Moneymakeover Money makeover: advice on retirement planning and other suggestions

S

SharkT

Registered User
Messages
21
Age: 53
Spouse’s/Partner's age:48

Annual gross income from employment or profession:
€114,000 + 10,000 Bonus

Annual gross income spouse:
150,000 + 30,000 Bonus

Monthly take-home pay:
€8,500 approx (after pension contributions etc. We have company health insurance and death cover).

Type of employment:
Private sector

Expenditure pattern:
After-school childcare at 450 per month.
Mortgage on rental property is approx 1,250 per month.
Excluding these we probably spend 3-3.5k per month. But prob spend another 7-10k annually on holidays.

Rough estimate of value of home
€950,000

Mortgage on home
None

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month?
Yes

Savings and investments:
Me:
€20k Cash savings.
€50k 10 year state savings bond. (Maturity 2032)
€12k Prize bonds

Wife:
200k cash savings
20k regular savings.

Joint Savings
80k Zurich Prisma 4
12k Zurich Prisma 5 ( just started contributing 4k per month to this)
3k Zurich Prisma 5 (kids investment to max out the 3k per year tax free)

Do you have a pension scheme?
Me €380,000 previous pension (Aviva buyout bond)
Me €360,000 new pension
Wife pension €500,000 (Aon lifestyle type fund)

My company pays 10% and I pay 30% (max for tax relief).
Wife's company pays 10% and she pays max without exceeding the 115,000 cap. .

Do you own any investment or other property?
Yes. Value €500,000. Mortgage tracker ECB+1.15% €130,000 remaining (14 years). Rented for €2250 a month gross. Agency looking after it. Have just giving notice on this in June hoping to put on market march next year assuming tenants vacate.

Ages of children: 2 children - ages 12 and 8.

Life insurance:
Mortgage protection on both properties.
Health insurance thought jobs.
Death in benefit through jobs.

Other info
I have received all my parental inheritance.
My wife has received some inheritance but will likely receive a high 6 figure sum in the next 10 years also.

I have approx 1360 contributions towards the state pension.
My wife currently has a similar amount of credits.

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

I would like to retire as soon as I comfortably can. Ideally on three years So my PRSI pension contributions would fall short for a full state pension in three years time.

I realise with small kids retirement may be a while away but I'm trying to assess how far away. So any thoughts on that welcome.

My wife would like to continue working until she is 55/57. I would like to be finished in 3 years at 56. I want to spend more time with my kids, I have hobbies that I would like to pursue if time allowed also. I have no interest in moving into a different area of work and going part time is not an option.

Do you think retirement in 3 years is realistic?
Anything else I need to consider or suggestions as to things we should do to plan for retirement.

Any advice on what to do with the lump sum when we sell the rental property next year?
 
I wouldn't worry too much about the state pension. If you work for another three years, you will have about 1510 contributions or an average of 32 contributions per year.

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So you will "lose" €30 a week or €1,500 a year. Not material in the overall context of your total wealth and income.

Even if I got my calculations wrong, it will be €45 a week, so still not material.

Update: These calculations are incorrect and have been subsequently corrected. But the overall point stands. It is just not material in the context of €3m of assets and should not be a factor in the decision.

Brendan
 
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Yes, you absolutely can quit work in three years and should if you want to spend more time with your children.

And if a stock market crash damages the values of your pensions over the next few years, you can return to work.

So don't tell people you are retiring. Tell people you are taking a few years off work to spend more time with the kids.

You might well want to return to work when they are older.
 
SharkT said:
2 children - ages 12 and 8.
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You wish to retire when they are 15 and 11. So both in secondary, eldest heading into the leaving cert.
SharkT said:
I want to spend more time with my kids, I have hobbies that I would like to pursue if time allowed also.
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Spending time with kids is very worthwhile. But one never knows with teenagers. They might want to spend their time studying, with friends, on a sport or in their room!
 
Bronte said:
Spending time with kids is very worthwhile. But one never knows with teenagers. They might want to spend their time studying, with friends, on a sport or in their room!
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Yeah, in my experience (me with my parents and my son with me, and observing the wider family dynamics) once kids turn c. 15/16 they often want to spend more time with other people or doing other things than with their parents.
 
Thanks for the replies all.

Good points and observations.

Thanks for the info and context on the PRSI contributions. I'll look into that more. Maybe if would be worthwhile buying the remaining contributions but as Brendan said it's not a materia difference anyway.

Agreed that the kids as teenagers may have little desire to spend too much time with me. But I do have other hobbies and interests that I would like to pursue. Plus they will likely still need ferrying to activities which is proving somewhat challenging at the moment.

In my industry it's difficult to get any role when you are over 55. But having said that if I needed to I would be happy to do anything like stocking shelves or do anything like that if my pension and investments took a significant hit.
 
See this key post/thread about different ways to increase/maximise your PRSI contributions/credits towards the contributory old age pension.

Key Post - PRSI and planning retirement

This Key Post is in the form of a FAQ where I don't know many of the answers. I will update the post as I get answers. 1. PRSI payable on reaching state pension age Answer: 0 (Class M) 1a. Does this relate to the start of the tax year in which you become 66? Or to after your birthday? Answer...
www.askaboutmoney.com
 
Brendan Burgess said:
I wouldn't worry too much about the state pension. If you work for another three years, you will have about 1510 contributions or an average of 32 contributions per year.
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I'd be worried about rule changes in the future on pensions. Now that we have auto enrollment there may come a day when the pension will be assessed even if you have the contributions.

I'd be more inclined to keep building your credits. In 3 years you're youngest will be 11 and you can claim homemaking credit to look after them to age 12. Then pay voluntary prsi up to the 40 years stamp threshold.
 
Brendan Burgess said:
So don't tell people you are retiring. Tell people you are taking a few years off work to spend more time with the kids.
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Definitely don't tell anyone you're retiring early.
As stated you may get bored, want to return to some work, try a side gig etc.

Also I'd try doing a mock run. Take a few months of parental leave, 3/4 months and see how that feels.

I've taken parental leave over the years and knew it suited me to leave my job as I'd tested it first. But I've known people who took different leaves from work and it was no good for them, total lack of direction and purpose.
 
Robovac rider said:
The PRSI information in post #3 is incorrect..
Click to expand...
The OP might like to be set straight on the matter in case you know?

I think the OP should keep going full time a few more years. I don't think it would set a good example to the children for the dad hanging around the house. Sounds like in his industry you get pushed out the door as you age so stay until they push you out the door you have a great salary and employer pension match. If they made you redundant they might have to pay you redundancy which would also be a nice additional retirement nest egg.
 
CharlieMac said:
I don't think it would set a good example to the children for the dad hanging around the house.
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Doesn't sound like he'll be hanging around the house to me.
SharkT said:
But I do have other hobbies and interests that I would like to pursue. Plus they will likely still need ferrying to activities which is proving somewhat challenging at the moment.
Click to expand...
I wouldn't worry too much about the impact it would have on the kids myself. But maybe I'm remiss in my parental/paternal responsibilities or something.
 
Ref post #3: The Yearly Average (YA) method for calculating the State Pension (Contributory) is being phased out over a 10-year period that started on January 1, 2025. By 2034 — well before the OP turns 66 — it will be fully gone, and all pensions will be calculated solely under the Total Contributions Approach (TCA).

Under pure TCA rules, 1,510 eligible PRSI contributions would entitle the OP to 72.6% of the full pension (which requires 2,080 contributions). At current 2026 rates, that leaves the OP short about €82 per week, or €4,264 per year, of the maximum rate.
 
SharkT said:
80k Zurich Prisma 4
12k Zurich Prisma 5 ( just started contributing 4k per month to this)
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Minor in the greater scheme of things but...

There may be overlap between Prisma 4 and 5 that potentially dilutes diversification. And I wonder if you might do better on annual management charges?

And make sure that the charges on your pensions are competitive.
 
You have an income of €330k a year
You have about €3.1m in assets.

It's very clear that whether or not you get the full state pension or €2,000 less a year ( €4,000 less tax) does not impact your decision on whether you can stop working or not. By all means, take the action recommended to maximise your pension. But it is a side issue.

Can you afford to stop working in three years?
Absolutely.
Especially as your wife will continue to earn €180k a year.

How much will it cost you to stop working? About €60k a year after tax.
So about 2% of your net asset value.

The investment strategy for your assets is a far bigger decision that whether you can afford to stop working or not.

Brendan
 
SharkT said:
After-school childcare at 450 per month.
Click to expand...
SharkT said:
Ages of children: 2 children - ages 12 and 8.
Click to expand...

SharkT said:
I realise with small kids retirement may be a while away but I'm trying to assess how far away.
Click to expand...

ClubMan said:
Yeah, in my experience (me with my parents and my son with me, and observing the wider family dynamics) once kids turn c. 15/16 they often want to spend more time with other people or doing other things than with their parents.
Click to expand...

I wonder should you stop working now. Your kids are at an age when they would want to spend time with you.

You say that it's difficult to get a role in your industry after 55. Does it have to be in your industry?
 
OP states they are spending 3.5 monthly. Plus childcare, so 4 k. Plus say another 10k on holidays. Maybe 4.5 k a month which they will more or less have from wife’s income alone. Will the hobby be costly. Not stated is whether his wife is happy with his retirement plan. They’ve certainly plenty of money. Presumably he plans on running down savings to live on from age 58 to say 80. Eased a lot when state and private pensions kick in. We are missing how much his company pensions will pay him.
 
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