Moneymakeover Mid life financial health check…thanks

Yes, with the €6k I meant after loans paid and AVCs maxed. Hoping to pay off the loans sooner than 2027.

We won’t pay off mortgage early, will be finished in 8 years. It’s on a low rate fixed payment.

Why would you not pay the mortgage earlier? It would help your monthly outgoings and ensure you can maximize your pensions, both of you. It might also help then ensuring you can put away money for your children.
The fact that you might receive inheritance soon will help with your retirement plans. However it just somewhat compensate for the fact that up to now you have made very little provisions for this. Once your debts and mortgage are paid, about 200k will be left.
You mentioned that your most expensive years will be until mid-70s. Have you considered when you will retire? Do you plan to work until 66?

It makes no sense to give your children €6k while you have a mortgage and while you have worries about your finances.

Thanks. That makes sense.

Yes, paying the loans and AVCs is the priority. I’m already paying AVCs of about 18% and will increase and persuade husband to do so. Hopefully, over the next 10 years we can make up a bit of ground on the pension front but yes I agree that we don’t have loads of time for years of compounding…and can’t go back in time.

We don’t have any particular age in mind to retire. We did a lot of travelling in our 20s, so would be happy to spend the time closer to home I think. We are under no illusions that we would be going on cruises or anything like that. I’m only just back working after 10 years at home so we will definitely do another at least 10 years for husband, and maybe 15 for me. Would prefer not to work in our 60s in an ideal world, but depends on lots of factors including health.

spotthenovice44 said:

We won’t pay off mortgage early, will be finished in 8 years. It’s on a low rate fixed payment.

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spotthenovice44 said:

Type of interest rate: tracker, variable, fixed.
If fixed, what is the term remaining of the fixed rate? Fixed, 8 years remaining, decent rate

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Not that it fundamentally affects the advice already given above but ... what's the fixed rate and term and what is it likely to revert to when the fixed rate term is up?

I think you need to be realistic.

At the moment, it looks like you are spending around €70k a year, excluding your mortgage.

To maintain that level of expenditure in retirement, you would need combined retirement savings north of €2m.

That’s not really achievable within 10/15 years.

So something needs to change.

Spend less, earn more, work longer - or some combination of all three.

I don’t mean to sound too discouraging - you can certainly make a huge difference to your financial position in 10/15 years.

No it’s not €70k a year on living/bills/childcare/holidays/food etc it’s more like €50k, since we are repaying 2 loans as well as the mortgage and saving €1.5k pm to fund a household repair which is now thankfully at a stage where we can redirect that €1.5k. And that’s with 4 people. Our expenses on that €50k will reduce dramatically when the children no longer require childcare (they are going to state secondary school so fees not an issue) and when they leave home. I don’t think we are anywhere close to needing the equivalent of €70k per annum for living expenses in retirement.

Fair enough.

Let’s say you could retire comfortably on an income (net of taxes) of around €40k pa. Does that sound about right?

That would require a combined pension pot of around €1m.

That might be just about achievable in 15 years if you both maximise your pension contributions and experience reasonably favourable investment returns.

The key point is that you need to really focus on clearing your debts and saving for retirement.

Apart from your mortgage, you are spending 84k a year. Your loans are spending, just deferred. Will you never need to change your car again? Your house loan is also spending. Your house will need work in the next 40 years, perhaps not as extensively though. They are not day to day spending but still spending. My children costs between 1k to 1.5k a month so that is what I exclude for my retirement plan. Note: they might cost less in secondary school but then more in third level.

I suggest that you do a set of a financial projections on all known and likely income and expenditure coinciding with significant changes for future years eg

For the next 2 years, until loans are cleared
Maybe following years until 3rd level may start
Then until mortgages are cleared,
and continue on from there until your 70’s, 80’s etc.

Along the way factor in, as appropriate, an estimate for everything from pension contributions, house improvements, car purchase, education costs etc. Healthcare costs, for example, would be introduced, whenever you are likely to start paying them yourselves. Forget about giving the children money now but see at what stage it would make sense to introduce, based on funds.

Obviously, you will have to reflect, as best you can, your likely regular income and likely estimated expenditure.

As for inheritances, that is for yourself, when you wish to enter those into the calculations.

Obviously, this is far from exact, but at least, it will give you a high level perspective based on known/likely changes in income and expenditure in the coming years.

At the moment, there are so many moving parts and I thought that this piece really showed the need to get more specific.

spotthenovice44 said:

I think the trickiest years for us will be the years between now and mid 70s,

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That's 30 years.

Thanks, appeciate the inputs. This is all helpful.

For the last decade our collective earnings were “only” €70k gross (I was earning zero), only since 2024 did my husband get a pay rise and I went back to work, so we have only had earnings of €190k gross for a year. Which gives me hope for the next 10 years that we will get into a better situation in regard to pensions. We should be able to contribute a significant amount in AvCs and employer contributions soon…

I count us fortunate to have a lovely home/ lots of equity (on paper), and good incomes and definitely not looking for any sympathy.

But Is it too late to ask my husband to join the civil service for the next 10 years? Probably wouldn’t make much difference to pensions now…

Sarenco said:

That would require a combined pension pot of around €1m.

That might be just about achievable in 15 years if you both maximise your pension contributions and experience reasonably favourable investment returns.

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All going well the OP should be able to achieve a pot of €1m on their own by the age of 60, but obviously there's no guarantee. Based on current salary and the employer continuing the same level of contributions the OP will have 620k in contributions over 15 years to add to the current 100k. Factoring in likely increases in salary and fund growth it should result in a very healthy pot.

I would expect a 350k inheritance will help ensure the OP will be able to fund maximum contributions. With three state pensions due and hopefully a significant pension pot for the spouse by then, they should be in a very strong position.