Moneymakeover Mid life financial health check…thanks

spotthenovice44 said:
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.
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Stop right there.

You had your priorities exactly right. You are well off, so you took time out to raise your children. You could well afford to do so and I am sure that your kids and yourself are better off as a result.

You have an almost mortgage-free house with a cheap tracker. You have savings to match your debt.

After paying off your unsecured loans, maxing your pension will be the priority.

It will probably be right to clear your mortgage ahead of schedule, but revisit this decision before you do so.
 
I disagree.

Getting to your late 40s with over €1m in home equity and only €130k in combined pensions doesn’t suggest appropriate financial planning to me.

Coupled with the personal debt, it suggests a family living beyond their means, IMO.

From this point, it will be challenging (but certainly not impossible) to fund comfortable retirements.
 
Yes, I agree with you both actually, it was very beneficial for the children to have me at home but also possibly a naive decision given that I was the main earner and lost a decade of earnings and pensions. I only went back to work last year.

We did prioritise buying and paying the house off, where perhaps we should have bought something a bit smaller and paid into shares/pensions. So in one way we probably are living beyond the means of a family who had one earner for 10 years. I would accept that our planning leaves a lot to be desired but now we are trying to assess and fix that. Albeit quite late!

The loan was a for a car we needed, we drive a Yaris so it’s not a BMW :), we are a one car household, and the other loan was for bits that needed doing on the house a few years ago. I don’t think the loans are massively excessive, as you can see we have no issue paying them and still saving, but obviously will be very glad when they’re gone in 2027. If I had been working we wouldn’t have needed them I would say! And we may pay them back faster now I’m back in work.

Retirement is an issue! But I’ve only been back at work a year and I’ve put away €38k into the pension between me and employer. My pot was only €60k last year…now I’m up to €100k. Yes, it’s probably too little too late but I’m planning on keeping that up if at all possible.

I really appreciate everyone who has taken time to reply. Really helps.
 
Sarenco said:
Getting to your late 40s with over €1m in home equity and only €130k in combined pensions doesn’t suggest appropriate financial planning to me.
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We don't know what price they paid for their home. So if house price inflation gave them loads of equity, that is not really their "fault".

It is not just about maximising wealth.

They could have maximised wealth by her staying working. But that was not their priority and I agree with them.

They are well off and they are going to be fine when they get their inheritances.
 
It’s not about maximising wealth - it’s whether it makes sense to live in an expensive house at the cost neglecting appropriate retirement saving.

The OP has already recognised that they prioritised buying and paying off an expensive house over saving for retirement.

From here, it will be challenging (though not impossible) to fund comfortable retirements without downsizing the house.

Sure, the hoped for inheritance will help if it comes to pass but it wouldn’t be sufficient to fund their current lifestyles for very long.

It’s a question of balance - you can’t eat a house in retirement.
 
Ready for a kicking again. Principal residence to me is not an asset unless you are going to sell and have a cheaper option.
I own my own house. I cant eat it I cant trade it. In fact I never stop spending money on it. Not an asset to me.
I own an apartment outright and collect rent from same. Thats what I call an asset.
 
Yes, I can see where some of you are coming from. We are unlikely to sell our principle house, or to make money from it. So unless we downsize, we won’t make any money back from it! Although it’s 5 bed so renting a room always an option later on. And continue to spend on it…but we benefit from being near to the sea and lots of space so feel that in that it was a good choice. And I suppose later down the line the children will have it. We benefited from getting on the property ladder in early, which again was another reason why neither of us were paying AVCs, I started working at 16 and paying a mortgage at 18. It’s hard to do all of these things I suppose. Although some do and well done to them!
 
KOW said:
Principal residence to me is not an asset unless you are going to sell
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Discussed at length here so no need to take this thread off topic.

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
 
spotthenovice44 said:
we benefit from being near to the sea and lots of space so feel that in that it was a good choice.
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You have had use of this fine house for at least 20 years and will enjoy it for another 20 years at least.

You absolutely made the right decision to buy it.

You would have been better off contributing to a pension than overpaying this mortgage, if that is what you have been doing. But that is a small error in the context of things. You got the big decisions right.
  • You bought the right house for yourselves.
  • With a tracker - which I presume is a cheap tracker
  • You sacrificed wealth maximisation so that you could raise your kids
After the inheritances are received, you will look back and say "Well done!" to yourselves. But say it now as well.
 
spotthenovice44 said:
I don’t think the loans are massively excessive, as you can see we have no issue paying them and still saving,
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It makes no sense to be saving at effectively 0% and paying loans at a lot more. I know people like to compartmentalise their finances but money is money. You should focus immediately on paying off the loans with the highest interest rate. You will save in interest and be better able to fund pensions.
 
I absolutely agree Dr Stranglove. As I’ve mentioned in the post and in the thread the reason why we have been saving and not overpaying the loans quicker is that we have been saving for a specific repair which we have now met the savings for €25/30k and this repair is extremely urgent to avoid more expense. Now that we have that money we will direct the savings towards the loans and then pensions. I don’t think my explanation was clear sorry.
 
Yes, downsizing is always an option later if the costs of maintaining became too great relative to income. It’s an expensive part of Dublin, so if we stay here we would never get a “cheap” property. Having said that I wouldn’t completely rule out moving area once the children are finished college as neither of us is from the area. The CSO figure for the median house price in DLR is €662k recently, so whilst not cheap we could definitely downsize from our place and stay in the area if we really had to/wanted to have less maintenance later. Although I’m not a fan of frequent moves and their associated costs. We are in this house 7 years.
 
I do think there is an inherent a d present value in the principal residence as it means you likely do not need to save separately for your kids inheritance or part of it.

This factors into my plans the same way as the UK State Pension. Instead of needing xx I only need yy and can retire earlier as a result.
 
Yes, our kids will be ok for an inheritance later on, I am not concerned as we are fortunate in family circumstances.

Like many people we wonder about how to funnel some money down to help them when they actually need the money while we are (hopefully) still alive…to buy a first property etc. Since people often really need help from parents more during their younger years rather than older years if it’s available.

I will also qualify for U.K. state pension when I am 68 (if I make that).

I think the trickiest years for us will be the years between now and mid 70s, with very light pensions in the years before and around state pension age (which is what I am tying to fix in next 10 years). I am not too concerned about our very late years because my husband will also then come into an inheritance (hopefully much later than me, my situation is different as my remaining parent is in serious ill health unfortunately, and at a very advanced age). This is why my parent and I have been thinking about what I will do with that €350k to boost retirement funds. I will probably need to contact a financial adviser when this is received as I don’t know much about investing. In our very later years (by 70s) we will inevitably have come into other assets on husbands side.

This is why I wonder whether it would be better to start transferring the €6k to each child annually under the tax free threshold after we have paid off our loans? To build something for their future housing deposits or college fees. Otherwise, that money will be “stuck” with us later on tax wise when we do get other assets, at the stage that they could have already done with a little help.

Although building a pension for our younger pension years is also something we really need to do, and are taking steps on.
 
You regret not maxing your pension.
You say "I think the trickiest years for us will be the years between now and mid 70s,"
Yet you repeated ask about transferring €6k to an 8 year old.

Clear your expensive debt.
Max your pension.
Clear your mortgage.

If and when you have money left over, revisit the issue here. But don't be asking now about what you will do when you get an inheritance in a few years.
 
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