have a long commute and travelling costs? Or other high work related costs?
I am not saying you are not ready to retired. However, you are currently spending 5k a month, your budget plans for about 4.5 a month+ travel. Where do you think you will the cut? My thoughts is more free time, more expenses...
 
Noted on the need to move cash to equities – thank you all.

Thanks also for the pointers on using AI modelling and the CGT on the Portugal property sale.

What kind of financial planner and on what basis (e.g. fee based versus commission based)?
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Pension specialist, commission-based; this is from the Voyant report they produced:

Account Type: Unit Linked Account (Exit Tax)
Growth Rate: 4%
Product Fee: 0.65%
Net Growth Rate: 3.35 %
Ongoing Advice Fee: 0.4%
Growth Rate Net of All Annual Fees: 2.95%

Where do you think you will the cut?
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Going from two cars to one, and spending almost six months in Portugal, where costs are much lower (food, social, heat) – obviously, we know that the fixed charges of Ireland remain, but over time we’ve noticed the expenditure difference when we’re in Portugal.
 
You have €3m in assets.

A difference in return of 1% will mean €30k a year, more or less.

Within limits, your expenditure will not be material.

You should be 100% in equities. As you can handle the volatility and even a long-term decline.

Don't forget - you will have two OAPs as well.

And if everything goes really bad financially and your savings and pensions run out, which is extremely unlikely, you will be able to get a life loan on your home.

Enjoy life. Spend money.
 
Albufeiralegria said:
Pension specialist, commission-based; this is from the Voyant report they produced:

Account Type: Unit Linked Account (Exit Tax)
Growth Rate: 4%
Product Fee: 0.65%
Net Growth Rate: 3.35 %
Ongoing Advice Fee: 0.4%
Growth Rate Net of All Annual Fees: 2.95%
Click to expand...
This is meaningless. It's an arbitrary projection and no indication of actual returns going forward unless it's a guaranteed return product which I doubt.
And 1.04% p.a. is expensive.
You could do better elsewhere.
E.g.

www.bond.ie | Low Cost Prisma Funds | Ireland

Unit Linked Funds Ireland Low Cost Prisma Funds Zurich Life Investments Unit Linked Investment Mutual Funds Ireland www.bond.ie
www.bond.ie www.bond.ie
ferga.com

Ferguson and Associates

Pensions (including Self Administered) Life Assurance - Income Protection Savings - Investments
ferga.com ferga.com
 
Sarenco said:
At your ages, I would suggest that at least 50% of your overall liquid assets (pensions and after-tax savings) should be in global equities.
Click to expand...
While I agree in principle, I think there’s a worthwhile caveat at this particular point in time in that Sequence of Returns risk is elevated when equity CAPE ratios are high, as they are today. A reverse glidepath, where you gradually increase exposure to equities rather than all in one go, would be advised. Worth reading Karsten Jeske’s thoughts on the subject. Early Retirement Now | Reverse Glidepaths
 
conor_mc said:
I think there’s a worthwhile caveat at this particular point in time in that Sequence of Returns risk
Click to expand...

The Sequence of Return risk might apply to someone who has just enough to survive.

In this case, this is a very wealthy couple. And the benefits from investing in equities far outweigh the risks.

They should invest 100% in equities.

Of course, the market looks high today but time after time it's shown that we really can't predict the market highs and lows.
 
Albufeiralegria said:
Going from two cars to one, and spending almost six months in Portugal, where costs are much lower (food, social, heat) – obviously, we know that the fixed charges of Ireland remain, but over time we’ve noticed the expenditure difference when we’re in Portugal.
Click to expand...
I'd be interested to know how much you actually save or cut costs by spending 6 months abroad when you factor in all the costs of keeping two properties running and all the associated costs??
 
Im in a similar boat, enough to retire, im 54 and spouse is 56, own consulting company, and I am retiring but will work for couple of months in 2027, to use up 20% tax free allowance.
This way I dont need to touch pensions and wait for sft limit to increase.
Also, i was between contracts last year, was travelling for Jan, but Feb and March was tough, as weather not great and my youngest is still in school, final year now so thinking work 3mts then retire and its coming into summer, and then Sept onwards we are free to travel etc.
Best of luck, and enjoy what you have worked hard to accumulate
 
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