Moneymakeover Mid life financial health check…thanks

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spotthenovice44

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Personal details

Your age: 45
Your spouse's age: 49

Number and age of children: 2 (8 and 12).


Income and expenditure
Annual gross income from employment or profession: 105k (bonus of up to 30%)
Annual gross income of spouse/partner: €85k

Monthly take-home pay: 8.5k

Type of employment - e.g. Employee or self-employed.
Employer type: e.g. public servant, private company. Both employed, private.

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving approx €1k per month and contributing 18% to pension (me) and 5% spouse.


Summary of Assets and Liabilities
Family home value: 1.2 million approx
Mortgage on family home: 130k
Net equity: approx 1 million

Cash: 10k state savings & BOI €20k
Defined Contribution pension fund: €100k (me), €30k spouse
Company shares : No
Buy to Let Property value: no
Buy to let Mortgage: no

Total net assets: 1.1mill (see above mostly in house)


Family home mortgage information
Lender Dont wish to say.
Interest rate
Type of interest rate: tracker, variable, fixed.
If fixed, what is the term remaining of the fixed rate? Fixed, 8 years remaining, decent rate
If tracker, what is the margin e.g. ECB + 1%

Remaining term: (Original term is not relevant)
Monthly repayment: 1450

Other borrowings – car loans/personal loans etc

Car loan €16k remaining 8% loan
Home refurb loans €8k remaining 8% loan These will be paid off by 2027..

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? None

Pension information

Value of pension fund: €100k (me), €30k (partner)

I will qualify for a U.K. state pension age 68, currently paying back years have 18 years so far (need 35).



Other savings and investments:


Other information which might be relevant

Life insurance: yes. €260k Both have good death in service schemes through work.

What specific question do you have or what issues are of concern to you?
As you can see we have done pretty well with nearly owning our property outright, however, retirement and upcoming costs for the children are our main concern now. Neither of us are particularly financially savvy but we are trying to learn. I took 10 years out of work to raise the kids and only went back last year, but have started AVCs. So I am now putting approx €3k per month into a pension between me and employer.

We are saving for a job that needs done to the house at the moment which will cost 25k but the repair is needed (ie if not done will cause problems with the house). Which is why we haven’t paid off the loans with that savings money we have. What advice would people have for our general situation?

I will likely come into an inheritance of approx 350k in the next few years as parent is v unwell and older. What should I do with that to generate more income given that we haven’t got great pensions (yet)?
 
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What are the education plans, eg private secondary and potential for college expenses (ie living at home v living away). This should be part of money makeover I think if the poster has children.
 
spotthenovice44 said:
We are saving for a job that needs done to the house at the moment which will cost 25k but the repair is needed (ie if not done will cause problems with the house). Which is why we haven’t paid off the loans with that savings money we have. What advice would people have for our general situation?
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When does the job need to be done?
You have €35k savings so why not just do it now?

If it's more than two years away, then clear your loans as ClubMan suggested. You will be clearing them anyway over the next two years, so you might as well do it now and save on the interest. The interest is costing you about €2,000 a year.
 
spotthenovice44 said:
I will likely come into an inheritance of approx 350k in the next few years as parent is v unwell and older.
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So you are doing fine.

Don't worry about education too much.

Your pensions are light so both of you should max them.

When you face education costs, you will have either cleared your mortgage or will have received your inheritance. If not, you can take a break from maxing your pension contributions.

The only other thing you should both do is to open credit union accounts, if you have not got them already.

Then if you need loans for education or for doing up the house, they might well be the cheapest.

Brendan
 
Thanks everyone. We plan to send the children to the local non fee paying state secondary school, may send for grinds later to “top up” if help needed.

We are in South Co Dublin so well served for children staying at home for college if they choose to go to college (UCD and other major colleges very doable travel wise).

On the home repair it is needed asap so we are using the savings for that…just explaining why we haven’t paid off the loans…

One further question. When would you start putting money by for the kids €6k per year allowance? Presumably we are better to pay off the loans and start topping our own pension up first BUT given that I will likely get an inheritance and so will my OH (although could be hopefully a long way away for him) we are probably better to start funnelling something down to them?
 
spotthenovice44 said:
On the home repair it is needed asap so we are using the savings for that…just explaining why we haven’t paid off the loans…
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That doesn't tally with this:
spotthenovice44 said:
We are saving for a job that needs done to the house at the moment which will cost 25k
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As @Brendan Burgess said:
Brendan Burgess said:
You have €35k savings so why not just do it now?
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spotthenovice44 said:
When would you start putting money by for the kids €6k per year allowance?
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When any unsecured loans are cleared and pensions are maxed out. Not before then.
 
Yes, sorry we have been saving €1k per month and now we have the funds for the repairs so we are going to use what we have saved for that…rather than to pay off the loans. Thanks
 
In order of priority -

1. Complete necessary repairs on your home;

2. Pay off expensive car & house refurbishment loans;

3. Start maximising your tax-relieved pension contributions;

4. Pay down mortgage ahead of schedule.

You should be able to fund children’s education costs out of current income at that time.

As a general comment, I think you have way too much of your net worth tied up in your home.

Are you planning on downsizing at retirement? Your pensions look very light for your ages, particularly relative to your home equity.
 
Yes, I took 10 years out as a stay at home parent so didn’t contribute to pension during that time and husband was self employed…we were just about covering things without being able to really fund a pension. Easy to see with hindsight that we should have made it more of a priority.

We don’t plan to move or downsize unless really stuck. Should be mortgage free in 8 years and current mortgage is only €130k so not too bad…in the meantime we are going to put as much into AVC’s as possible. I am able to put aside around €3k a month now into pension..better late than never.

I suppose with the €350k that will be inherited we will try to plug the pension gap a bit. I can see that health care payments might become an issue for example when no longer working…as we currently have coverage through work…
 
spotthenovice44 said:
I am able to put aside around €3k a month now into pension..better late than never.
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spotthenovice44 said:
Your age: 45
Your spouse's age: 49

Annual gross income from employment or profession: 105k (bonus of up to 30%)
Annual gross income of spouse/partner: €85k
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Just to note that you can put 25% and your partner 30% (if they turn 50 this year) of your respective gross incomes (up to a max €115K of per person) into a pension and get full tax relief.

Tax relief limits on pension contributions

This page outlines the tax relief limits on pension contributions
www.revenue.ie www.revenue.ie
I don't know if you mean €3K for yourself or your partner but that would be above the individual tax relief limit for your ages. Making pension contributions that don't benefit from tax relief usually doesn't make sense.
 
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spotthenovice44 said:
Need to persuade OH to do similar….
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Your spouse is 16 years from retirement with 30k in pension

You shouldn't need to persuade them, it's a no brainer....40% back on contributions.

Time is not on their/your side here. Money invested needs time to grow.

How is he proposing to fund retirement? State pension will not fund a lifestyle I'm guessing you currently have.
 
Yes, completely agree.

We don’t have a out of this world lifestyle but most of the income is going on mortgage + loans + bills and utilities which is significant in Dublin and of course the children childcare activities and so on… we don’t eat out often and we holiday in Ireland. But we are clearly doing some things wrong, I can appreciate that!

But yes, Irish state pensions unlikely to suffice and I can’t draw the U.K. pension until I’m 68 by which stage he will be 73!
 
With a take home pay of 8.5k, a mortgage of 1.4k and saving of 1k, your monthly expenses are about 6k after accommodation. That's relatively high even in Dublin, even with children depending on the level of childcare required. It's all about establishing priorities and making your money go as far as possible. I would look into how much is exactly coming in including child benefit as 8.5k seems a bit low considering your wages. And then I would look into where your money goes, money diary can be great.
 
Thanks 8.5k is lower than the salaries seem because I’m now contributing to AVC’s off the gross wage.

We are paying a fair amount in the loan repayments also, and the monthly savings are €1.5k (sorry I got that bit wrong saying €1k I forgot we also have another regular saver of €500). So it’s more like €4/4.5k per month for bills, food, clothes, childcare, activities and all of the rest aka broken down washing machine and so on…seems to be some big surprise expense like that every second month :)

We did a diary a while ago but need to update it again and review. Thats a great suggestion thanks.
 
Longer term when the mortgage is cleared and if you come into that inheritance you will be in a very good position. And the car loan and house loan will have disappeared also.

You have high monthly income accompanied by high monthly outgoings, and that is without health insurance payments. You have just answered Premos and there may not be a lot of adjustment to be made but it would be still good to maintain a record for a few months.

This is a succinct summary of the sequence of next steps

Sarenco said:
1. Complete necessary repairs on your home;

2. Pay off expensive car & house refurbishment loans;

3. Start maximising your tax-relieved pension contributions;

4. Pay down mortgage ahead of schedule.
Click to expand...
 
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