lessobviousname
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What is the mortgage rate on the investment property?Own a rental property worth about €550k with a mortgage of approx. €360k.
Own a rental property worth about €550k with a mortgage of approx. €360k.
Very general advice is that you are way overweight in property in your overall wealth.
You can also put it all in pension now (or as much of it you like), and claim the relief against your income each year too. You would benefit from tax free growth in the pension. You would have a bit more hassle on getting your tax certs and returns done. You would lose flexibility on access to the money.You can put 25% of your income into a pension fund and should do so.
€140k@25% = €35k
You have €360k in cash which is only 10 years contributions.
I would put this cash into an equity fund and take
Interest rate is 2.65%. The tax relief benefit is notable as the interest charged at this stage of the mortgage is significant enough to make it a decent offset. I use a management company at the moment to take the admin pain out of managing it.What is the mortgage rate on the investment property?
If it's a low interest loan - say 4% and you get tax relief, so the real cost is only 2%, I would not pay off the mortgage.
Brendan
Kids are happy where they are now. The au pair (and other alternatives) have been considered, but the flexibility of childcare with respect to after-school (eldest) is very helpful.With the younger of your kids I assume starting school next sept would you consider an au pair rather than childcare. You’d save on childcare.
You can put 25% of your income into a pension fund and should do so.
€140k@25% = €35k
You have €360k in cash which is only 10 years contributions.
I would put this cash into an equity fund and take out whatever you need each year to max your pensions.
Keep it all under review.
If new legislation makes pensions less attractive, then it might make sense to clear your mortgage.
When the cash is all transferred to your pension scheme, then you decide what to do.
It may make sense at that stage to sell the investment property and feed the proceeds into your pension fund, but that is at least ten years away, so don't worry about it now.
Brendan
You can also put it all in pension now (or as much of it you like), and claim the relief against your income each year too. You would benefit from tax free growth in the pension. You would have a bit more hassle on getting your tax certs and returns done. You would lose flexibility on access to the money.
If you have cheap passive funds in your pension it probably makes send to prefer investing there vs outside.
Reminder that you will only get income tax relief up to 25% of €115kYou can put 25% of your income into a pension fund and should do so.
€140k@25% = €35k
Two incomes, both less than €125k, and both taxpayers are aged in their 40s, so both will receive full relief up to 25%.Reminder that you will only get income tax relief up to 25% of €115k
Question I have, is how did you end up with a 60k mortgage on a 1.15m house on your salaries, whilst also having a 360k mortgage on a rental property and having propery in the UK? I assume there was a lump sum / investment proceeds from something at some point?
In order to retire early you need to figure out how much money you need monthly to live. So at a very simple level you currently live on 3,900p, (46,800 a year), I based this on take home pay net of childcare, savings, mortgage. Lets assume throughout your retirement you can draw down 5% and the market will return 5% so that you replenish your assets.
In your case 5% = 46,800 which would mean you need a pot of 936,000 to be able to retire mid 50s. There are obviously lots of variables e.g. if you decide you only need 30k to live of, then there are one of costs (kids weddings, financial support etc).
I would start looking at how you can get there, one option could be to move to a cheaper house and bank the difference, aggressive pension savings using tax breaks, change lifestyle and save more etc.
but have moved to a new company which I get a lot more satisfaction from, but also equity which might be worth more in time versus the drop in wages (no guarantees there of course).
Also, both my wife and I work four day weeks as well,
This always seems to get asked on these kinds of threads. Why on earth would you not want to retire early ??! I'm not being flippant, but genuinely curious as I would ditch work tomorrow if I could afford to. What is all the working for if you can't get some time to enjoy yourself towards the back end of your life.Why do you want to retire earlier?!
I'm really enjoying the job I have today, but I'm not sure about how I (or my wife) will feel in around 15 years. The last job was very intense and I shifted to a four day week to try and get a balance. It wasn't enough and I left it, but saw the value of a four day week so that was a prerequisite for the new role.Why do you want to retire earlier?! My next point was going to be look at a job that has more fulfillment or move to reduced hours!
Fair point. Presently we are trying to plan without factoring in the need to sell our home. It'll probably make sense at some point in the future to do so (but might much further into the future... 25 years+). I'd rather try and find ways of achieving our goals without neccessarily having to rely on this.A point to make is that you say your wife isn't considering an option of downsizing the house in the next 5-10 years, yet you are are trying to plan out your entire retirement of 30+ years (fingers crossed).
This always seems to get asked on these kinds of threads. Why on earth would you not want to retire early ??! I'm not being flippant, but genuinely curious as I would ditch work tomorrow if I could afford to. What is all the working for if you can't get some time to enjoy yourself towards the back end of your life.
Personally, I would much rather spend the limited time I have on this planet doing things that I want to do, rather than what I need to do. It's something not many people get to do, but something that I, and a lot of people aspire to. Most people don't have a vocation, and having to do assigned chores 10 hours a day plus, 5-6 days a week, only being able to book time off and go away when it suits other people, endless stress, dealing with difficult people, I'd be out at the drop of a hat. Some people would rather continue working full time even if they could afford not to - that is an anathema to me.
I'm really enjoying the job I have today, but I'm not sure about how I (or my wife) will feel in around 15 years. The last job was very intense and I shifted to a four day week to try and get a balance. It wasn't enough and I left it, but saw the value of a four day week so that was a prerequisite for the new role.
I guess it might be more accurate to say I'd like to put ourselves in a position to "financially retire" and have the option of stepping away from the roles we are working when we reach a certain age (mid/late 50's). If we love the jobs we do then we'll no doubt continue to do them beyond that point, or at least look for more flexibility at that point to enjoy more things outside of work.
Fair point. Presently we are trying to plan without factoring in the need to sell our home. It'll probably make sense at some point in the future to do so (but might much further into the future... 25 years+). I'd rather try and find ways of achieving our goals without neccessarily having to rely on this.
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